How to get easy loans for MSME business?

Due to recent alterations in MSME definition by the Government of India, the scope of this sector has increased significantly.

In the present scenario, the investment criteria for micro, small, and medium enterprises have increased up to Rs.1 crore, Rs.10 crore, and Rs.50 crore, respectively. The turnover threshold is up to Rs.5 crore, Rs.50 crore, and Rs.250 crore, respectively.

Therefore, a large number of entities now have qualified as MSMEs and have also become eligible to avail MSME business loans.

With such encouragement from the government, now, entrepreneurs can find various available options to choose and expand their business.

Here’s how to obtain easy credits for MSME business –

â—Ź Decide the loan amount to avail

The first and foremost step for borrowers is to decide the loan amount they seek. It should be noted that it is up to the lender to decide on this amount. They will consider all the factors (like business turnover, vintage, etc.) before sanctioning a loan application.

The loan principal may also determine the rate of interest and tenor. A large amount can attract high-interest rates as the credit becomes risky for a financial institution.

Hence, it is recommended not to apply for an amount that is considerably more than what is actually required. Keeping the principal minimum and tenor short will lower the cost of loans and make repayments easier. Borrowers will be able to reap all the benefits of an MSME loan if they do so.

â—Ź Fulfil the eligibility parameters

Depending on financial organizations, the eligibility criteria can differ. However, some elementary parameters need to be fulfilled by borrowers to avoid application denials.

Individuals will have to meet a certain age bracket, business experience, income, etc. Applicants need to clear previous debts and maintain their credit profile while applying for new MSME business loans.

â—Ź Organise the required documents

Borrowers also have to go through a series of mandatory paperwork to verify their eligibility for the specific credit facility. This process has become a lot easier, and thus, applicants should know about the necessary documents so that they can arrange them accordingly.

Business registration proof, financial account statement, Aadhaar, PAN, etc. are some compulsory documents that borrowers need to submit to avail an MSME loan.

â—Ź Prepare a full-proof business plan

When the basic intention of procuring credits for MSMEs is to initiate a business venture or to grow it, lenders may ask for a specific and promising business plan. This is because, from a financiers’ perspective, a distinctive and organized business plan will help in knowing how entrepreneurs intend to utilize the funds.

â—Ź Apply for the right loan

Financial institutions can provide a variety of need-specific credit products. So, if applicants have clear ideation about their plans, they can apply for the best MSME business loan accordingly.

Moreover, availing credits for MSME can turn out to be time-consuming and complicated if not applied with the right lender. Entrepreneurs can apply with NBFCs like Bajaj Finserv that guarantee Business Loans for MSMEs with minimal documentation and easy application process.

Applicants can secure a quick credit of up to Rs.20 lakh within 24 hours of successful approval.

The NBFC also brings pre-approved offers that can process loan applications quickly and saves a considerable amount of time. These offers are also applicable to different financial products like credit cards, personal loans, and more. Individuals can have a look at their pre-approved offer online by submitting mobile numbers and names.

Lastly, as a caution, borrowers should not apply for multiple MSME business loans at one time as it can reduce their credit ratings. Moreover, they should also practice on-time repayment to manage their wealth efficiently and also to be a successful small business owner.