MSMEs are an integral part of the Indian economy. They are the second most contributing industry to the Indian GDP after agriculture. Moreover, they are known to contribute approximately 24% of the service sector's GDP. MSME businesses rely on lenders for upgradation by applying for easy Business Loans. Let us examine how and why one can apply for an MSME loan online.
What is MSME - Meaning, Features, Role & Importance in India
The Micro, Small, and Medium Enterprises Development Act of 2006 came into existence for the welfare and growth of the enterprises operated by the sector. The MSME enterprises receive loans to expand and better set up their businesse. MSME loans are offered at lower interest rates, starting at just 8.3%, and can go up to 15 years for repayment. This sector mainly involves the manufacturing and processing of commodities. The business should be registered under the MSME scheme on the government’s UDYAM portal to meet the eligibility criteria for an online Business Loan.
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Micro Enterprise:
These enterprises have an investment below Rs.1 crore and a turnover of up to Rs.5 crores. -
Small Enterprises:
These enterprises have an investment below Rs.10 crores and a turnover of up to Rs.50 crores. -
Medium Enterprises:
These enterprises have an investment below Rs.50 crores. However, their turnover is up to Rs.250 crores.
What are the benefits of applying for digital small business loans?
Quick Approvals:
The Business Loan procedure of processing and approval with Poonawalla Fincorp is prompt, hassle-free, and speedy. The disbursal of funds is fast and helps entrepreneurs deal with their business needs almost immediately.
Straightforward Processing:
The MSME loan process is straightforward, where you have to log
in to the lender portal, sign up and upload the required documents
to get approved. You can enjoy the benefits of repaying the loan at
longer tenures. If you choose to foreclose
the loan, Poonawalla Fincorp offers this feature at no extra
cost.
The SME loan process is similar to it. They are available at
low-interest rates, and entrepreneurs can enjoy the benefits of
business funds that are not very hard on their pockets.
Access to Information:
Applicants can check their eligibility online through the easily accessible Business Loan eligibility calculator. The calculator and an EMI schedule will help you plan your finances better.
Multiple Schemes:
The Government of India has introduced multiple schemes to
finance and aid the MSME sector. The government disburses these
funds through NBFCs and
banks. Entrepreneurs have greatly benefited from these subsidies.
Most MSME loan processes do not require collateral, making it easy and
stress-free for entrepreneurs to make the most of these loans.
What are the Eligibility Criteria for MSME Loan?
Individuals over the age of 22 years are eligible to apply for
Business Loans, and they must not be over 65 years of age at the time
of loan maturity.
The SME loan process specifies that private
companies, sole proprietors, and businesses engaged in manufacturing,
trading, and service sectors are eligible to apply for the loan.
The business must be operational for a minimum of 5 years, and the
applicant must have the company for a minimum of 3 years in the
industry concerned.
The business must have records showing profits
for the last two years and a basic income of at least Rs.2 lakhs
annually.
The business requiring a loan must be registered under
the UDYAM portal and possess an MSME registration certificate to
qualify for the loan.
How to Apply for MSME Loan Online
The Business Loan process is simple. One must follow the below
steps:
The online Business Loan process requires the applicant to
visit the lender’s website and sign up for the loan. Meticulously fill
in all required details and submit the application form. A
representative from the lender will get in touch with you to take the
process forward.
The representative will explain the eligibility
and permutations available for your application. Then, you will be
requested to submit the verification documents online. You can scan
and upload the required documents to the loan provider’s portal.
You can also submit the documents offline by requesting the
representative to collect the physical copies of the required
documents. Online Business Loans are
made available to lessen the burden of tedious documentation. Once all
documents are submitted, verification by the concerned departments
takes place.
The lender shares the loan agreement with the
applicant on verification and approval. Upon successfully signing the
agreement, the applicants get the fund in their account within 48 hours.
What are the Documents Required for an MSME Loan?
- The identity proof and address proof of the applicant and business.
- PAN card of the applicant and the business concerned.
- Form 16 has to be submitted along with the bank and account statements of the business.
- Income Tax records for the past two years of the company the applicant is applying to get the loan.
- Audited financial statements of the business that demonstrate a profitable income for at least the past two years.
Conclusion
Online Business Loans are available to MSME sector businesses through simple application procedures. The interest rates are comparatively minimal, and business enterprises benefit best from them. Since their announcement, the sector has significantly welcomed and celebrated the MSME loans. To reap loan benefits, you must get an MSME registration certificate and apply for the required funds. Poonawalla Fincorp will take care of the rest of the Business Loan procedure.
FAQs for MSME Loan
- What is the advantage of MSME loans?
MSME Loans are collateral-free and can be availed of online. This is one of the biggest advantages of applying for an MSME Loans. These loans can be availed at competitive interest rates, which won’t increase the cost of borrowing.
- What is the difference between MSME loans and SME loans?
MSME Loans and SME Loans are both types of Business Loans. The only factor that makes a difference is the loan amount.
- What is the turnaround for MSME loans?
Once you apply for an MSME Loan online, you just have to await verification and confirmation. Post that, your loan amount will be disbursed into your account almost instantly.
- What are the documents required for getting a quick MSME loan?
For applying for an MSME Loan, you need to procure KYC documents (PAN card/Aadhaar card), business address proof (rent agreement/utility bills), and financial documents (bank account statement of past 6 months).
- How can I repay my MSME business loan faster?
Applying for an MSME Loan is easy and simple if you apply online. You just have to visit your lender’s official website, go to t6he deciated page for Business Loans, and click on ‘Apply Now’.
- What is the maximum term limit for MSME loans?
You can choose a repayment period of up to 36 months for an MSME Loan.
