msme business loan eligibility

Does Company Type Affect Your SME Business Loan Eligibility?

November 20, 2022 • 405 views
Author: PoonawallaFincorp Category: Business Loan

Over the last few years, we have seen an increase in the number of entrepreneurs and innovative business ideas. These businesses have also provided a huge boost to the economy and increased employment opportunities in India. Most of these businesses include MSMEs (Micro, Small and Medium Enterprises). As these MSME businesses operate on a low scale, there is a constant requirement for funds.
According to the type and nature of the business, owners must follow various company registration regulations which help them to incorporate their companies. The company registration process helps the incorporation of the company, allowing it to run smoothly. During the company registration process, the business owner must follow the required compliance set under the specific act. Similarly, to form an MSME company, the business owner must register the company under MSME Act. 
Generally, two factors of annual turnover and investment in plant, machinery, and equipment define the category of the business. 

Also Read: Small Business Money Management Tips: 5 Tips for Success 

Machinery, Plant, and Equipment

  • Micro Business – Up to Rs.1 Crore
  • Small Business - Up to Rs.10 Crore
  • Medium Business - Up to Rs.50 Crore

Turnover

  • Micro Business – Up to Rs.5 Crore
  • Small Business - Up to Rs.50 Crore
  • Medium Business – Up to Rs.250 Crore

The businesses that fall in the above-mentioned factors are termed MSMEs. 

MSME Company Registration Process

  1. Start the Registration Process
  2. Fill Application Form
  3. Enter Personal Details
  4. Executive will Process the Application
  5. Receive Certificate of Mail

What is MSME Loan?

Like other Business Loans, an MSME loan is used for business purposes. Business owners utilize the loan amount for numerous purposes such as upgrading services, buying new machinery or new equipment, setting up a new office, and hiring new employees.  

Eligibility of MSME loan

With Poonawalla Fincorp, borrowers can easily apply for Business Loan with an effortless simple loan process. Business Loans are designed to fulfil the requirements of the borrowers. Business owners are always looking for quick funds to tackle the financial crunch in their businesses. Poonawalla Fincorp aims to assist business owners to expand their businesses and help them solve any short term financial crunch issues. 
Generally, MSMEs operate on low capital as compared to bigger businesses. There is a high probability that MSMEs might constantly require capital to ensure there are enough funds to deal with any financial challenges. 

MSME Loan Scheme

  • MSME Loan in 59 Minutes 
  • MUDRA Loan Schemes for MSMEs
  • Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE)
  • Credit Facilitation Through Bank by National Small Industries Corporation (NSIC)
  • Credit Link Capital Subsidy Scheme (CLCSS) for Technology Upgradation

To apply for Business Loan for SME, you need to meet the below-mentioned eligibility criteria:

  • Age - The borrower should be between 22 and 65 years of age 
  • Business Vintage – business vintage required for the SME loan is a minimum of 2 years
  • Annual turnover- The business should have more than Rs.9 Lakh of annual turnover

Also Read: Get a Hassle-Free Business Loan for Self-Employed Individuals

Few factors that can affect your Business Loan Eligibility 

Additional debt 

While applying for a Business Loan, the lender verifies and examines all the necessary information required to determine your creditworthiness. In case there are any previously unpaid debts or additional debts which are on the heavier side, there are chances that your Business Loan application might get rejected. It is important that you manage your existing debts first and then apply for a new Business Loan.

Poor credit score 

 A credit score is one of the major factors that determine your approval of a Business Loan application. A credit score reflects your creditworthiness – in case of a poor credit score, there are high chances of rejection of the loan application. Also, with a poor credit score, there is a probability of getting a loan at a high-interest rate. 

Insufficient cash flow 

Your cash flow indicates the ability to pay off your financial obligations after paying for your operating expenses. Insufficient cash flow means the business will be unable to pay back the interest on time. Also, it impacts the confidence of the lenders.

How to apply for MSME Business Loan with Poonawalla Fincorp?

You can apply for a MSME Business Loan with Poonawalla Fincorp by following these steps:

Step 1: Visit the official website of Poonawalla Fincorp 
Step 2: Click on the Business Loan, go to Business Loan for MSME section
Step 3: Check the eligibility criteria for Business Loan for the MSME section 
Step 4: Click on ‘Apply Now’ under the Business Loan for MSME section

Conclusion

In conclusion, Business Loans provide leverage to the business to deal with any kind of financial challenges. Benefits such as minimal documentation, flexible loan tenure, no collateral, higher loan amount, quick disbursal, and many more assist businesses and ensure that all the requirements are fulfilled on time. 

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