MSME stands for Micro, Small, and Medium Enterprises, which are small businesses that offer a variety of services to the community.

If you’re looking to start a small business, you will require getting MSME registration and GST registration done. You will also require some capital to start a small business.

Opting for a loan can help you here!

A loan for MSME can be obtained from a bank or other financial institution in order to raise capital to establish a new business or grow an existing one.

The interest rate charged by the bank is decided by the amount borrowed and the repayment period selected. It can help you meet all of your company’s financial needs and cover a variety of business expenses such as purchasing new machinery, increasing working capital, taking on bulk orders, and so on.

A startup business loan can be obtained from a bank or other financial institution in order to raise capital to establish a new business or grow an existing one.

There are a number of ways in which you can get a business loan for your small business. Let’s look at 7 ways MSMEs can apply for a business loan.

Apply for Business Loan

Bank loans for businesses

This is the most common sort of loan available to a business owner, and it makes the most sense in some situations. Getting a company loan from your bank, on the other hand, may only be available under certain conditions.

Even then, it can be a time-consuming and tedious process. Because business loans have been around for a long time, banks provide a variety of solutions to meet the demands of a small business.

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Banks have a variety of loan choices, ranging from working capital loans to long-term asset-backed loans.

Credit Guarantee Fund Government Business Loan Scheme(CGTMSE)

If you qualify for the Credit Guarantee Scheme (CGTMSE) as an SME, you can acquire a credit line of up to Rs.1 crore with no collateral. This is a fantastic choice for entrepreneurs who need money to build their business or satisfy their working capital needs.

Only entrepreneurs with demonstrated technical and business expertise are eligible for this programme. Banks, unlike informal money lenders, do not impose high-interest rates. Business loans often have interest rates ranging from 11% to 16%.

Personal loans from Banks

If your business does not qualify for a bank loan, you can still receive funding for it by taking out a personal loan. Personal loans, of course, have their own set of disadvantages and are not always appropriate.

If you don’t require a large loan, a personal loan is a good option. A personal loan may be a more convenient option if the sum is little.

Unsecured Loans from NBFCs

The number of Non-Banking Financial Companies(NBFCs) has risen dramatically in recent years. NBFCs, on the whole, have more lenient lending standards than banks and are more willing to provide collateral-free loans.

NBFCs, unlike banks, do not require a plethora of business-related documentation. Many non-bank financial institutions (NBFCs) provide business loans without even seeing a balance sheet.

NBFCs may handle loans in as little as three days, compared to 60-90 days for banks. When you need money right away, NBFC loans are a wonderful choice.

Stand-Up India

The government launched the Stand-up India scheme to grant loans to enterprises managed by Scheduled Castes/ Scheduled Tribes and women.

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This scheme is overseen by the Small Industries Development Bank of India (SIDBI). This scheme provides loans ranging from Rs. 10 lakhs to Rs. 1 crore. A minimum of one Scheduled Caste/Scheduled Tribe or women entrepreneur must receive this loan from each bank. 

According to the terms of the loan, the fund will cover approximately 75% of the overall project cost. This scheme is open to enterprises that are involved in trading, manufacturing, or other service-related industries.

If the business is not a sole proprietorship, a minimum of 51 percent of the shares must be held by a woman or a member of a Scheduled Caste/ Scheduled Tribe.

National Small Industries Corporation Subsidy

The NSIC is an ISO-certified government enterprise that falls under the MSMEs umbrella. One of its main responsibilities is to help MSMEs expand by providing financial, technological, market, and other services across the country. In order to support the growth of MSMEs, the NSIC has launched two schemes:

  • Marketing Support Scheme – This programme aids in the development of any business by implementing programmes such as Consortia and Tender Marketing. Such a programme is critical since MSMEs require assistance in order to expand in today’s competitive market. 
  • The National Credit Support Scheme (NSIC) provides financial assistance to MSMEs for the procurement of raw materials, marketing operations, and syndication financing with banks.

This plan has the advantage of allowing small firms to participate in tenders without incurring any fees, as well as removing the requirement for MSMEs to pay security deposits in order to get financial support.

Pradhan Mantri MUDRA Yojana (PMMY) 

PMMY is a government-sponsored programme. This scheme offers up to INR 10 lakh in loans. It is available to non-corporate, non-farm small or micro businesses. Commercial banks, regional rural banks, small financing banks, cooperative banks, mutual fund institutions, and non-bank financial companies (NBFCs) provide these loans.

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MUDRA has designed Shishu, Kishore, and Tarun loan packages to represent the various stages of a business’ development and the finances it may require.

  • Shishu will cover up to INR 50,000 in loans.
  • Kishore covers loans up to INR 5 lakh for amounts greater than INR 50,000.
  • Tarun is responsible for debts worth more than INR 5 lakh but less than INR 10 lakh.

Access to capital has long been a source of frustration for small businesses. Fintech companies have developed novel solutions such as P2P lending in recent years, making it easier to obtain funds.

If you’ve been putting off starting or expanding your business because of a lack of resources, now is the time to go for it.

You can use an online business loan EMI calculator to receive an approximation of the amount of your loan for MSME. Many government-sponsored initiatives are available through banks and are expressly geared to aid MSME projects, with cheap borrowing rates and no collateral security requirements.

If you’re looking to get a loan for MSME, contact Ziploan! ZipLoan is a digital lender with a technology-driven approach to loan sourcing and underwriting that is tailored to the demands of its target market.

They offer business loans ranging from Rs. 1 to Rs. 7.5 lakhs with no prepayment penalty and minimum documentation.

Once your loan has been approved, you can proceed with MSME registration and GST registration and advance to the next steps in starting a small/medium-sized business.

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