The Indian economy is highly reliant on MSMEs for national growth and development. For all those clueless about the MSME full form, it stands for Micro, Small, and Medium Enterprises.

MSME or Micro, Small, and Medium Enterprises are normally controlled by small business owners who present numerous services to a diverse array of customers. 

An MSME loan is normally acquired by entrepreneurs who wish to start small enterprises or assist small enterprise owners in developing their existing businesses.

Receiving a loan for MSME (Micro, Small, and Medium Enterprises) is an easy and low-cost approach to borrow funds for business ventures and fill in investment gaps by covering a diversity of expenses without encountering any obstructions. 

What is meant by an MSME loan?

MSME or Micro, Small and Medium enterprises loans are unsecured loans extended by numerous financial institutions to assist business owners in meeting all their diverse enterprise expenses.

The interest rate on Micro, Small, and Medium Enterprises loans fundamentally commence from 8.3 percent. 

In addition to this, minimum costs are charged as processing payments or fines if the applicant opts to foreclose or prepay the loan. Also, the maximum limit of availing of a loan for MSME can level up to Rs 500 crores. 

However, some financial institutions do not hold this kind of upper limit for obtaining a loan. The repayment duration for these loans can range up to 15 years, and applicants can receive a loan without any mortgage or collateral. 

This implies that there is no requirement to mortgage any assets as a guarantee to secure the loan financing. Hence, it would not be wrong to state that these Micro, Small, and Medium Enterprises loans are one of the most suitable sources of finance for your business.

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How to apply for MSME loan

RBI, popularly known as Reserve Bank Of India, has defined Micro, Small, and Medium Enterprises loans as a type of credit rendered to small-scale enterprises looking for some financial assistance to help their business grow. 

Some years back, only some selected financial institutions extended Micro, Small, and Medium Enterprise loans and further required an extensive MSME registration process.

However, things have changed, and now small business owners can easily obtain this loan in some extremely easy steps mentioned below. 

Assess your business requirement

This is the initial and one of the most important steps you must take before applying for this loan. Before filing for a loan, you must assess your distinct business requirements and then choose the loan amount that you require. 

In addition to this, you can also pick your desired loan type, like obtaining a top-up loan, machinery loan, or any other distinct loan.

Assessing your distinct business requirements will allow you to make better financial decisions to meet your short and long-term goals. 

Choose the right lenders

Nowadays, micro, small and medium enterprise owners hold many lender options when it comes to applying for an MSME business loan. However, due to this wide range of options available, it is obvious to get perplexed with the diverse choices while making the selection. 

To get out of this bewilderment, you must always compare all the shortlisted lenders based on the MSME loan interest rate they charge, EMI amount, and eligibility criteria before making the final determination. 

Apply for an MSME loan online

Once you choose the right bank or financial institution for obtaining a Micro, Small, and Medium Enterprise loan, you can easily apply for this loan online by filling out the online application form available on the website of the financial institution that you pick. In the online application form, you would be required to fill in the details such as:

  • Name of your enterprise 
  • MSME Registration Number
  • Date of incorporation 
  • Official business address 
  • Trade license number
  • Business turnover for the last 12 months
  • Purpose of obtaining an MSME loan 
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Once you fill in the online application form by furnishing all the details mentioned above, you can choose the desired loan amount per your distinct business requirements. 

Check the eligibility criteria and submit the required documents 

After choosing the loan amount and completing the online application, you can check the common eligibility criteria that financial institutions set for granting this type of loan. The MSME loan eligibility criteria are as follows:

  • The loan applicant should be between 25 to 55 years of age
  • Must hold a standing business for more than 3 years 
  • Duly filled Income Tax Return for preceding three financial years 
  • Applicant must not hold any loan default history 
  • A minimum credit score of 750 or more

If you fulfill all these eligibility criteria, you can submit certain documents for verification purposes. Mentioned below is a list of documents that you will be required to submit for obtaining an MSME loan

  • Photo identity proof includes a PAN card, Aadhar Card, Passport, Voter’s Id card, or a driving license as an identification authentication. 
  • Proof of residence by submitting an electricity bill or trade license number or telephone bill, or a lease deed of the property. 
  • Financial documents of your business that include the latest audited balance sheet, annual projected turnover, profit and loss statement, ITR (Income Tax Return) of the preceding two financial years, along with a bank statement of the preceding 6 months.
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Obtain the required funds 

After you submit the required documents, the chosen lending financial institutions will start the quick document verification process for the instant approval of your loan. If the documents submitted are legitimate, the financial institution will approve your loan and disburse your loan sum. 

Micro, Small, and Medium Enterprises (MSMEs) in contemporary times must be intelligent enough to employ their available economic means and grow them strategically.

This is why small business owners must leverage Micro, Small, and Medium Enterprise loans to boost their business growth and attain all their short and long-term financial objectives.

Looking for an instant MSME loan? We can help. Get in touch with us and receive quick and hassle-free approval of your loan within minutes. 

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Frequently Asked Questions

How can I get a loan from MSME?

3 simple steps to your MSME / SME Loans

1) Submit Application. Simply enter your personal, business and financial info to receive a MSME / SME Loans offer.
2) Upload Documents. Upload digital copies of your documents in a single step process for verification.
3) Get Sanctioned.

How much loan can a MSME get from Ziploan?

Applicants can avail the MSME loan of up to Rs. 7.5 lakh within 3 days*. Minimum documentation and online process help MSMEs avail financing instantly.

What is benefit of MSME registration?

Some of the benefits from Central Government include easy sanction of bank loans (Priority sector lending), lower rates of interest, excise exemption scheme, the exemption under Direct Tax Laws and statutory support such as reservation and the Interest on Delayed Payments Act.

What are the documents required for MSME loan?

Following are the documents required to avail MSME loan:
1) Bank statement (12 months)
2) Business registration proof
3) PAN Card
4) Aadhar Card
5) ITR of the previous two years

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