MSME sector is considered as the backbone of Indian economy. They contribute significantly to the country’s growth and employment generation. But sometimes, this sector also requires support from the economy. The small business owners find themselves with insufficient funds and capital for machinery or working capital.  In these situations, banks and NBFCs can offer rescue to the business owners in the form of MSME business loan.

Banks generally have lengthy procedures, and the risk of rejection is also attached to bank loans since their eligibility criteria are stringent. Another significant reason for it is lack of security for the loan amount. Also, banks typically don’t offer MSME schemes to the small businesses as they are considered a bit risky profile. Nevertheless, unavailability of credit at the right time can be a major setback for the MSMEs.

With the funds in hand, a business owner can increase working capital, inventory, and also expand business operations. Additionally, extra funds also provide the business owner with a cushion to invest in marketing and advertisement.

MSME Loan in 59 Minutes: Eligibility, Documents, Interest Rate

Having said that, the time has changed now. Several NBFCs are operating in the market that provides hassle-free MSME loan without collateral. The SMEs usually lack the security which is to be hypothecated as collateral. It prevents them from availing benefits of formal credit for their small business.

The NBFCs offer an online application form which makes the procedure easy and convenient for the applicants. The NBFCs offer short-term SME loans for 12-24 months within a few working days. Their application and disbursement process is very fast. They require minimal documents which can be uploaded online.

Let’s take a look at the business loan sanctioning procedure of the NBFCs:

Online Application Procedure

For business owners who are worried about how to apply for an MSME loan, the NBFCs offer easy MSME business loan. Their loan application forms are available online. Also, the forms are pretty basic, and the applicant is required only to fill some basic and requisite information, such as name and address of the business, contact details, and business vintage.

The list of documents required by the NBFCs are very minimal and their soft copies can be uploaded online. Notably, it is advised that the application should be submitted carefully with the correct information so as to initiate a hassle-free business loan procedure.

MSME loan

Uploading Required Documents

As conveyed earlier, the required documents are minimal and consist of some basic documents. It is worth mentioning that all the required documents vary for every NBFC as they have their own set of rules and procedures. Also, the type of business loan applied influences the documents required.

These companies have developed software to measure the creditworthiness of the borrowers. It includes checking the risk factor involved in collateral-free business loans offered by the NBFCs. The documents uploaded are verified through the advanced systems that measure the creditworthiness of the borrower holistically, based on the business’s performance, social profile, and financial performance.

Verification Process

The NBFCs use PAN or Aadhar to verify the applicant’s details. Since it provides sufficient details about the business owner and business; the NBFCs don’t take a lot of time in the verification process.

Also, in secured loans, the lender first has to assess the monetary value of the property to ascertain the loan amount. Nevertheless, there is no such need in unsecured business loans since they are offered without security. The loan amount is calculated entirely on the basis of the creditworthiness of the borrower.

Thus, they make the verification process quick and easy for all the MSMEs. Also, various NBFCs have minimum operation history requirements limited to just two years. Their annual business turnover is also limited to just Rs. Five lakhs in a year. Once the verification is completed, the applicant is intimated about the same.

How To Apply For An MSME Loan In Just 5 Steps?

The growth in the financial sector and rise in the demand for MSME business loans have led to a rise in various NBFCs in recent time. The NBFCs offer different loan products, such as capital loans, working capital loans, Flexi loans, and terms loans. Mostly every NBFC nowadays has digitised their entire procedure of business loan sanction. It ensures that business owners get access to loans for business through a convenient and easy process.

The loan waits have shortened! The need for collateral on the part of the applicant has also been eliminated! Business turnover and performance is also taken into account along with credit rating in the verification process for application. Timely access to NBFC business loans has positively affected MSME owners in running their business.

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