MSME loans play an integral role in the overall growth of the economy, especially inequitable growth. According to the recent data cited by SIDBI, MSMEs have contributed nearly 29% to the gross domestic product. As per the IMF, the protected growth is nearly about 7.80% for the next fiscal with the MSMEs leading the surge. As a new business owner, you always have the urge to have more funds, and here, these MSMEs loans come into the role. These loans are designed to facilitate business owners so that they can meet their financial requirements with ease. You can easily spot numerous NBFCs that offer eye-catchy MSME loan offers; however, it is important to go through the details of the same and check out what offer suits you the best.

Before applying for such loans, it is important to discuss the definition and important points regarding the same. Without further ado, let’s find out essential details regarding MSME loans and get to know the procedure to apply for the same.

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What Is An MSME Loan?

MSME stands for Micro, Small and Medium Enterprises that are run by small business owners. This is divided into two major sectors – the manufacturing sector and the service sector. These MSMEs offer various products and services within the community. Now, the loan that is needed to support these enterprises is known as MSME Loan.

  • An MSME loan is a kind of loan that is offered to micro, small and medium enterprises to begin a micro-business or to improve their existing business.
  • It is a short term loan where the tenure varies from 12 to 24 months. Business owners can easily get a business loan in India and enhance their business with proper and timely funding.
  • This type of loan is an efficient means of providing financial support to your business.
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To get an unsecured business loan from NFBCs, you should satisfy the below-mentioned eligibility criteria:

  • 2 years of business vintage
  • Last year’s ITR to be minimum Rs. 1.5 Lakhs
  • Last year sales must be at least Rs. 5 Lakhs
  • A business owner should own either business premises or a house

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How To Apply For MSME Loans?

Now, as you’ve decided to get an unsecured business loan online, you need to understand that applying for MSME loans is nothing like rocket science. There are two ways of sending your application for an MSME Loan – online and offline.

  • If lenders have an online facility, then fill the application form with the required details and submit the same via their official website.
  • Alternatively, you can personally visit the lender at the nearest branch and request them for an application form.

Important Information required while applying for MSME Loans:

  • Application Date
  • Enterprise Name
  • PAN Card Number
  • Registered office address
  • Address of the Enterprise
  • Date of Establishment
  • Name of Partners
  • Existing Activity
  • State where the business is located
  • Type of Constitution (Partnership firm, private limited, cooperative society, limited company, and Proprietorship)
  • Name of associate concerns and nature of the association
  • List out the proposed card facilities
  • Existing Credit Card Facilities
  • Statutory Obligations must be mentioned
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However, at ZipLoan, we require minimal documentation, such as:

  • PAN Card
  • Last 2 years’ ITR
  • Bank statement of the last 9 months
  • Business and house address proof

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Get MSME Loans from Popular Banks and NBFCs

If you are searching for the best small business funding, then you can easily count on NBFCs to get this loan sanctioned with ease. Let’s find out some of the benefits of why NBFCs are preferred over banks and other financial institutions.

Flexible Interest Rates

The major advantage of choosing NBFCs over banks is flexible interest rates. See, there is a no-brainer that interest rate has traditionally been the primary consideration for a loan seeker. NBFCs offer MSME loans at a competitive rate of interest as compared to the banks and thus, are highly preferred. Flexible interest rates further lead to reduced EMI pay-outs, thus decreasing your financial concerns to an extent.

Quick Disbursal of funds

Being a small business owner, you don’t have enough time to wait to get your loan sanctioned. Therefore, you can count on NBFCs as they offer quick disbursal of funds. We all know that banks generally involve lots of paperwork and strict lending terms and conditions. NBFCs, on the other hand, have lenient eligibility criteria while sanctioning the loan, and thus, they offer instant MSME loan to the borrowers.

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Easy Eligibility Criteria

Unlike banks, NBFCs possess easy eligibility criteria which make them a better option as compared to the banks. Moreover, their relaxed eligibility criteria make the loan approval simple and faster. In addition to this, NBFCs are more flexible in dealing with such factors, and thus, a small business owner can easily qualify for the loan at a low credit score as well. Their simple eligibility criteria ease micro, small and medium enterprises in availing the loans. They offer loans to entrepreneurs and small business owners across the industry verticals to fund their financial needs and helping them in taking their business to the next level.

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These NBFCs serve these MSMEs by:

  • Reducing turnaround time from credit-appraisal to disbursement by using the latest technology through a standardised process
  • Offer designing product that fits best to their target segment
  • Risk pricing exposures
  • By differentiated credit underwriting that takes multiple sources of data into account

The role of MSMEs in all types of economies is well-organised as they generate numerous employment opportunities, equal distribution of national income, and optimum utilization of local resources. To take these businesses to the next level, both popular banks and NBFCs are set to offer business loans instantly. ZipLoan offers an unsecured business loan ranging from Rs. 1 Lakh to Rs. 5 Lakh, as per the business requirement. Opt for an NBFC Business Loan and kick start your business with appropriate funding without any mortgage or guarantee.