MSME Business Loans are specially designed and offered to the MSME segment of society. The Micro, Small and Medium Enterprises are playing a notable role in the nation’s growth. They are significantly contributing to the GDP, employment generation, driving innovation, and overall economic growth of the country.
To help MSME sector in its growth, several MSME Loan schemes are offered to them by various loan lenders in the country. The MSME business owners can avail business loans of up to Rs. 5,00,000 at basic eligibility criteria and minimal documentation. The eligibility for MSME Loans is different for every lender. However, there are few points on which most lenders verify the borrower.
Let’s take a look at the common eligibility for MSME business loans:
Table of Contents
Credit Score
Your credit or CIBIL score is the reflection of your financial habits, credibility, and repayment pattern. It helps in providing the lenders a fair idea of the credit risk involved in granting you MSME loan. It is imperative to maintain a healthy score to get loans at the best interest rates. Additionally, some lenders also offer business loans at low interest rates to the borrowers with a high CIBIL score.
GST Registration
Also Read: How To Apply For MSME Loan in India?
GST registration provides the business with a legal identity. In addition, it also makes you eligible for various government MSME loan schemes. The schemes for which you would be eligible after MSME and GST registration include MUDRA loan, MSME loan in 50 minutes, and various other schemes.
Financial Statements
The financial statement (audited) will help the lender to get access to the information about how well managed the business is. All loan lenders are more inclined towards sanctioning the loan to the small businesses which are profitable and generating good revenue. Thus, financial statements such as PNL account, bank statement, balance sheet, and ITR are required by most of the lenders.
Business Vintage
The main reason why business vintage is taken into consideration is that if the business is long surviving, it certainly would be generating enough revenues for its survival. The other things that it represents include a well-charged balance sheet, understanding of the marketplace, and if the business is fulfilling the customer demands. The minimum vintage required by lenders is 2 years.
MSME Business Loans Tenure
It is not at all necessary for you to avail the loan of the highest amount and tenure available with the lender. You need to estimate your financial requirements to reckon the loan amount that you need. Also, know the EMIs that you can afford and accordingly, decide the loan tenure.
Use of Funds
All the funds availed under the MSME business loans should only be used for business purpose. If you have availed an MSME Loan with security, you will be asked to document the end of the funds. However, if MSME loan without security is availed, there is no such need. With an unsecured business loan, you are not required to tell the lender about the end use of the funds, just use it for business only.
Now that you know the common eligibility criteria for MSME business loans, you can check your eligibility and accordingly apply for a small business loan. Additionally, you can also register your business for free at the Connect App by ZipLoan to build your business network. Through the e-marketplace, you can create a business profile, list your products/services, find business, discover new business opportunities, and build connections.
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