MSME Loan: Eligibility, documents required, loan amount, interest rate and other key details
An MSME loan can be beneficial for a business in case it's facing liquidity issues and needs funds for day-to-day operations or expansion plans.
Entrepreneurs often avail loans for hassle free business operations or to meet fund crunch. Over time, various loans have been rolled out to by banks and NBFCs to support business owners in their entrepreneurial journey. One of the most popular types of entrepreneurial loans is Micro, Small, and Medium Enterprise Loans or MSME loans. These credit facilities financially help MSMEs to run their business and to expand operations.
What is an MSME loan?
The MSME loan offers capital to businesses for their daily operations, such as purchase and maintenance of inventory. These loans can be availed via different banks in the country and the interest rates vary from bank to bank. The MSME loan interest rate starts from 8.75 per cent per annum and the actual applicable rate is decided by the lender.
There is no minimum limit for borrowing but the upper limit is set at Rs 2 crore. However, the upper limit can be revised as per business needs as per the lender’s choice. Also, the loan may not require collateral if it's an unsecured business loan. The MSME loan tenure extends to up to 15 years. You might have to pay processing charges as specified by the lender.
What is the eligibility criteria for MSME loan?
- An excellent credit score of the business owner and a healthy credit history.
- The business should have a minimum income of Rs 2 lakhs per financial year.
- The minimum yearly turnover of the business should be at least Rs 10 lakh.
- The enterprise should be financially stable.
- The authorised signatory should be aged between 21 and 65 years.
- The authorised signatory should have worked for a minimum of one year in the organisation.
- Public limited companies, Private limited companies, Sole proprietorships, Partnership firms, and Limited Liability Partnerships (LLPs) are eligible to avail MSME loans.
Documents required for MSME loan
- KYC documents of the authorised signatory, such as the PAN card, Aadhaar card, driving licence, voter ID, passport, and utility bills.
- The enterprise's address proof, including rental agreement, lease agreement, sale deed or utility bills.
- Business' bank statements of the last six months.
- Business incorporation certificate or establishment certificate.
- Previous two years' profit and loss account and balance sheet statement.
- Enterprise's PAN card and income tax return records.
- Any additional document as requested by the concerned bank or NBFC.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
PM Modi has invested in this post office scheme; know his total worth as per Lok Sabha elections 2024 affidavit
SRH vs GT IPL 2024 Ticket Booking Online: Where and how to buy SRH vs GT tickets online - Check IPL Match 66 ticket price, other details
Top 7 SWP Mutual Funds: Rs 50 lakh investment, Rs 70K monthly pension for 10 years, and Rs 42.30 lakh balance value; know more details
Gold and Silver rate today (May 13, 2024): Precious metal under pressure; yellow metal near Rs 72,400, white metal above Rs 84,600
SIP Returns: How Rs 3,000, 5,000, and Rs 10,000 SIPs can help you build retirement corpus of Rs 1.06 cr, Rs 1.77 cr, and Rs 3.53 cr
TBO Tek IPO Listing LIVE Update: Bumper Debut! Share list at 55% premium - Buy, sell or hold? Check Anil Singhvi's view
07:25 PM IST