Micro, Small, and Medium Enterprises play a crucial role in the economic development of any country, contributing significantly to employment generation, industrial production, and exports. As these enterprises strive for growth and sustainability, financial support becomes paramount. Regards to this, any prominent non-banking financial company (NBFC) in India, has been instrumental in providing tailored business loans to MSMEs, fostering their development.
Features of MSME Loan
- No collateral required
- MSME loan amount starts from INR 50,000 to INR 10 crore
- The rate of interest wholly depends upon nature and the business
- Flexible repayment schedule
- It can be applied online
- Fast approval process
- Processing fees to get an MSME loan range from 2-3% of the total loan amount.
MSME or SME Loan Fees and Rate of Interest
- Rate of interest: ranges from 12.75% to 44% per annum
- Duration of loan: A few months to 10 years
- Processing Fees: 2% to 6% +GST along with Rs. 500 as convenience fees
- Prepayment charges: 4-7%+ GST
Eligibility Criteria for MSME Loan
- Only Indians can apply for MSME Business loans.
- The age of the applicant must be between 21 to 70 years old.
- Minimum of 6 months of business vintage is essential.
- The nature of the business should be legal as per the law.
- The credit score should be good.
Documents needed for MSME/ SME Loans
Documents required to avail MSME loan vary from one lender to another, but if you talk about IIFL need below documents:-
- Bank statements of last 1 years of main business account
- PAN card and Aadhar number
- A partnership deed is mandatory if the business is in partnership, and a PAN card if the company is a private limited or LLP.
- Business registration proof
Business Loan Application Process
The steps to apply for business loan are: –
- Visit the website of the lender and click on the ‘Apply Now’ button to fill out the application form.
- Now click on the ‘Submit’ button.
- Complete the KYC by uploading all the essential documents.
- If the lender approves the loan, the amount will be disbursed into the bank account within a few hours.
What is the Purpose of MSME Loan?
- Financial Support: MSME loan provide financial assistance to Micro, Small, and Medium Enterprises (MSMEs).
- Working Capital: Addressing short-term operational needs, ensuring smooth day-to-day business activities.
- Business Expansion: Facilitating expansion plans, enabling MSMEs to scale operations and enter new markets.
- Technology Adoption: Funding for technological upgrades to enhance productivity and competitiveness.
- Infrastructure Development: Supporting the development of physical and technological infrastructure.
- Employment Generation: Contributing to job creation by empowering MSMEs to sustain and expand their workforce.
- Market Competitiveness: Enhancing the overall competitiveness of MSMEs in the market.
- Risk Mitigation: Providing a financial buffer to navigate economic uncertainties and market fluctuations.
The Bottom Line
MSMEs are the backbone of the economy, and their growth is vital for overall economic development. Financial institutions, through their tailored business loans, play a pivotal role in empowering MSMEs, addressing their financial needs, and fostering a conducive environment for growth.
As small businesses navigate the dynamic economic landscape, access to flexible and affordable financing solutions becomes increasingly crucial, and institutions like IIFL Finance are at the forefront of facilitating this journey.
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