Micro, Small and Medium Enterprises (MSMEs) create more employment opportunities. And conjointly contributes to the country’s GDP by nearly 40%. Thus, the government focus on the formation of new MSMEs and the expansion of the existing MSMEs. This may boost the economy of the country. Thus, several MSME loans launched are to provide the funds needed by MSMEs to form and expand.

 What is MSME loan?

MSME loan is a form of a business loan extended to MSMEs to take care of their expenses associated with the business. MSME may use the MSME Loan to buy new machinery, to buy inventory, to renovate, to build a new warehouse, etc.

Who is eligible for MSME loan?

Following are eligible for MSME loans:

• Start-ups
• MSMEs
• A proprietorship company
• A partnership company
• A private limited company
• A limited liability partnership company

 What are the benefits of MSME loans?

There are many benefits of MSME loans which have are as follows:

• Unsecured business loans: MSME loans are loans for business without security. Hence, it is the foremost favourable option for MSME to source the funds.
• Documentation: MSME has to submit the basic documents to apply for MSME loans which are:
  • Address proof
  • Identity proof
  • Business registration copy
  • Rent agreement copy
  • Copy of Income Tax Returns
  • Bank Statement Copy
  • Passport-sized photo
• Application process: MSME loans are online business loans and hence it is easy to MSME loan apply. For this, MSME needs to upload a filled application form and documents on the website of the lender.
• Quick disbursal: MSME loans are instant business loans. Thus, the disbursement of the loan takes only a few working days.
• MSME loan interest rate: MSME loans offered are at an affordable MSME loan interest rate. Moreover, the financial lender may also offer a customized MSME loan interest rate.
• Loan amount: MSME can avail of an unsecured business loan up to Rs. 7.5 lacs when they opt from Ziploan. This is an encouraging factory for MSMEs who are looking for a small business loan for their business. Moreover, MSMEs might also get a customized offer.
• Loan repayment tenure: MSME loans offered have flexible repayment tenure. MSMEs have the option to repay  it between 12 months, 18 months, and 24 months, and 36 months as per your flexibility. Moreover, this repayment tenure is quite long, hence it doesn’t become a burden too.
• Prepayment charges: MSMEs don’t have to pay for any hidden charges or costs. At Ziploan, they levy a one-time processing fee and they don’t have any prepayment penalty if the customer prepays the loan amount after the payment of the first 6 EMIs.
• Complete control: Small enterprises don’t get direct control of the funds in the case of a venture capitalist. They might have to inform investors before assigning the funds to a business idea. This may be a burden to small business. MSMEs can have complete control over the loan amount sanctioned to them in MSME loans.
• Accessibility: MSME loans are online business loans and thus, their account is accessible online.

To sum it up, MSME Loans are a boon for the formation and growth of MSMEs.

Frequently Asked Questions:

1 – What is CGTMSE loan (Credit Guarantee Trust for Micro and Small Enterprises)? 

CGTMSE loan is a scheme launched by the Government that offers MSMEs a loan amount of up to Rs. 2 crores.

 2 – How much is the Business loan interest rate? 

Financial lenders offer business loans at varying business loan interest rate.

 3 – What are the types of business loans? 

Business loans are either secured business loans or unsecured business loans. Companies need to present security to the financial lender for business loans. Whereas in an unsecured business loan there is no need to provide any kind of security.

 4 – What are business loan requirements? 

The business loan requirements that a company should submit are:

• Identity proof
• Address proof
• Business proof
• Income proof