MSME Loan for New Business in India

MSME Loans, MSME Loan for New Business, MSME Loan Apply Online 2020 and learn more about MSME loan.

Success is not final; failure is not fatal, it is the courage to continue that counts.”

MSME is the Micro,Small and Medium sized Enterprises. The MSME loan is for those entrepreneurs who are starting a new small business or having a small business. MSME loan helps the small and medium entrepreneurs in their business and other work related to their business. 

BENEFITS OFMSME LOANS

  • Helps in instant financial needs in your business.
  • Helps you execute your business plans by providing money for that.
  • It is beneficial for getting a tender of government.
  • Helpful for raising the business.
  • Increases the credibility of your in the market.
  • It has low interest rates.
  • MSME Registered people get subsidies in taxes.

TYPES OF MSME LOANS

The MSME loans are of various kinds for various purposes. Here we have mentioned the types of MSME Loans for your knowledge.

OVERDRAFT FACILITY ON CURRENT ACCOUNT:

In an overdraft facility the applicant can only overdraw the amount or cash at certain occasions or needs. The transaction should be a limit of the bank loan.

BILLS DISCOUNTING LOAN:

When the MSME urgently needs money or financial help from the bank, then they can discount their bills and get the loan. They have to provide some discount or commission for it. 

CASH CREDIT LOAN:

This type of MSME loan is for the entrepreneurs to complete the cash credit limit of the seasonal,occasional and other working finances. This helps them to complete their business needs.  

SHORT TERMED UNSECURED BUSINESS LOAN:

The business entrepreneurs sometimes have some unplanned or unorganised business plans for which they need financial support. This type of loan is for the entrepreneurs to complete their needs of money for certain business plans. The repayment tenure of this loan is 1 to 3 years. 

CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES (CGFTMSE):

This loan scheme is launched by the Ministry of the  Micro,Small and Medium Enterprises. In this scheme the new or existing entrepreneurs get a loan amount of up to Rs.1 crores for their business use. The most important benefit of this scheme is that the CGTMSE takes the guarantee of the loan and no collateral is required for this loan. 

BANK GUARANTEE LOAN:

This is a different type of loan. In this the bank takes the guarantee of the entrepreneur to the third party and assures them to fulfil the loan amount if the entrepreneur doesn’t complete the contract.

TERM LOAN:

The term loan is a popular type in MSME loans. This loan is given to the entrepreneurs for fulfilling their financial expenses. This loan includes the expenses of machinery,land or building,etc.

APPLY FOR MSME LOANS

There are some simple steps by which you can apply for the MSME loan. These steps are written below.

  • Get an application form of the MSME loan from the bank.
  • Fill up the form with correct details.
  • Do not leave any section unfilled.
  • Attach all the documents required for the loan.
  • Signature the form.
  • Submit the application form to the bank.
  • Wait for the approval of the loan application.
  • The money will be transferred in your account in 24 hours.
  • Use the money for the business purpose.

DOCUMENTATIONS REQUIRED FOR  MSME LOANS

  • The documents required are identity proof of the applicant.
  • Aadhar card,PAN Card,passport, licence, etc.
  • Residential address proof such as aadhar card, utility bills, etc are also asked.
  • Bank statement of past six months.
  • The applicant’s age proof is also required by the bank.
  • Passport size photographs are needed for the application form.
  • Residential address proof of the business, factory, office, etc.
  • Balance sheet copy of the company for the last two years.
  • Slip of sales, income and municipal tax.

ELIGIBILITY FOR  MSME LOANS

  • The private limited company, partnership firm, public limited company, self help groups, trusts, NGOs, etc can apply for the msme loan.
  • Traders and retailers can also apply for this type of loan.
  • The age criteria for MSME loan registration is 25 years to 66 years of age.
  • The time of establishment of the business should be at least three years.
  • The maximum turnover income should be 90,000 or more.
  • The location of the factory or office should be in a positive location list.

INTEREST RATE OF MSME LOANS

For the loan amount of 50,000 on wards have the interest rate of 7.65% per annum. The repayment tenure of this loan is 15 years.  The investment limit for the micro enterprises is 1 crores and for small enterprises is 10 crores and for medium size enterprises the investment limit is 20 crores.

DISADVANTAGES OF  MSME LOANS

  • The interest rate should be paid on time and early.
  • The process of applying for the MSME loan is too long and boring.
  • The banks face problems in recollecting the loan amount because there is no collateral and they do not find a way to recollect the loan.
  • While applying for this type of loan the applicant has to pay a processing fee which takes them in trouble.
  • To get this loan you need to have a great and high credit score.

BANKS GIVING  MSME LOANS

HDFC Bank
State Bank of India
Central Bank of India
Allahabad Bank
ICICI Bank
Bajaj Finserv
Oriental Bank of Commerce
Union Bank of India
Indian Bank

“A successful man is one who can la a firm foundation with the bricks that others throw at him”

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