Features and Benefits of MSME Loan
A micro, small, and medium enterprise (MSME) loan is a type of business loan given by banks or lending institutions to SMEs, MSMEs, and start-up enterprises. Let us tell you that many banks and loan institutions provide SME and MSME loans to their customers without collateral or any security.
What is MSME?
Let us tell you that micro, small, and medium enterprises are called MSME in short. Let us tell you that recently the government changed the definition of MSME. Let us tell you that in the new transformation of MSME, all the low-grade enterprises and micro, small, and medium industries will come.
There are two sectors in MSME. manufacturing and service sector
The sector in which services are provided is known as the service sector, and the sector in which products are manufactured is known as the manufacturing sector.
What is the Definition of MSME?
Following is the definition of MSME
Definition of Micro Industry
Industries with investment up to 1 crore and turnover up to 5 crores in both manufacturing and service sectors have been given the status of micro-enterprise.
Definition of Small Scale Industry
An enterprise with an investment of up to 10 crores and a turnover of 50 crores in both the manufacturing and service sectors is considered as a small business unit.
Definition of Medium Industry
Let us tell you that in both the manufacturing, service sectors, the business with investment of up to 30 crores and turnover of 100 crores is considered as medium enterprise.
What is MSME Loan?
In order to ensure that the business of the Micro, Small and Medium Enterprise (MSME) sector is run properly, the government is trying to provide loans to MSME businessmen.
The loans given to MSMEs are called MSME loans. MSME loans can be taken from all government and private banks as well as NBFC companies.
How to get MSME loan?
- Tell all of you that, just as other loans are available, MSME loans are available in the same way. That is, applying for an MSME industry loan also has to be done through the proper channels by following a certain procedure. Before applying for the loan, make sure to check your eligibility and collect the necessary documents.
- Now after this, you have to apply for an MSME loan. You can apply for an MSME loan both online and offline.
- How to apply for an MSME loan depends entirely on the lending bank or NBFC. Businessmen should not face any problems in applying for loans, which is why the government has also given the option to apply online for all these MSME loans.
MSME Loan – Features, Fees and Interest Rate
|Interest Rate||Depends on Business Requirements|
|Loan Amount||There is No Minimum Loan Amount, While the Maximum Loan Amount is up to ₹1 Crore which can be increased as per the business requirements.|
|Pay Period||12 Months – 5 Years|
|Collateral||Not Required for Unsecured Business Loan.|
|Processing Fee||0 to 4% of the Loan Amount|
|Foreclosure Fee||0 to 5% of the Outstanding Loan Amount|
|Part Payment Fee||From 0 to 4%|
|Loan Cancellation Fees||Vary From Bank to Bank|
|Subsidy||The Subsidy is offered by selected lending institutions|
|Credit Facilities||Working Capital Loan, Bill Discounting, Overdraft, Cash Credit, Letter of Credit, Bill Purchase, Merchant of Cash Advance etc.|
Who gets the MSME loan – what is the eligibility?
First of all, it is necessary to check your eligibility to apply for an MSME loan. Because without eligibility, you cannot apply for any kind of loan. However, there isn’t much of a difference between standard loan eligibility and MSME loan eligibility.
- The applicant age for a MSME loan should be between 18 and 75 years.
- To qualify for an MSME loan, your personal business must be at least three years old.
- You should have a CA-certified or audited balance sheet.
- The nature of the business for which the loan is being applied for is a proprietorship, partnership, private limited company, or limited company; you must have some or all of these.
Documents Required for MSME Loan
- Aadhar card
- Identity certificate
- Residence identity certificate
- Age proof
- Pan card
- Bank statement of last 12 months
- Business registration certificate
- If your business is first then you have to provide balance sheet copy of last 2 years profit and loss.
- GST Certificate
- No Objection Certificate (NOC)
Under which scheme MSME loan is available?
The main objective of the MSME loan given by the government is to create an environment of self-employment in the country. Because of this, all such schemes fail. under which MSME loans are given. Let us tell you that MSME loans are available through the following government loan schemes:
- Prime Minister Mudra Loan Scheme
- Credit Guarantee Fund Trust (CGTMSE)
- Prime Minister’s Employment Generation Program (PMEGP)
- Women Entrepreneur Scheme
- Equipment Finance Scheme
- Micro Credit Scheme
- Mudra Card
- Credit Guarantee Fund
So now you have come to know that MSME loan can be obtained under all these schemes.