The interest in entrepreneurship continues to increase with support from the Government and convenient funding options. Many small business owners prefer to avail of MSME loans, offering a no-collateral facility, low-interest rates, and high loan amounts.
If you want to set up a small business, you can take out or opt for an MSME loan in no time if you have all the documents. All paperwork procedure is quicker than it was before. However, the only requirement is that you must have a list of all the necessary documents required for an MSME loan.
How MSME Loans Help Small Business Owners?
MSME loans are available for businesses registered as Micro, Small, and Medium Enterprises. These loans can be availed for many business purposes:
- It can help small business owners in meeting their working capital requirements, and business expansion plans, acquiring new assets, and technological upgradation for higher output. MSME full form is Micro, Small & Medium Enterprises.
- As a business owner, you can invest in land or a manufacturing unit to start your business, buy raw materials and factory supplies, meet expenses of marketing and advertising, office refurbishment, etc.
You can approach reputed lending institutions for funds against SME/MSME loans for your business needs at flexible and attractive interest rates and more favorable terms, like easy repayment.
Why do Small Business Owners Prefer SME/MSME Loans?
The eligibility criteria for MSME loans are not as strict as those for a general business loan with most lending institutions. It is one of the reasons that MSME loans are preferred by small business owners.
Here are the benefits that make most small business owners prefer SME/MSME loans:
A. High Loan Amount
A company registered as an MSME can apply for a loan of up to Rs.50 lakhs. Such high amounts through loans can be utilized for business growth and expansion effectively. A business loan EMI calculator can help you to decide on the right amount of the loan that can be repaid timely as per your repayment capacity.
B. Collateral-free Loans
SME/MSME loans are collateral-free loans with reputed lenders. You can keep utilizing your assets for further business growth instead of collateralizing your assets to access funds.
C. Transparent Procedures
Loan sanction procedures for MSME loans are transparent and help business owners make informed decisions on their borrowings. Lending institutions provide online ready-to-use tools to check eligibility and loan application requirements, like the business loan eligibility calculator and business loan EMI calculator.
D. Easy Eligibility
Privately held companies, partnership firms, and sole proprietors involved in trading, manufacturing, or services sector for at least three years can apply for SME/MSME loans. The applicant should have an experience of a minimum of five years in the business.
- The business should be registered as an MSME on the Udyam Portal.
- The annual business turnover should be Rs. 10 lakhs following a minimum of two years’ profitability.
E. Fast Loan Disbursal
Prominent lending institutions allow companies to apply online to reduce the hassle of excessive documentation. You can apply for the loan with minimal documentation, which makes the process faster. The documents required are as follows:
- Latest passport-size photograph of the applicant
- Identity Proof – Applicant’s PAN card and PAN card in the name of the business.
- Address proof of the business as well as the applicant.
- Past six months’ income and bank statement along with Form 16
- Income Tax or GST Returns for the previous two fiscal years
- Financial statements of business profitability for the previous two years
- Certificate of Business Incorporation.
F. Affordability with Competitive Interest Rates
MSME business loans are available at affordable interest rates with renowned lending institutions based on a few parameters, like the nature of the business, establishment years, industry type, etc.
G. Flexible Repayment Options
Small business owners will have ample flexibility concerning the repayment schedule of MSME loans as these are available with ample flexibility for repayment. You can schedule the loan repayment between 12 and 60 months as per your financial position and receivables.
Thus, such benefits of an MSME Loan are a fillip for start-ups and small business owners, making it the first choice of most entrepreneurs. To get the best business loan, you can approach a reputable lending institution and apply for SME/MSME loans at favorable terms.
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