Micro, Small and Medium Enterprises (MSME) loans are generally offered to startups and small business entrepreneurs. The repayment tenure varies from lender to lender for the MSME loans. Based on the loan amount, the applicant’s profile and business history the interest rates are offered.
Banks and NBFCs offer MSME loans to the applicant only if certain eligibility criteria meet. MSME loans are also unsecured loans. The government of India and the Reserve Bank of India (RBI) define MSME loans, as the loans for business enterprises need support in terms of finance, infrastructure and other areas.
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Here are the steps you can follow to apply for an MSME loan
- Visit udyogaadhaar.gov.in website. This is a national portal for registration of Micro, Small & Medium Enterprises.
- Fill information like Aadhaar number, Name of the Entrepreneur and once you enter these details, click on validate and generate OTP.
- You will receive an OTP on your mobile number which is linked to your Aadhaar card. Fill the OTP on the window and click on "Validate" and an application form will appear.
- Fill in all the details required.
- Click on "Submit" once you have filled all the required details in the application form.
- After you click the "Submit" button, the page will ask if you have entered all the data correctly. Click "OK" to confirm.
- Now, you will again receive an OTP on your mobile number which is linked to your Aadhaar card. Fill the OTP and the code is given below on the window and click on " Final Submit" to submit the application form.
- You will see the registration number above, just note it down for further references.
Documents required for an MSME loan
- Duly filled Application form.
- Identity Proof: Passport, driving licence, PAN card, Voter’s identity card.
- Residence Proof: Passport, lease agreement, trade license, telephone and electricity bills, ration card and sales tax certificate.
- Age Proof: Passport, Voter’s identity card, Photo PAN card.
Financial documents that are required
- Bank statement of last 12 months
- Business registration proof
- Proprietor(s) PAN Card Copy
- Partnership deed copy
- Company PAN card copy
- P&L and balance sheet copy of last 2 years
- Sales tax documents
- Municipal tax document
Banks that offers MSME loans
- State Bank of India
- HDFC Bank
- Allahabad Bank
- Central Bank of India
- ICICI Bank
- Bajaj Finserv
- Oriental Bank of Commerce
- Union Bank of India
- Indian Bank
The Union Cabinet at its meeting on June 1 has approved changes to the definition of micro, small and medium Enterprises (MSMEs). Raising the turnover limit for medium enterprises to Rs 250 crore, the government aims to broaden the scope of MSMEs.
Union Minister Prakash Javadekar said the new definition of MSMEs would benefit units. Enterprises with Rs 1 crore investment and Rs 5 crore turnover would now qualify as micro enterprises.
Businesses with an investment of less than Rs 10 crore and turnover less than Rs. 50 crore will now be classified as small enterprises.
The definition for medium enterprises has been revised upwards to an investment of Rs 50 crore and a turnover of Rs 250 crore.
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