The emerging market of India is taking the world by storm. 40% of the total GDP of the country is the boom of the MSME sectors. The MSME sector also happens to be the hub of employment. Around one hundred and ten million people depend on this sector for their livelihood. The MSME sector is forming the socio-economic structure of the country by strengthening the backbone of rural India. The Indian government is trying hard to fortify this sector even more.
Hence, it gives out massive loans, 100% guarantee monetary support, and more to the MSME sector. If you are in a fix about how to apply for MSME loan? It is easy, visit any MLI, and they will walk you through the process.
In this article, however, we will discuss the five reasons why MSME loans are an ideal choice for small businesses.
- Collateral-free loans: The perk of getting an MSME loan is, it is collateral-free. Pledging security at the time of borrowing the loan amount is not necessary. It is a big plus for the micro, small, and medium enterprises as they get a jump-start for their venture. It further helps in boosting their productivity. This feature makes MSME loans so appropriate and feasible.
- MSME loan amount is quickly accessible: Running a business is not a matter of joke. You need to worry about the startup capital, the capital to maintain the smooth flow of your existing venture, and the expansion of your business. All of these require a lot of capital. The MSME loans can help you deal with these issues because you can get the loan quickly without much problem. The hassle-free process includes minimum documentation, and the amount is disbursed to the borrower in no time. Your urgent fund requirement is taken care of by the MSME loans. Plus, the interest rate is very nominal, and the tenure for repayment is flexible. Who likes to pay enormous amounts on interest amounts? The reduced interest amounts of MSME loans can save a lot of your money.
- The loan amount is high: Businesses that require a lot of working capital can apply for MSME loans. However, one needs to follow the MSME loan criteria to get hold of the impressive amount that can help a business get on its feet and run swiftly. However, there is one thing that the borrower needs to keep in mind, and that is the amount of turnover that the company has because the MSME loan amount the borrower can lend will depend on that. The minimum amount of the loan starts from 50,000 INR that can range up to crores depending on the borrower’s requirement and their company’s turnover.
- Easy and quick approval: Usually, the MSME loan approval is very fast, and the orders are pre-approved, which is another reason why entrepreneurs should think of taking this loan.
- Flexibility: Generally, due to the absence of any long-term commitments, MSME loans are utilized by businesses to meet their short-term goals. This is the reason why an enterprise can maintain its cash flow and allocate resources accordingly. Furthermore, the MSME loan amount is a brilliant resource for entrepreneurs who want to keep liquidation at bay. This fund also helps them to keep the company’s control in their own hands. This is a big plus for budding entrepreneurs who don’t want help from venture capitalists or angel investors.
MSME loan criteria
To apply for the loan, you will have to meet the MSME loan criteria. If you don’t meet the eligibility criteria, knowing how to apply for MSME loan will be of no help.
|Particulars||MSME loan criteria|
|Business type||Manufacturing Service|
|Business size (taking investment into account) – Manufacturing Sector||Micro – < Rs.25 lakh Small – < Rs.5 crore Medium – < Rs.10 crore|
|Business size (taking investment into account) – Service Sector||Micro – < Rs.10 lakh Small – < Rs.2 crore Medium – < Rs.5 crore|