What Is a MSME Loan And Who Is Eligible For It?

Oct 16th 2023
Loan
What Is a MSME Loan And Who Is Eligible For It?

What is a MSME Loan and who is eligible for It? MSME loan is a credit facility offered to MSMEs, individuals, startups, business owners, entrepreneurs, self-employed professionals and other business entities for business expansion purposes and to meet day-to-day business requirements. The maximum loan amount offered by Banks/NBFCs is up to Rs. 2 crores (Collateral-free loans) with a repayment tenure of up to 5 years, which may exceed as per the requirements.

MSME loan interest rates shall vary from lender to lender and shall depend on per applicant’s profile and business requirements. At Investkraft, we understand the vital role that MSMEs play in driving economic development and innovation. To empower these dynamic businesses, we proudly introduce our specialized MSME loan solutions. With our MSME loan offerings, we aim to be your financial partner on your journey towards success and sustainability. Explore our range of options, and let Investkraft be the catalyst for your business’s growth story.

What Is An MSME Loan And Why Is It Important?

India has become an emerging market that attracts various investors from different countries around the world. It owes a significant part of its growth to the MSME sector. Micro, small, and medium-scale businesses, or MSMEs, are known for contributing approximately 29% of the GDP of our nation. These enterprises frequently require financial aid in order to conduct their business operations seamlessly.

In such instances, MSME loans play an essential role. Technological advancements have made it easier for businesses to borrow capital via MSME loans. Additionally, various other MSME benefits are further discussed.

By applying for an MSME loan, companies can make sure that they can raise sufficient capital to meet their requirements. Some of the remarkable features of this loan that act as advantages for micro and small enterprises include:

  • Line of Credit: It establishes a line of credit for companies operating in the MSME sector. The maximum duration for these MSME loans is 15 years.
  • Business Growth: MSMEs often require financing to expand their operations, invest in new technologies, or increase production capacity. MSME loans from Investkraft can provide the necessary capital for these growth initiatives.
  • Innovation and Competitiveness: Loans can enable MSMEs to innovate, improve product quality, and stay competitive in the market. Investkraft’s support through loans can foster innovation within the sector.
  • Financial Inclusion: Many MSMEs may not have easy access to traditional banking services. Investkraft’s MSME loans can bridge this gap, promoting financial inclusion and supporting businesses that might otherwise struggle to obtain financing.

How To Get MSME Loan For New Business?

If you’ve wanted to start a small-scale business by yourself with little to no idea of how to raise finances for it, we’ll walk you through the basics of MSME schemes and how to apply for each of them. Since banking has now been highly digitized, you can apply for the MSME loan online.

To secure an MSME (Micro, Small, and Medium Enterprises) loan through Investkraft for a new business venture, you should follow a systematic process. First, ensure that your business qualifies as an MSME as per the government’s criteria. Then, visit the Investkraft website and navigate to their loan application section. Provide all necessary documents such as your business plan, financial projections, KYC documents, and credit history. Investkraft will assess your application and conduct due diligence. It’s essential to have a well-thought-out business plan that outlines how you intend to use the funds and demonstrate your ability to repay the loan. Once approved, you can access the loan amount to fuel your new business growth.

Who Is Eligible For MSME Loan?

MSME loans are majorly used for business expansion purposes, starting a new business, meeting working capital requirements, enhancing cash flow, purchasing raw materials, goods, or stock, buying or upgrading equipment/machinery, paying off rent/salary, hiring, and training staff, etc.

Eligibility Criteria

  • Min. 21 years at the time of loan application & Max. 65 years at the time of loan maturity
  • Minimum business vintage of 1 year
  • Annual Business Turnover; as defined by the lender, shall vary from bank to bank
  • Good repayment history with financial stability
  • No previous loan default with any financial institution
  • Decent Credit Score and creditworthiness of the applicant shall be considered by lenders.

Eligible Entities That Can Apply For MSME Loans

  • Individuals, Startups, MSMEs, business owners, women entrepreneurs, self-employed professionals, and people falling under the SC/ST/OBC category and various other business entities.
  • Private or Public Limited Companies, Sole Proprietorships, Partnership Firms, and Limited Liability Partnerships (LLPs) engaged only in the trading, services, and manufacturing sectors.

Documents Required

  • KYC documents of applicant and co-applicants that include Passport, Aadhar card, Voter’s ID card, Driving License, PAN Card, and Utility Bills (Telephone, Electricity Bills)
  • Proof of belonging to SC/ST or OBC category, if applicable
  • Any other document required by the bank/NBFC

Investkraft is a financial institution that provides loans to Micro, Small, and Medium Enterprises (MSMEs) in India. Eligibility for an MSME loan with Investkraft typically depends on several factors.

First and foremost, a business must be registered as an MSME, which is determined based on its turnover and investment in plant and machinery or equipment. The specific criteria may vary, but generally, a micro-enterprise should have investments of up to Rs. 25 lakhs and a turnover of up to Rs. 5 crores.

Small enterprises may have investments up to Rs. 5 crores and a turnover of up to Rs. 75 crores, while medium-sized enterprises may have investments up to Rs. 10 crores and a turnover of up to Rs. 250 crores.

Additionally, Investkraft will assess the creditworthiness and financial stability of the business, including factors like the business’s financial statements, credit history, and repayment capacity. Meeting these criteria can make a business eligible for an MSME loan with Investkraft, which can be instrumental in supporting its growth and development. It’s important to note that loan eligibility criteria may evolve over time, so businesses should check with Investkraft for the most current requirements.

How To Apply For An MSME Loan?

To apply for an MSME (Micro, Small, and Medium Enterprises) loan through Investkraft, you can follow a straightforward process. First, ensure that your business qualifies as an MSME based on the criteria set by the government. Then, visit the official Investkraft website or contact their nearest branch to obtain the loan application form. Fill in the application form with accurate and detailed information about your Business.

  • Once you have your documents ready and meet the eligibility requirements, visit Investkraft’s official website. There, you can find the application form for the MSME loan. Fill out the form with all the necessary details and complete information, regarding your business and financial situation.
  • After submitting your application, Investkraft will review it thoroughly. They may conduct a credit check and assess your business’s financial stability. Be prepared for this evaluation process and provide any additional documents or information requested promptly.
  • Once your application is approved, Investkraft will provide you with the loan terms and conditions, including interest rates, repayment schedule, and any collateral requirements. Carefully review these terms and, if acceptable, sign the loan agreement.
  • Upon agreement, Investkraft will disburse the funds to your business account. Ensure that you use the loan for the intended purpose and manage your finances responsibly to meet the repayment schedule.

Regularly communicate with Investkraft’s customer support team for any assistance or clarifications needed throughout the loan tenure. Applying for an MSME loan through Investkraft involves thorough preparation, meeting eligibility criteria, and responsible financial management to support your business’s growth and development.

FAQs

1. Is credit score important for MSMEs in getting MSME loans?

Ans. Yes, having a good credit score that is above 750 is always an added advantage when applying for MSME loans.

2. How can I get collateral-free MSME loans?

Ans. If you want to get collateral-free loans for MSMEs or startups, then you will have to apply for an unsecured business loan.

3. Is Machinery loan offered to MSMEs?

Ans. Yes, a machinery loan is a type of business loan offered by various Banks/NBFCs to MSMEs, entrepreneurs and existing businesses. This loan type is mainly considered under equipment finance.

4. Who is eligible for an MSME loan?

Ans. MSME loans can be availed by individuals, startups, self-employed professionals, entrepreneurs, business owners, Micro-Small and Medium Enterprises (MSMEs), sole proprietorships, private and public limited companies, partnership firms, Limited Liability Partnerships (LLPs), etc.

5. What documents are required for the MSME loan application?

Ans. Typical documents may include business registration documents, financial statements, KYC documents, and business plans. Investkraft will provide a detailed checklist upon inquiry.

The Conclusion

MSME loans are the ideal choice for small business owners. They are customised financial arrangements with the right benefits packaged into them. These loans are versatile, and scalable and help the business owner get the most out of their borrowing operations. Investkraft’s MSME loan program has proven to be a valuable resource for small and medium-sized enterprises (SMEs) seeking financial support.

Overall, this initiative has been instrumental in fostering economic growth by providing accessible and tailored financial solutions to businesses that are the backbone of our economy. Through Investkraft’s MSME loans, countless entrepreneurs have been able to expand their operations, create jobs, and contribute to local and national development. 

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