Who are eligible for the MSME loan?
MSME loans, also known as micro, small and medium enterprise loans, are a type of loan you can take advantage of if you are a business owner or entrepreneur. This type of loan provides you with working capital which you can use for various purposes such as buying new inventory, buying new equipment, paying your employee’s salaries or helping yourself to grow your business. There are many lenders in India that offer MSME loans to their clients. The interest charged also varies from bank to bank.
Who are eligible to get the MSME loan?
If you are confused about who is eligible for msme loan, then you can get an idea from the below criteria. They are given by,
- Individuals should be at least 22 years old when applying for the loan and a maximum of 65 years at the time of maturity.
- The private company, business owner, and sole Private companies engaged in the trade, manufacturing or service sectors are eligible to apply for MSME loans.
- Applicants should have been involved in a relevant business for at least three years and at least five years of experience in the business.
- The company should generate a base income of at least Rs. 2 lakh per year, the turnover should be at 10 lakh per year, and it should be profitable for at least two years.
- Businesses should be registered as MSMEs in the Udyaan portal, and an MSME registration certificate should be provided.
How will you apply for the MSME loan?
- Log in to your MSME provider’s website and fill out the application form by correctly filling in the required details. An agent designated by the MSME loan service provider will contact you shortly with all possible permutations and combinations related to your loan and the most suitable option for your needs.
- After verifying your qualifications, you will be required to submit documents for review. You need the required documents which can be scanned and sent online.
- You can go offline and ask your provider to collect copies of the relevant documents. Once all relevant documents have been gathered will be sent to the relevant team for review.
- After reviewing your documents and the approval of your loan providers create and share loan agreements after signing the agreement. The amount will be paid to the applicant’s account within 48 hours.
What is the role of the line of credit in MSME loans?
Like a normal loan, the line of credit must have an acceptable credit and fund repayment and charge interest on borrowed funds. This is different from a loan, typically used as a fixed amount over a specified period with a prepayment schedule. Credit lines are more flexible and typically feature variable interest rates. When interest rates rise, your credit limit will be higher and this is not the case with fixed-rate loans. In general, there are fewer restrictions on the use of borrowed funds under the credit line. The mortgage must go toward the purchase of the listed property, but the credit line can be used at the discretion of the borrower.