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MSME Guide: How To Avail MSME Loan for Your Business

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While the entire focus is primarily MSMEs regarding the economic revival, bankers often come up with some valid and justifying observations on why MSME Loans and MSME focused banking schemes have still not picked up the way the should be.
Well, one of the most noteworthy observations from banks is the factual status of understanding of MSMEs /Entrepreneurs regarding loans & lending procedures.

Here is this article we are trying to list down few important steps which needed to have preparation while approaching any bank for applying for the MSME Loans.

Basic Criteria for applying MSME Loans is as follows:

  1. There has to be an established business that has been in operations for more than 6 months.
  2. Minimum turnover of ₹ 90,000 or more in the 3 months preceding your loan application.
  3. The business should not fall under blacklisted/excluded list for SBA finance.
  4. The physical location of your enterprises should not be in the negative location list.

Commonly Required Documents :

  1. Bank Statement of the last One year
  2. Business Registration Proof/Certificate of Incorporation
  3. Partnership Deed of the company
  4. PAN Card of the Company
  5. GST Statement
  6. Director’s PAN & Aadhaar Card and Incase of Proprietorship Company it has to be PAN & Aadhaar Card of Proprietor

Value Added Documents for Bank’s Due Diligence 

Well, these documents are not mandatory but might be required or they might add value on Banker’s perspective which is also termed as due-diligence for choosing your business for the MSME loan. These documents could be:

  • Licenses, certifications to run your business (if any).
  • Your Business plan of action post Loan or funding.
  • A brief presentation of your business which may highlight your unique offering (if any), the creditworthiness of your business proposal.
  • Director’s or proprietor’s credibility through bank statements, social profile etc.
  • If you are seeking a loan for existing business then, client profile and your relationship with your clients.
  • An overview of your business model.

Steps to Apply for MSME Loans

  1. Submit Application. Simply enter your personal, business and financial info to receive an MSME / SME Loans offer.
  2. Upload Documents. Upload digital copies of your documents in a single step process for verification.
  3. Get Sanctioned.

One more important aspect which every entrepreneur should know these days. Many banks are considering social media content around you and around your business for these due diligence activities. This is usually called a big data analysis of the MSME/entrepreneur. Although there is no set process defined for this, but some banks are considering the big data analysis using social media content around the entrepreneur and his/her business. This helps in understanding the social footprint of the entrepreneur and his network.

Faiz Askari

Faiz is a mediapreneur specialised in Small Business and Technology domain.

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One Comment

  1. The article gives a complete understanding How To Avail MSME Loan for Your Business. If you need a instant msme loan, you can opt for a msme loan from Lendingkart and you will receive the amount instantly.

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