How to apply for MSME Loan for a new business?

May 19, 2021 Pawneshwar Datt Rai

MSME is known as micro, small and medium enterprises, sometimes it is also shortened to SME for small and medium enterprises. But, in essence, MSME and SME loans are the same and are offered to businesses that fall under these two categories. Mostly, MSME loans for new business, small business owners, and women entrepreneurs are offered on a short-term basis. The duration of MSME / SME loans varies from bank to bank according to loan terms.

MSME Loan for 2021 users

The Government of India changed the concept of MSME on May 13, 2020, and announced it. The latest MSME meaning is as follows:

Investment has been replaced by Investment and Annual Turnover as the MSME classification criterion.
The Indian government also raised the expenditure cap for MSME classification. As a result, more businesses and organizations will be able to access the internet.
The criteria for classifying MSMEs have now been made uniform for Manufacturing and Services Enterprises, as shown in the key points listed below:

Manufacturing and Services Enterprises

Microbusiness: Turnover is less than Rs.5 crore and investment is less than Rs.1 crore.
Small business: The investment is not more than Rs.10 crore, and the turnover is not more than Rs.50 crore.
Medium business: The investment is not more than Rs.20 crore, and the turnover is not more than Rs.100 crore.

MSME loans are available to Micro, Small, and Medium Enterprises (MSMEs) for the expansion of existing businesses or the start-up of new businesses. MSME loans have interest rates that start at 7.65% per annum. The loan sum approved can be as low as Rs.50,000 and as high as a few crores. The loan repayment period can be up to 15 years depending on the loan amount approved.

Top Banks offered MSME Loan Interest Rate in 2021

Bank Name	Interest rate
Oriental Bank of Commerce	10.70% p.a. onwards
ICICI Bank	13% p.a. onwards
Central Bank of India	11.25% p.a. onwards
Indian Bank	9.75% p.a. onwards
Punjab and Sind Bank	9.95% p.a. onwards
State Bank of India	7.65% p.a. onwards
UCO Bank	8.85% p.a. onwards
United Bank of India	10.25% – 16.25% p.a.

Eligibility criteria for MSME Loan

The applicant should be minimum of 18 years old and the maximum of 65 years old.
Individuals, SMEs, MSMEs, business owners, women entrepreneurs, self-employed professionals, people belonging to the SC/ST/OBC group, Private or Public Limited, Sole Proprietorship, Partnership Firm, Limited Liability Partnership engaged only in trading services and manufacturing sectors, Private or Public Limited, Sole Proprietorship, Partnership Firm, Limited Liability Partnership engaged only in trading services and manufacturing sectors
For established businesses, a minimum turnover of Rs. 10 lakh is needed.
With a CIBIL score of 700 or higher, you have a good repayment history.

Documents Required for MSME Loan

Self-created business strategy
Application form filled out fully with passport-sized photos
Passport, Aadhar card, Voter’s ID card, Driving License, PAN Card, and Utility Bills are examples of KYC documents for applicants and co-applicants (Telephone, Electricity)
Copy of Business Incorporation or Company Establishment Copy of Last 12 Months Bank Statement
Any other documents that the lender needs.

What are the steps involved to apply for MSME/SME Loans?

Below is the mentioned list of 5 simple steps for MSME/SME Loans:

Pay a visit to Afinoz.com to compare and contrast the best SME/MSME loan
Choose the loan option that best fits your company’s needs.
Fill out the SME/MSME loan application form and send it to receive a call from the Afinoz expert.
To continue with loan formalities, submit all relevant documentation to the bank’s representative.
Get money disbursed in your bank account after the bank approves your loan.

MSME Loans under Government Schemes for 2021

Various banks and NBFCs sell Micro, Small, and Medium Enterprises (MSMEs) SME/MSME schemes launched by the Ministry of MSME. The following are some of the most common MSME schemes offered by financial institutions and initiated by the Indian government:

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a credit guarantee fund trust for micro and small businesses.
Credit Linked Capital Subsidy Scheme Credit Guarantee Scheme CLCSS: Credit Linked Capital Subsidy Scheme
PMMY National Small Industries Corporation’s MUDRA Yojana (NSIC) Subsidies
The Prime Minister’s Employment Generation Programme (PMEGP) is a government initiative that aims to create jobs for Prime Minister
PMRY stands for Prime Minister Rojgar Yojana (Prime Minister’s Rojgar Yojana).
Loans from PSB in 59 minutes
Stand-up comedy India is a startup country.

In the Bottom Line

As the above-mentioned information will help you to understand MSME loans offered by several banks and NBFCs for new business owners. It also provides complete details regarding the same. Apart from this, you can compare and select from Oriental Bank of Commerce, UCO Bank, ICICI Bank, United Bank of India, Central Bank of India, State Bank of India, etc. The generic loan amount is starting at as low as Rs. 50,000 at the competitive interest rate. Therefore, if you want to get more information about MSME loans, visit the official site of the bank or directly contact the customer support team of Afinoz for more details.