What is an MSME?

Micro, Small and Medium Enterprises or MSME are administered by the Ministry of MSME. It is under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 sanctioned by the Government of India. This industry is regarded as the pillar of the Indian economy. It provides employment to most of the citizens of our country. The Ministry of MSME manages the fabrication and administration of regulations, rules and laws related to MSME as a way of boosting it.

What is an MSME business loan?

Small and medium sized businesses make a crucial contribution in helping the country develop. The MSME sector scores 29% of our country’s GDP as about 12 crore of India’s population is employed in this sector.[1] There are many schemes aided by the government in order to decrease the financial issues faced by people in the MSME sector. Moreover, the MSME loan provided is an unsecured business loan.

According to reports, about 63.05 million micro businesses, 0.33 million small businesses, and around 5,000 medium sized enterprises are functioning currently.[2] A micro industry involves investments less than Rs.10 lac. A small industry includes investments more than Rs.10 lac but less than Rs.2 crore. A medium sized industry involves investments more than Rs.2 crore but less than Rs.5 crore.

How to Apply for MSME Loans?

Pradhan Mantri Mudra Loan Scheme:

There are many MSME loan schemes available for this flourishing industry. One such scheme is the Pradhan Mantri Mudra Loan Scheme launched in 2015. Under this Mudra Loan Scheme, small and medium sized businesses are given collateral-free loan or unsecured business loan upto Rs.10 lakhs in three categories.

The three categories are Shishu Loan, Kishore Loan and Tarun Loan. In Shishu Loan, an MSME loan is offered upto Rs.50,000. In Kishore Loan, a loan from Rs.50,000 to Rs.5 lakhs is given. Lastly, in the Tarun Loan, a loan of Rs.5 lakhs to Rs.10 lakhs is offered. For people requiring small business loans, they can avail the Kishore Loan or the Tarun Loan.

MSME Loan Eligibility Criteria:

  • Six months old and above businesses can only apply for the MSME loan.
  • The minimum turnover for getting the loan approved would have to be Rs.90,000, three months before the loan.
  • The business should not have been blacklisted.
  • The business should not be situated in the negative location list.

How to apply for an MSME Loan:

  • The national portal for registration of MSME is udyogaadhaar.gov.in website.
  • Fill out your details such as the Aadhaar number and Name of the Entrepreneur. Click onto the validate option to generate an One Time Password (OTP).
  • The registered mobile number linked to your Aadhaar card will receive the OTP. Fill out the OTP to click on “Validate” to receive an application form.
  • Fill in the required details.
  • Click on “Submit” after having filled out your details.
  • Again an OTP would be received on your Aadhaar linked number. Fill the OTP to click on the “Final Submit” of your application.
  • Note the registration number on the final page. Do not forget to note it down for future references.

Benefits of MSME loans:

There are many benefits in availing a small business loan. The businesses registered under MSME are automatically eligible for a subsidy. They are offered an exemption to the internet garnered on the overdraft from banks. The charges are reimbursed if the company services or products are ISO certified. Subsidies are automatically available while registering for patents when requiring for one. Small business loan is unsecured business loan which is given under the Credit Guarantee Trust Fund Scheme. There are concessions on electricity charges. If under any circumstances, payments are delayed by the company, they’re provided protection.

Tata Capital’s Unsecured Business Loan aids in providing quick and hassle free funding for a small business loan with flexible options while repaying. They offer loans that are tailored to suit your own requirements. They’re custom built in terms of your business needs. You can also customize the monthly loan repayment upon your convenience.

Conclusion:

For any type of industry under the MSME sector, it is natural to be struggling financially at a point of time. Applying for a small business loan is a smart move for an entrepreneur. It serves many benefits and is launched by the government to help the MSME sector.  You can also avail unsecured Business Loan provided by Tata Capital to further your business objectives.

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