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MSME Loans in India: How to apply

Millions of small and medium businesses (MSMEs – Micro, Small & Medium Enterprises) are the backbone of India’s economic growth. If you

want to start your own business or expand an existing one, an MSME loan can be a great financial option for you. Let’s understand how to get an MSME loan, who is eligible, what documents are required, and how to apply.

What is an MSME Loan?

An MSME loan is financial assistance provided by banks or NBFCs (Non-Banking Financial Companies) to micro, small, and medium enterprises for business purposes. It can be used for:

  • Working capital
  • Purchasing machinery
  • Business expansion
  • Raw material purchase, and more

Eligibility Criteria for MSME Loan:

  • The applicant must be an Indian citizen
  • Any new or existing MSME business
  • Business must be registered (Udyam Registration required)
  • Bank statements and income proof required
  • In some schemes, a good CIBIL score is also important

Documents Required:

  • Aadhaar Card / PAN Card
  • Udyam Registration Certificate
  • Bank Statements (last 6–12 months)
  • Business proof (GST, Trade License, etc.)
  • Income documents and balance sheet (for existing businesses)
  • Passport-size photographs

How to Get an MSME Loan – Step-by-Step Process:

Step 1: Register on Udyam Portal
To avail an MSME loan, you must first register your business on the Udyam Portal.
👉 Website: udyamregistration.gov.in

Step 2: Choose a Loan Scheme
The government and banks offer various loan schemes, such as:

  • Mudra Loan (Shishu, Kishor, Tarun)
  • Credit Guarantee Fund Scheme (CGTMSE)
  • Stand-Up India Scheme
  • PMEGP Loan (Prime Minister Employment Generation Programme)

Step 3: Approach Bank or Financial Institution
Visit your nearest bank, NBFC, or apply via an online lending platform.

Step 4: Fill the Application Form & Submit Documents
Apply online or offline and upload/submit the required documents.

Step 5: Loan Processing & Approval
The bank will verify your documents and approve the loan accordingly.

Step 6: Loan Disbursement
Once approved, the loan amount will be transferred directly to your bank account.

Benefits of MSME Loans:

  • Lower interest rates
  • Collateral-free loans (in certain schemes)
  • Easy repayment options
  • Opportunity to grow your business
  • Subsidies and tax benefits

Important Tips:

  • Always compare interest rates and EMIs
  • Maintain a good CIBIL score
  • File GST and returns on time
  • Keep all your business documents updated and accurate

Conclusion:

If you’re a small business owner or aspiring entrepreneur, an MSME loan can help you turn your dreams into reality. Just choose the right scheme, prepare your documents, and follow the application process carefully.

For more information, stay connected with us at News.BadaBusiness.com

 

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Finance

5 Smart Ways To Help You Settle Business Loans Quickly!

5 Smart Ways To Help You Settle Business Loans Quickly!
5 Smart Ways To Help You Settle Business Loans Quickly!

Summary: Is your business running in losses? Are you losing your investors because of the debt? Do you want to take your small business out of debt?

Rising interest rates and high corporate debt levels are giving sleepless nights to lots of investors and small business owners. It is impossible to predict the future, and with the latest happenings in the world, the period of consistent declines in the GDP of India, it is challenging for small business owners to run their business operations with the guidance of an expert.

Though most entrepreneurs begin their startup by arranging funds through debt funding, equity funding, loans, or other less formal sources like friends & family, the experience of being in debt can be scary and overwhelming. To avoid making drastic mistakes at the initial stage, many entrepreneurs also hire the best business coach in India.

If managed smartly, borrowing funds can help you accomplish your goals; if mismatched, it will affect your financial well-being and cause mental stress, especially to small business owners that are worse affected due to the Covid-19 pandemic.

The Indian government launched many loan schemes to offer relief to MSMEs in subordinated debts, collateral-free loans, and equity infusion through its Fund of Funds (FoF) scheme in 2020. This scheme proposes to purchase up to 15% growth capital in high-credit MSMEs.

You can work with a business coach who can help you manage funds more efficiently. Also, if you have a well-thought financial plan, you can solve the cumbersome process of taking your business out of debt, just like others. Here is how you can chart your way out of debt:

1. Reorganize the Debts 

The first step that will take you closer to managing your debt is to organize all the details of precisely what you owe. Make a list of your debts with EMIs, interest rates, and tenures. This will help you recognize the costliest obligations.

2. Pay Urgent & Costliest Debts First!

After sorting out your debts, pick the costliest one! If not paid on time, expensive debts will extract the highest interest. This can drain your finances. Hence, settle your costliest debts on a priority basis. Take help from the best business coach for strategies that will help you pay your debts.

3. Make Monthly Budget

One of the most vital debt management techniques is planning a monthly budget! Make a list of your income & expenses while deciding on your monthly budget. This will allow you to think about ways to reduce your daily expenditure. Having details of monthly cash flow can help you save money that you can use to clear your debt.

4. Consolidate Loans

Sometimes keeping track of all the loans can be difficult. If you have too many loans, it can be a good idea to consolidate them into one. This will leave you with just one EMI. Business loans, personal loans, and credit cards provide you with this option. It will remove various debts and leave you with just one loan to track. Consult with a business motivational speaker today to understand your finances. 

5. Protect yourself Against Economic Shocks 

The future is uncertain, and it is wise to protect yourself from uncertainties you might be exposed to. For E.g., a loss of a job could lead to delayed EMIs. So, to avoid such situations, create an emergency fund to help you sustain yourself during a bad phase. Ideally, this fund should be 3-6 times more than your current monthly income.

Repaying loans is a moral, legal, and also a financial obligation. With intelligent and effective debt management strategies, you too can get your business out of debt. Learn how to manage your debt with the top-industry leaders from our Problem Solving Courses.

Categories
Finance

5 Types Of Small Business Loans Entrepreneurs Can Take At Low Interest!

5 Types Of Small Business Loans Entrepreneurs Can Take At Low Interest!
5 Types Of Small Business Loans Entrepreneurs Can Take At Low Interest!

Summary: Finding the right source of funding for your business? These government schemes can help you to take your business to new heights of success.

When starting a small business funding is crucial. What makes it a daunting process is finding the right source. There are many banks and schemes through which entrepreneurs can take small business loans. Entrepreneurs can take small business loans in two ways: they can either take loans through government schemes or they can take loans from private players.

The government of India also offers relief in the form of collateral-free loans, subordinated debts, and equity infusion through its Fund of Funds (FoF) scheme, which proposes to buy up to 15% growth capital in high-credit MSMEs.

Many government schemes are made to empower SMEs. Among various schemes, the key government schemes include MSME Business Loans for Start-ups in 59 minutes, Pradhan Mantri Mudra Yojana, and SIDBI Make in India Soft Loan Fund for MSMEs.

Here is a list of other government schemes for small scale businesses:

1. Loans for Startups in 59 Minutes

Launched in 2018 this central government-backed small-scale industrial loan is famous for the loan eligibility that is conveyed to the applicant in just 59 minutes. Though, the actual process might take eight to 12 days.

A loan via this scheme attracts an interest rate starting from 8.50%. Also, the interest rates are based on the nature of your business and your credit rating. This scheme offers loans ranging from a minimum of INR 1 lakh to a maximum of INR 5 crore. A 3% reservation for such loans is available for women entrepreneurs.

2. Pradhan Mantri Mudra Yojana (PMMY)

To provide business finance to micro-businesses the Government of India established the Micro units’ development and refinance Agency (MUDRA). The Pradhan Mantri Mudra Yojana (PMMY) administered by MUDRA is a small-scale industry loan by the central government with the intent to “fund the unfunded”.

This scheme offers a wide range of sectors and business activities. MSMEs can take up to INR 10 lakhs without collateral. This scheme is called MUDRA loans. All types of trading, manufacturing, and service businesses can apply to this scheme.

3. SIDBI Make In India Soft Loan Fund For MSMEs (SMILE)

SMILE is a government loan scheme by the Government of India that offers loans with below-market interest rates, also known as soft loans. This small business lending scheme is governed by the Small Industries Development Bank of India (SIDBI). The minimum loan amount under this scheme is INR 25 lakh. The interest rate starts at 8.36%, the scheme comes with a moratorium period of 36 months. The maximum repayment tenure is 10 years. New MSMEs, along with existing service and manufacturing sectors, can apply for this scheme.

4. Credit Guarantee Fund Trust for Micro And Small Enterprises (CGTMSE)

This government loans scheme offers central government small-scale industries loans to the MSME sector. This scheme provides working capital loans of up to INR 10 lakh without any collateral. Credit facilities up to INR 1 crore can be availed after mortgaging your business land or assets.

New or existing MSMEs in service or manufacturing activities, agricultural and educational institutions, and self-help groups are eligible for this scheme.

5. Stand Up India

The Stand-Up India initiative seeks to provide government small business loans to women entrepreneurs and individuals under the scheduled caste or scheduled tribe category. It was launched by the Small Industries Development Bank of India (SIDBI) and it provides loans to small businesses between INR 10 Lakh to INR 1 crore. The amount will cover around 75% of your business project and its interest rate is calculated as the bank’s marginal cost of funds-based lending rate (MCLR) + 3% + tenure premium.

These are the government schemes that entrepreneurs can use to raise funds for their small businesses. We know what you are thinking! The idea of managing a business is easier said than done and we completely agree with you. This is why to help you move forward with your business goals, we at Bada Business Problem Solving Courses  & LFP Bada Business (Leadership Funnel Program).