5 Steps to Apply for MSMELoan
Registering on the MSME website alone is not enough to get the loan disbursed, one can face a lot more challenges after the enrolment.
Applying for an MSMEloan can be a challenging task as it requires clearance check from multiple Government bodies and the documentation that one submits for review will undergo thorough scrutiny ensure the authenticity of the application and to rule off any discrepancies that might occur later in future.
Apart from the MSME validation, even the lenders that are the facilitators of the loan will perform checks as per their procedures and make sure that the application clears the eligibility criteria set by them to avoid any bad loans on their books and to provide more safety to customer profile, CIBIL score and business reputation in general.
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How to Apply for MSME Loan Below are the steps to register and apply for an MSME loan provided by the ministry of MSME (Government association founded in 2007 by the Government of India)
1. First step is to visit https://msme.gov.in/ and click on the box “Udyam Registration Online Registration for MSME” to go the registration page.
2. After you are on the registration page you will see three options/buttons i.e. Ø For New Entrepreneurs who are not Registered yet as MSME or those with EM-II Ø For those already having registration as UAM Ø For those already having registration as UAM through Assisted filling
3. Depending on which category one must click on the appropriate option and proceed with the application
4. Once the above is done you will be presented a page to enter your details like Aadhar number, Entrepreneur name and an OTP will be generated.
5. The last step is to select the scheme you want to proceed with and before you do that, first check with the bank or financial institution policies and terms and conditions that is acting as a mediator to ensure there are no last-minute surprises.
Registering on the MSME website alone is not enough to get the loan disbursed, one can face a lot more challenges after the enrolment. Some thorough check that any business owner or entrepreneur will have to pass are mentioned below.
Initial Investment: An initial investment is required from the owner showing their stake in the business and that should be at least 25% and above of the total loan requirement. As most of the MSMEloans are collateral free and come with subsidies, lenders are reluctant to invest 100% of the amount and have the terms and conditions drafted specifically for MSME applications.
Proper Documentation: Every year a huge percentage of MSMEloan applications are rejected due to poor paperwork and lack of clarity in documents submitted. A body providing unmatchable benefits would obviously like to ensure that all the documents are scrutinized with the best of their capabilities before approving the collateral free amount. This includes property papers, agreement papers if rented property, Income Tax returns, bank statements, clear vision and business projection in near future, technical and operating capacity, innovative and emerging technology ideas etc.
One also must prove business existence in some cases if the bank or financial institution asks for if an existing business is applying for the loan. A mutual understanding between the lender and borrower will go a long way and should help the borrowers immensely in understanding the process dynamics and eventually getting the application a green light.
Features and Benefits of MSME
Non-CollateralLoans: MSMEs have the option to avail collateral free loans where they do not have to submit an asset or property in the form of security to avail the loan.
Quick processing: Processing for the MSME applications is always fast and these loan requests are always given the top priority regardless of the lending institution facilitating the loan.
Flexibility: MSMEloanshave extremely convenient EMI options to support the growing businesses and one must pay interest only on the partial amount that they have withdrawn from the loan sanction and borrowers have the options to withdraw as much as they want considering their working capital needs or other business expenditures. Businesses also have the option to pay only the interest amount for the certain period initially and then start paying the principal amount as per their profitability.
Paperwork: The documentation and paperwork requirement are very simple and easy.
Pre-approved Loan offer: Businesses also have the option to avail a pre-approved loan offer depending on the business profitability and existence and the field of business it is.
Tax Exemptions: Businesses get many tax exemptions and more importantly startups do not have to pay any tax for the first three years in the business.
MSMEloans have a very higher tenure option in situations where the business is in growing stages. In addition to above features borrowers can also track and make changes to their loan all via online account management option where everything can be done almost instantly and online.
(Disclaimer: Brand Desk Content)
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06:09 PM IST