Small businesses play an integral part in India’s socio-economic development. A majority of MSME businesses operate in rural parts of the nation providing employment to millions of people. 

Small businesses are in constant need of funds to meet the day-to-day working capital needs, such as procuring raw materials, payment of salaries, purchasing new equipment, and other expenses. A lot of times, these small businesses may not have enough working capital to meet their operational needs. And due to their size they cannot afford secured loans or go for loans from third-party creditors at high interest rates. This is where MSME loans offered by leading financial institutions come to their rescue. Before we dive into how small businesses can avail these loans at a nominal MSME loan interest rate, let us first understand what MSME loans are. 

What Are MSME Loans?

These loans are offered by several financial institutions to small businesses at an affordable MSME loan interest rate to meet their various operational expenses. MSME loan for new businesses are offered to business owners who meet certain eligibility criteria. MSME loans are also offered by financial institutions under few government schemes like:

• Micro Unit development and Refinance Agency (MUDRA)
• Credit Guarantee Funds Trust for Micro & Small Enterprises (CGTMSE)
• Prime Minister’s Employment Generation Programme (PMEGP)

All businesses need to do to avail loans under these schemes is to meet their eligibility criteria. 

Since MSME loans are collateral free and their tenor can be adjusted as per the working capital needs of a business, they can play a vital role in the survival and growth of small businesses.  

How to Get MSME Loan for New Small Businesses

Before applying for an MSME loan, business owners first need to find out their net working capital. This can be done by subtracting current liabilities of the business from its current liabilities. In case the net working capital is not enough or in negative, the business will have problems in managing its operational expenses. Therefore, a working capital loan will help it run its operation smoothly, and allow the business owner to focus more on the efficient operations and growth of the business rather than having to worry about securing funds constantly. 

Coming back to point, to get the required amount of credit or working capital loan for their business, business owners must meet these following criteria and have the following documents:

• Must be between the age of 25-65 years and a citizen of India
• Must have filed Income Tax return of their business for the past one year
• Their business should be running for a minimum of three years
• Ownership proof of the business showing the registration documents of the business
• Financial documents such as copy of Income Tax and GST returns, bank account statements, balance sheet
• KYC documents and address proof documents such as Aadhar card, rent agreement, PAN card, Passport or Driving License. 

The above mentioned eligibility criteria are general parameters and might differ from lender to lender. To ensure that your loan application gets approval in less time, it is important to check the eligibility norms of the lender of your choice. This will ensure quick approval and hassle-free process while you avail of an MSME loan for new business.

Financial institutions like Bajaj Finserv offer business loans of up to Rs. 45 lakhs with minimal paperwork and simple terms. This NBFC also provides pre-approved deals of several products such as personal loans, business loans and home loans. This helps in fastening the loan availing process.???????