Small and medium-sized enterprises (or MSMEs) are the backbone of any economy. They account for more than 90% of India’s manufacturing sector, providing employment to hundreds of millions of people.
Additionally, these companies generate more than 80% of India’s total business revenues, with an average growth rate of 25-30% annually over the past few years. However, being a small business poses a number of challenges. That is why it is critical to get financial assistance from lenders in order to grow your company and create jobs.
However, obtaining loans can be difficult for many start-up businesses that have limited collateral or working capital. Fortunately, there are several loan programs available specifically for small businesses in the country. Let’s explore the steps for applying for a msme business loan.
Know your Eligibility Before applying for a loan
It’s important to know your Eligibility. There are numerous business loan policies and schemes across the country, so knowing what to look out for is important. In order to qualify for a loan, you must meet certain financial and documentary requirements. Here are some of the most common eligibility criteria for business loan in India.
- Minimum net worth – The minimum net worth required for a loan varies from lender to lender.
- Income verification – Your loan eligibility will be determined by your income and financial status. You must provide proof of income to show that you are capable of repaying the loan.
- Loan tenure – The loan tenure for an MSME generally ranges between 3-10 years. You must repay the loan amount as well as interest on a monthly or quarterly basis.
- Personal guarantee – Many lenders prefer to see a personal guarantee, i.e., a guarantee from a person who is responsible for repaying the loan amount.
There are several online business loan application websites, but applying online is important. Online application portals generally have extensive information about business loan eligibility, loan repayment clauses, and other important details. Be sure to apply online, since you have a higher chance of getting approved if you apply online. Before applying business loans online, be sure to gather all the required information, including your business plan, financial details, and proof of ownership. You can apply online by filling in a business loan application form, providing all the required information, and uploading all the required documents.
Fill The Form
After you have applied for a business loan, the next step is to fill in the form. It’s important to fill in the form correctly, since any mistakes will delay the processing of your loan application. The form will ask you for your personal details, such as your full name, address, email address, etc. You must provide accurate information, since a business loan rejection may happen if your details are not correct.
Take A Decision and Move On
Once the lender verifies your information and financials, you will be notified about your approval or rejection for a business loan. Once you are notified about your approval or rejection, you must move on and take action. You must arrange the required funding and make repayments on the loan. If you miss a repayment, you may face penalties, including interest rate increases and even legal action.