How to Apply for MSME Loan for New Businesses? | Rupeezo

By Rupeezo | 12th, Jan, 2023

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In India, 12th five year plan laid special emphasis on the development of businesses especially ‘Micro Small Medium Enterprise sector’ popularly known as MSME, this sector is the global gateway of growth in India. It is the foundation of overall manufacturing sector. It nurtures the competitive sector by boosting Indian economy by providing large contribution of industrial output. The MSME sector is expected to increase share of manufacturing in GDP in next decade. It is expected to create millions of job opportunities in the manufacturing sector. Due to this govt. has formulated special loan schemes and policies to provide finance and credit to MSME sector.

MSME Business Loan

MSME business loan has been formulated by govt. of India, banking and non-banking institutions to boost fund, investment and credit in this sector. MSME business loan scheme will offer business loans to enterprises and new businesses. MSME business loan can be used to the optimum by new businesses. MSME business loan provide fund for capital growth, which can be used for any business requirements. MSME business loan provide benefits on certain taxes also. MSME business loan provided by govt., banking and non-banking institutions can be availed by entrepreneurs. Some major banks provide MSME business loan like HDFC, SBI, PNB, ALLAHABAD Bank etc. Bajaj Finsery comes under non-banking finance institution. Let us now have a look at some of the prominent MSME business loans available across the market and apply for business loan accordingly comparing and evaluating every option -

1. SBI - Only those businesses are eligible for State Bank of India MSME loan apply, which are engaged in manufacturing unit (any type of).Even if they are providers of services. Their loan amount depends upon the average monthly balance in the current account of the entrepreneur for the last 12 months. It does not depend on the type of work they are doing. Whether they areself-employed or professional individuals and whether they deal in retail or wholesale. The minimum amount which they offer as loan is 10 Lakhs while the maximum amount exceeds 25 lakhs. This scheme is offered only to those businesses who deposits minimum 40% of the desired loan as security amount. Entrepreneurs can apply for business loan with SBI and install and start a manufacturing unit.
2.  HDFC - MSME loan apply with HDFC is preferred by the businesses who want 40 lakh as loan amount the status of business is not considered for this MSME loan apply. Whether they are running small businesses, are self-employed individuals, proprietors, have private companies or have partnership firms, which are involved in manufacturing or trading. They must have total business experience of 5 years and should have been engaged in present business for the last 3 years. For MSME loans apply with HDFC, the minimum turnover of the business should be 40 lakh. It should have been profit-making business for the past 2 years and its ITR should be 1.5 lakh annually. With HDFC, apply for business loan, if you want to expand your small-scale business into a large one.
3. ICICI  – MSME loans apply with ICICI is preferred by the businesses that are on the lookout for customized loans. It offers loans for new entities. They offer collateral free loans, loans which are free from financials. They have even got finance for businesses indulged as importers or exporters. They must have installed secured overdraft facility. In MSME loan, apply with ICICI, the loan amount of upto Rs. 1 crore can be availed without any finances. With ICICI, apply for business loan, if you want a customized loan
4. Bajaj  – New business loan can be availed through non-banking financial institutions like Bajaj Finsery too. This non- financial institution offers loans up to 30 lakh. It offers fast loans, which are sanctioned within 24 hours and are free from security (collateral) deposit. This new business loan can be availed to invest in the infrastructure, meet working capital requirements, installation of new plant and machinery and for the payment of different overheads. Apply for business loan with Bajaj to avail the sanctioned amount within 24 hrs.

Eligibility for New Business Loan

New business loan have different interest rates levied by banking or non-banking institutions depending upon the type and amount of loan. Most common interest rate for new business loan is 8.65 which can increase up to 16.25% depending upon banks or financial or non financial institutions by which they are being offered.

To be eligible to avail new business loan, different banks or non-banking financial institutions have set up different guidelines or parameters, which have to be fulfilled. Some basic guidelines are there which have to be followed by every institute offering new business loan. If you fulfill these guidelines, you can apply for business loan. Investment return and profit prospects of the proposed project is to be set up before taking new business loan from any bank or non bank

financial institutions. It is the basic eligibility criteria for availing MSME loans for new business. According to ‘Micro Small Medium Enterprise sector’ MSME act 2006 micro, small and medium enterprises have been categorized into two divisions i.e., manufacturing and service enterprises. There is some more eligibility criterion to apply for MSME loans for new business.

• There Should Be Technical/ Economic Viability.
• There Shall Be a Contribution on Behalf of the Promoter.
• The Capacity to Repay the Loan the Entrepreneur.
• There Should Be Securities/guarantees on Loan Advancement.

Application for MSME Loan for New Business

To apply for MSME loans for new business following documents needs to be deposited by entrepreneurs at the time of obtaining the loan.

• First Requirement of the Document is filled the Application Form, and Along With That Identity Proof (Be It Pan, Aadhar, Voter Id, or Passport Anyone) Has to Be Deposited.
• Along With This Proof of Residence and Proof of Business, Address Has to Be Given.
• Document Having Proof of Age Has to Be Produced. Along With These, Before the Sanction of MSME Loans for New Businesses Needs Some Financial Documents Too for Submission.
• These Include Income Tax and Sales Tax Returns, the Balance Sheet of Profit and Loss for the Previous 2 Years, Bank Statements, Project Reports, and Copies of Partnership, Lease, and Sale Deeds.

Banking institutions may ask for some other documents too for depositing. MSME loans for new business can be applied physically also, apart from online. Physically, entrepreneurs have to take appointment and visit the lender, they have to travel till their place, and they can approach only one lender at a time. This takes a lot of time and energy whereas in online with much less energy MSME loans for new business can be obtained.

Frequently Asked Questions

    1. What is MSME Business Loan

‘Micro Small Medium Enterprise sector’ is called MSME. It is a loan scheme to boost fund, investment and credit in small startups.

     2. In Which a Five-year Plan Govt. Laid Emphasis on This?

In 12th five-year plan govt. also laid emphasis on development of business.

     3. For MSME Loan Apply, Which 2 Financial Documents Are Needed?

For MSME loans apply, income and sales tax documents are needed to be deposited.

     4. According to the ‘MSME Act 2006’, How Many Divisions of MSME Businesses Are There?

According to ‘MSME act 2006’, MSME businesses are divided into 2 divisions of manufacturing and service.

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