When Does it Make Sense to Take an MSME Loan?

MSME (Micro, Small and Medium Enterprises) also termed as SSIs (Small-Scale Industries) are considered to be the economic backbone of our country. This sector contributes 45% to the total industrial employment, 50% to the total exports, and 95% to the total industrial units in India. With the growth of industries matures the country’s economy. Although registering under the MSME act is not yet mandatory, your business can gain benefits in tax payments, loans, and other credit facilities with the MSME registration.

What is MSME Loan?

While the MSME sector plays a significant role in the development of the country, it faced major trouble in their capital investments. This is when conventional banks and Non-Banking Financial Companies (NBFCs) started offering customized loan products for entrepreneurs. An MSME loan is a type of business loan that is provided to micro, small, and medium enterprises for business establishment or expansion.


The government of India has classified MSMEs into two types, they are:

Service Enterprise

The investment of the service enterprise as well as of the equipment must be as per the below-mentioned data:
Micro Enterprise : ≤ 10,00,000
Small Enterprise : 2,00,00,000 ≥ 10,00,000
Medium Enterprise : 5,00,00,000 ≥ 2,00,00,000

Manufacturing Enterprise

The investment of the manufacturing enterprise, the plant, and of the machinery must be in accordance with the following data:
Micro Enterprise : ≤ 25,00,000
Small Enterprise : 5,00,00,000  ≥ 25,00,000
Medium Enterprise : 10,00,00,000  ≥ 5,00,00,000

Features and Benefits of MSME Loans

– MSME loans are mostly collateral-free.
– The online MSME loan process helps in quick approval and disbursal of the loan amount.
– The tenor of MSME loan ranges from 12 months to 60 months.
– You need to submit nominal documents for an MSME loan application.
– You can manage your loan account easily from the website of your financial provider.

When should you take an MSME Loan?

You can avail an MSME loan if:
– You are purchasing land or factory for starting a business.
– You are buying factory supplies like a machine, furniture, etc.
– You want to meet the capital requirements of the company like purchasing raw materials.
– You need to pay the debts, wages, and settle other bills.
– You have to expand your business and need financing for marketing, advertising, and refurbishment of the organization.

However, you can check with your financial provider for the MSME loan eligibility of your organization. Usually, the only eligibility criteria are the CIBIL score of the organization as almost all business loans are unsecured. Renowned loan providers MSME loans of up to 30 lakh to equip growing businesses with timely financial aid. The unique Flexi loan facility allows you to pay interest-only EMI and repay the principal amount whenever possible during or at the end of the tenor. You can also get pre-approved offers in addition to the loan amount which you would be able to get access to.

How to Apply for an MSME Loan?

You can apply for an MSME loan online as well as offline. Usually, young entrepreneurs prefer online mode due to the ease of the application process. All you got to do is to fill up an application form, and within 24 hours of your application, personnel from your financial institution will contact you. Make sure to check your organization’s credit score to meet the MSME loan eligibility criteria of the financial provider of your choice. Browse from a wide range of customized collateral-free business loans to suit your growing business requirements.

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