Micro, Small and Medium Enterprises have been contributing substantially to the Indian economy’s growth for the past two decades. This segment is responsible for 30% of India’s GDP and 40% of exports. Additionally, MSMEs have been instrumental in providing employment opportunities to the Indian youth.
However, securing financing to foster growth in the sector has been a difficult proposition from the onset. The situation has somewhat been remedied by financial institutions offering MSME loans to eligible enterprises. Borrowers need to understand the steps necessary to apply for MSME loan and avail the same to access the necessary funds.
5 ways to get quick approval for securing MSME loans
For quick approval on the funds, small business owners will need to follow the steps below –
- Appropriate business plan –
To avoid roadblocks in their business, owners should chalk out a well-thought plan to avail the required funds. To secure a business loan without any complication, one should mention the following points in his/her business plan.
- Company overview
- Market analysis
- Projection of finances
- Experience of the management team
- Cash flow management –
A lender’s primary concern is a borrower’s repayment capacity. By properly managing cash flow, an individual can enhance chances of approval. One can manage cash flow by avoiding irrelevant expenditures, reducing overheads and enforcing timely payments.
- Credit score improvement –
Maintaining a high credit score makes an individual’s credibility stand out in the loan market. Lenders check this score before sanctioning a loan. Therefore, it is advisable to keep a clean credit history and avoid outstanding payments as much as possible. Following certain techniques such as maintaining an appropriate credit utilisation ratio and timely payment of bills can help an individual maintain a high CIBIL score.
- Mandatory documents –
To apply for an MSME loan, one needs to carry essential documents like ID proof, address proof, last 6 month’s bank statement, proof of business continuation and more.
- Check for the lowest interest rates –
A borrower’s ultimate motive is to opt for a low MSME loan interest rate. This will allow him/her to pay low EMIs throughout the loan tenor. Furthermore, calculating EMIs beforehand will also help an individual to plan his/her repayments strategically. Thus, borrowers can manage their finances better with proper repayment planning.
After applying for the funds by following the above pointers, borrowers can enjoy the benefits of securing an MSME loan.
Benefits of MSME loans
- Easily accessible – These loans are easy to avail of because of their quick processing time and minimal documentation. Additionally, applicants can access his/her account online after disbursement of this business loan.
- One can have full control over the business – Financiers often require applicants to pledge collateral to sanction the funds for their business. However, since MSME loans are unsecured in nature, individuals can avail them without relinquishing control over their business operations.
- Low-interest rates – MSME loans come with a lower interest rate which allows an individual to lower the cost of borrowing and save for other business expenses.
- One can utilise MSME loans for a short time – It is best to not have a long-term financial commitment which can become a liability in the long run. Therefore, MSME loans are short-term advances to help solve a business’ short-term liquidity crisis.
With such benefits and more, MSME loans are efficient financing solutions for Micro, Small and Medium Enterprises owners. To enjoy these benefits, business owners should meet certain eligibility criteria to apply for an MSME loan.
Eligibility criteria to secure an MSME loan
- A candidate must be an Indian citizen between 25 to 65 years of age.
- One must have a business continuity for 3 years.
- A borrower needs to file income tax returns for his/her business for a minimum of 1 year.
If an individual satisfies the above-mentioned criteria, he/she can enjoy several perks against the MSME business loan.
For instance, lenders like Bajaj Finserv provide pre-approved loan offers to existing eligible customers to ease the loan application process. These offers are available on financial products like business loans, personal loans, etc. You can check your pre-approved offer by entering basic details such as name and contact number.
Therefore, on satisfying the required eligibility and providing the designated documents, one can apply for an MSME loan and avoid any hassles in the process.