In recent times there have been fixed ways through which a business can take loans, and for that, they have multiple options that allow the businesses to avail such loans. However, for the small and micro enterprises, there were not many options, and these companies are the backbone of the nation.
Because these companies need credit facilities, there must be a way to arrange arrangements that will help the firms pay the interest on time, and at the end of the loan tenure, a person can pay up the entire capital.
To push and facilitate the aspects of loans, the GOI has launched several schemes that will help a company meet its capital requirements and maintain its cash flow. In case of an emergency, a business might need to meet the criteria of the business with the help of a personal loan. Then, in that case, they can consult with an agent who is a personal loan DSA and can get the required capital in no time.
In this blog, we will look into some of the core elements of the MSME loans and understand how businesses and startups can ensure that they can avail such benefits from the financial institutions.
Eligibility Criteria Need to Be Met By the Start-Ups and Businesses
Different businesses come from different backgrounds, and a person who is dealing with the possibility of a loan requirement needs to inquire in the bank. However, there are certain eligibility criteria for each scheme, but in general, it can be summarized broadly under a few parts.
- An applicant must be above the age of 21, and the maximum age limit for a person who is taking a personal loan is 65.
- One needs to be a citizen and resident of India to avail of different kinds of MSME loans.
- One can take the MSME loan by showing the business papers, and the venture can either be a sole proprietorship, partnership fund or is also a Limited Liability Company (LLP).
- The final aspect is that the company or the start-up must have a good credit score, and it can be formed by doing timely repayment and proper utilization of the credit fund all these can help a company to get better results and sanction the loan.
Requirement of the Document For Applying for a Business Loan
The next aspect is the role of documents when it comes to applying for a business loan. Businesses and startups require several documents when they apply for the MSME fund. For example, today, a company or a person who is managing one needs to do their KYC when they apply for the loan.
If a business raises funds in debt, the management needs to submit the business plan in the initial phase or when they are raising capital for the first time. A firm also needs the business incorporation certificate, which serves as address proof of the company.
Top Government Loans Which is Required By MSMEs and Start-Ups
Several top schemes are available for people in businesses with small company sizes. The government has introduced several schemes that are beneficial for that segment of entrepreneurs and can benefit their working capital.
A person can also use the DSA app to contact an agent who can help them get some pocket personal loans for the business.
- Pradhan Mantri Mudra Yojana (PMMY)
PMMY provides loans to small and micro businesses up to Rs 10 lakh and to institutes that are non-farm and non-corporate small and medium enterprises. These loans are broadly free of collateral and have repayment terms of 1 to 5 years.
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
In this loan segment, the loan amount sanctioned is up to 2 crores. The lender also gets the backing of the government and can recover the fund up to 80% when the borrower fails to make the interest payments, which reduces the risks of the bank, and they can provide it to those who need it.
Credit is, therefore, the lifeline of the country’s MSME sector, and that eps the business to solve the requirements of the MSMEs.