India’s Micro, Small, and Medium Enterprises (MSME) sector is a key factor in exports, economic growth, and employment. The Press Information Bureau reports that this industry accounts for more than 42.67% of the country’s exports and employs more than 84,23,452 people. It is safe to claim that this industry supports the Indian economy.
The MSME sector has seen substantial expansion, yet there is still a lot of unrealized potential. A significant credit gap is one of the sector’s biggest problems.
To fill this credit gap, many leading financial institutions now offer attractive Business Loans tailored as MSME Loans to ensure the smooth operation and expansion of businesses without disrupting cash flow. So, entrepreneurs can now apply for MSME Loans to fuel their business’s growth without any hassle. However, before applying for an MSME loan, entrepreneurs must ensure that they meet the eligibility criteria and have all the necessary documents ready. To know about MSME Loan eligibility and MSME loan documents, read this article further.
But First, Let’s Understand What is Considered MSME/SME?
Ministry of Micro, Small, and Medium Enterprises categorises enterprises as ‘micro’, ‘small’, and ‘medium’ based on their annual turnover, irrespective of whether they are in the manufacturing or the service sector. The criteria are provided in the below table
| Enterprise | Annual Turnover (in Rs.) |
| Micro | Up to Rs. 5 Crore |
| Small | Up to Rs. 50 Crore |
| Medium | Up to Rs. 250 Crore |
What is the MSME/SME Loan Eligibility Criteria?
Though the MSME/SME loan eligibility criteria may vary from one lender to another, here are some common eligibility criteria that are common to all. Let’s have a look at the MSME/SME Loan eligibility criteria
| Criteria | Requirement |
| Age | Your minimum age must be 24 years at the time of loan application and 65 years at the time of loan maturity |
| Business Vintage | Your business should have been operational for a minimum of 2 years |
| Annual Turnover | Your business must have an annual turnover of at least Rs. 6 Lakh |
In addition to the above-mentioned eligibility criteria, there are some additional requirements as well. Please have a look at them
- Business Type: Your business must fall under the definition of MSME, which is based on investment in plant and machinery or equipment for manufacturing units and investment in equipment for service enterprises.
- Loan Purpose: MSME Loans are generally provided for business-related purposes, such as expansion, working capital, purchase of machinery, or technology up-gradation.
- Credit Score: A good credit score indicates your creditworthiness and repayment capacity. Lenders usually prefer applicants with a credit score of 650 or above.
- Profitability: Your business should have a consistent track record of profitability to demonstrate its ability to generate income and repay the loan.
- Collateral: While some lenders offer collateral-free MSME Loans, others may require collateral depending on the loan amount and your credit profile.
What are the Documents Required for MSME Loan?
Just like the MSME Loan eligibility criteria, the checklist of MSME loan required documents also varies from lender to lender. Also do note that these documents serve as essential supporting evidence during the loan application process and significantly influence your eligibility for the loan.
Below are the required documents that you will need to provide when applying for an MSME Loan
| Type of Document | Requirement |
| KYC | PAN Card of the business, Director/Proprietor/Partner PAN Card Aadhaar Card, and Passport Business registration and business address proof |
| Business Address Proof | Utility bills and/or rent agreement |
| Financial Documents | Your bank account statements for the past 6 months. |
Note: As said earlier, the specific documents required may vary depending on the lender and the type of MSME Loan you are applying for. It is essential to check with the lender or financial institution for the most up-to-date and accurate document requirements.
How To Apply for MSME/SME Loans?
Applying for an MSME/SME Loan at Credit Success is very easy. Apart from the minimal MSME loan document requirement, the entire process can be completed online from the comfort of your home. Just make sure that you have all the soft copies ready to be submitted. Here are the steps involved
Visit the loan application page.
- Enter your business name, its type, your PAN card number, mobile number and email, the loan amount you want to borrow, and the tenure.
- Verify your mobile number by entering the OTP sent to you.
- Fill out your details and upload the required documents.
- Submit the application form. If you are eligible for the loan, you will be notified.
- Once your loan application is approved, the funds will be disbursed to your bank account.
Conclusion
In conclusion, MSMEs form the backbone of the Indian economy, and ensuring their financial health is vital for sustained economic growth. By following this checklist of required documents for MSME loan eligibility, entrepreneurs can enhance their chances of a successful loan application and secure the necessary funds to fuel the growth and expansion of their businesses.
