MSMEs are known as Micro, Small, and Medium Enterprises work on a small scale. They are small in size in comparison to big enterprises but large in numbers. They are principal contributors in production, employment generation, and ultimately to the country’s economy.
In India, the MSME industry is the second-largest employment provider and generates over 70% employment.
https://www.ibef.org/industry/msme.aspx
Hence, the Government of India provides consistent support for the growth and development of the MSMEs.
A new startup can get registered under MSMEs and get benefits from several MSME loan schemes introduced by the government.
Financing a new business venture with MSME Loans
A new enterprise needs a cash flow for production, export, salaries, and other miscellaneous expenses. they usually apply for loans individually in several places. This consumes a lot of time, money and brings uncertainty.
But if you have registered your startup under MSMEs, you are automatically to get benefit from several MSME loans schemes. It is a complete financial solution for all your needs.
Under MSME Loans you just need to fill a simple form. Your application will be accessed by a wide range of lenders. This includes banks, NBFCs, SFBs, Fintech, etc.
And as per your geographical location, the nearest lender will approach you directly. You can apply it directly online at any time and anywhere.
New enterprises don’t have collateral to offer for a loan. MSME Loans are collateral-free loans, hence can be easily availed by startups.
The paperwork is less and eligibility criteria are easy to fulfill by small businesses, startups, and women entrepreneurs, etc.
The interest is relevantly low in comparison to the one offered by the bank in general. A startup should fulfill the eligibility criteria to be eligible for the MSME Loans.
MSME Loans can be used for investment infrastructure, purchase of plant and machinery, capital requirement, and fulfilling several overheads.
MSME Loans Benefits
1) Easily Accessible- For unsecured loans requires a lot of paperwork. However, if your business is GST and MSME registered, it will require minimal paperwork. MSME loan is easy to avail and the loan amount is disbursed quickly. You can easily access the account anytime, anywhere. No doubt the loan process is hassle-free and quick.
2) Collateral free loans- Collateral free loans means that it doesn’t require security to avail of a loan. The government of India, SIDBI, and MSME has introduced Credit Guarantee Trust Fund Scheme. Hence, old and new small and micro sector enterprises can easily avail these benefits.
3) Reduced Interest Rates- MSME loans are available at competitive interest rates. With the proper planning, you can use it effectively. The Low-interest rates ensure the minimum amount spent during repayment of loans.
4) Flexible loan duration- MSME loans are used for fulfilling immediate financial requirements. There is no long-term commitment. Hence small business owners can use the cash flow efficiently and repay quickly.
5) Protection against payments- Buyers purchasing goods from MSME enterprises have to do the payments within the agreed duration. After that interest rates will be applied to the bill.
6) Businesses availing of MSME loans are eligible for the industrial promotion subsidy provided by the government.
7) The small businesses which are registered under MSME loans are eligible for a concession on electricity bills.
MSME loans are for self-employed professionals, non-professionals, business entities. You should be an Indian resident and between the age of 24-70 years. The interest rates, documents, business tenure period varies from bank to bank.
MSME loans are great for small businesses, startups, and women entrepreneurs as these are collateral-free, quick processing required less documentation and quick disbursal. All you need is to fulfill certain eligibility criteria and apply online. The lender will access your application and connect you directly.
MSME loans help in the thriving of both business and countries’ economies. They are unsecured loans and required less paperwork. Hence, it is the first choice for financing the new business venture.
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Reference: https://udyamimitra.in/page/msme-loans
