MSME stands for micro, small and medium enterprises, sometimes it is also shortened to SME for small and medium enterprises. But, in essence, MSME and SME Loans are the same and are offered to businesses that fall under these two categories. Mostly, these loans are given to startup owners, small business owners and women entrepreneurs on a short-term basis. The duration of MSME / SME loans varies from lender to lender. As MSME loans are unsecured MSME / SME Loans, there are some minimum eligibility requirements in order to reduce the risk for lenders.

Features of MSME Loan / SME Loan

  1. Ticket Value up to ₹ 2 Crore

    We have a flexible ticket size for MSME and SME Loans that starts at ₹ 50,000 and goes all the way up to ₹ 2 Crore. This makes Lendingkart business loans a veritable option for micro, small and medium enterprises.

  2. Apply for MSME / SME Loan Online

    We believe in fast track growth and therefore, we removed every process that slows down a loan approval. By taking MSME and SME loans online we have ensured same-day loan approvals with disbursals pending the verification of documents.

  3. MSME / SME Loan in 3 Days

    Online document submission also allows us to complete the verification process quickly. As there are no wait times between sending and receiving of documents, we are able to approve MSME / SME loan disbursals within 3 days of application.

  4. MSME / SME Loans without Collateral

    All business loans approved by Lendingkart are unsecured. Meaning, there is no requirement for collateral to get an MSME or SME loan from us. And so, no need to worry about asset security when getting a business loan.

  5. Best Interest Rates for MSME / SME Loans

    We use financial data analytics to calculate the best available interest rates for your enterprise. There is no manual intervention in the whole process and hence the rate you get is fair and as per your business’s ability to repay the MSME / SME Loan.

  6. Flexible Repayment Tenure

    Lendingkart’s MSME loans give you ample time and options to repay your business loan easily. Our loan tenures start at 1 month and go all the way up to 36 months. Additionally, you have the option to repay in monthly or bi-weekly instalments or EMIs. This allows you to repay your debt in sync with your account’s receivables.

  7. No Hidden Costs

    Lendingkart MSME loans do not have any hidden costs or fees. We only charge an upfront processing fee of 2-3% depending on your loan amount and that’s all. This allows you to get more value in your principal disbursal than with any other business loan product in the market.

  8. Zero Prepayment Charges

    All MSME and SME loans from Lendingkart come with zero prepayment fees. So, if you decide to settle your debt early, you can do so any time after the payment of the first EMI, without attracting any penalties or charges for early repayment in full.

Benefits of MSME Loan / SME Loans by Lendingkart

– Move quickly from planning to execution

Our superfast turnaround time means that you can take things from planning to execution within a matter of days instead of weeks or months. An MSME loan from Lendingkart allows you to get ahead in product marketing, boost production and expand your supply network in no time at all.

– Remain in control of your business

Our MSME / SME loans are unsecured, keeping your valuable assets protected in case there is a loan default. Similarly, we do not take control of your credit policy in return for investment, so that you remain in charge of your precious enterprise at all times.

– Manage your company capital better

Our MSME / SME loans can be used for a number of purposes. You can either use them to expand your operations by buying plant and machinery or opening at a new location, or you can use the loan for streamlining your working capital and general cash flow. Our MSME / SME loans help you in balancing your company capital through short-term investments that can be easily repaid.

– Raise your credibility in the market

With Lendingkart MSME / SME loans, you can give your business a much-needed boost and hence improve your profitability. This, in turn, will reflect in your books and create goodwill and credibility for your business in the market. Credit rating agencies will also take note of your improving prospects and raise your business’s credit rating accordingly, opening the way to increased investment and business finance.

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MSME / SME Loans Fees & Interest Rates

Customized Interest Rates15 to 27% *
Processing Fees2-3%
Loan Tenureup to 3 years
Pre-closure ChargesNil**
Eligibility Criteria> ₹ 90,000 turn over for 3 Months
Loan Amount₹ 50,000 – ₹ 2 crore
InstallmentsFlexible Monthly / Bi-weekly

*Based on the health of your business, revenues and annual turnover

**Pre-closures are only allowed after the first EMI is paid in full

Eligibility Criteria for MSME / SME Loans

  1. An established business that has been in operations for more than 6 months.
  2. A minimum turnover of ₹ 90,000 or more in the 3 months preceding your loan application.
  3. The business should not fall under blacklisted / excluded list for SBA finance.
  4. The physical location of your enterprises should not be in the negative location list.
  5. Trusts, NGOs and charitable institutions are not eligible for small business loans.

If you are not sure if your business falls under a restricted category or location, you can contact us to confirm your eligibility

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Documents Required for a MSME / SME Loans

 ProprietorshipPartnershipPvt. Ltd. / LLP / One Person Company
Bank statement (12 months)
Business registration proof
Proprietor(s) PAN Card Copy
Proprietor(s) Aadhar Card Copy
Partnership Deed Copy
Company PAN Card Copy

We accept any of the following as a Business registration proof

1)Business Registration Certificate 2)GST filing 3)Gumastadhara 4)Trade License 5)Drug License 6)TIN7)VAT registration

3 simple steps to your MSME / SME Loans

  1. Submit Application

    Simply enter your personal, business and financial info to receive a MSME / SME Loans offer.

  2. Upload Documents

    Upload digital copies of your documents in a single step process for verification.

  3. Get Sanctioned

    Receive your MSME / SME Loans approval and disbursal within 3 working days.

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Smart ways to use MSME / SME loans

Here are 5 smart ways you can utilize the funds of an MSME / SME loan.

  1. Inventory Management

    Inventory management is a critical part of a small business as its profits depend on the sale volumes. As many as 31% of the businesses applying for a small business loan use the funds to purchase inventory. Utilize the funds from your MSME loan to secure your inventory supply chain. Manage seasonal dips, replenish existing stock or buy new product samples for sale with an inventory loan for MSMEs.

  2. Purchasing Plant & Machinery

    A small business owner can use unsecured MSME loans to fund the purchase of new equipment. Since, investment in plant and machinery requires heavy funding, an MSME loan up to ₹ 1 Crore can be helpful in expanding your operations without straining the company capital fund.

  3. Working Capital Management

    A small business owner can use unsecured MSME loans to fund the purchase of new equipment. Since, investment in plant and machinery requires heavy funding, an MSME loan up to ₹ 1 Crore can be helpful in expanding your operations without straining the company capital fun.

  4. Consolidate your business debt

    One of the best advantages of short-term MSME loans is that they allow you to consolidate smaller debts and make them a single EMI. This not only reduces the strain on your monthly budget but also helps in aligning your debt repayment with your invoicing schedule. Moreover, by consolidating business debt, you may be able to reduce the amount that you are currently paying for sundry debts as now you have the option to expand the repayment schedule up to 12 months.

  5. Invest in Marketing

    Marketing helps in growing your business by expanding its outreach. There are two things that can be accomplished with an effective marketing strategy. One, reinforcing the trust and loyalty of existing customers in your brand. Two, acquiring new customers in existing or new markets. However, marketing is a costly affair and a comprehensive online and offline marketing campaign requires investment. An MSME / SME loan fund can give you the financial backing for running such a campaign.

Calculating an MSME / SME Loan EMI

MSME / SME Loans EMI

Equated Monthly Instalments (EMIs) break down a loan into easily repayable financial units. Each unit contains a component of the principal amount and the accrued interest. Flexible EMI schedules offered by lenders like Lendingkart Finance help you in one of the two ways. 

Either you can repay your loan with ease by breaking it down in small monthly instalments. Or, you can speed up the repayment of your financial debt by opting for bi-weekly instalments, halving the repayment cycle. You can also avail refinance for the previously approved loan amount with Lendingkart’s auto-renewal option.

How to Calculate MSME / SME Loans EMI?

The MSME / SME Loans EMI calculation is done on the basis of a simple formula i.e.
E = P x r x (1+r)n/(1+r)n-1
Here,
‘E’ is the EMI
‘P’ represents the loan amount
‘r’ stands for the interest rate offered on a monthly basis
‘n’ is the duration of the loan
Our MSME / SME loan EMI calculator is a digital version of this formula, that allows you to calculate EMI amount through a web interface. The loan EMI calculator can help you understand the breakdown of interest and principal loan amount, thus, allowing you to decide the layout of your cash resource planning.

What to do and not to do when applying for an MSME loan online

Do’s

  • Check your credit score before moving an application for MSME or SME loan. Most lenders rely on credit rating for preliminary loan approvals.
  • Get your documentation in order before starting the loan application process. For Lendingkart MSME loans, make sure that you have all the required documents in digital format as we do not accept physical copies at the time of application.
  • Prepare a business plan that specifies how you intend to use the loan funds and how much time it might take to generate positive returns from the investment. Every lender may not ask for it but it is good to have a business plan ready to assuage a lender’s concerns.
  • Assess your MSME loan requirements before applying. Try not to overestimate or underestimate your loan requirements as in both cases you will end up wasting time and money.

Don’t’s

  • Do not apply with multiple lenders as it will reduce your credit score by several points. It also shows financial desperation on your part, which might put off potential lenders.
  • Do not delay your repayments for existing debts even if you are taking the MSME loan for debt consolidation. It has a negative impact on your credit score and financial goodwill.
  • Do not go for lenders who charge you an upfront fee. There are many fraudulent lenders in the online space who may ask for huge fees for approving your MSME loan application. A genuine lender like Lendingkart Finance will never ask you for an upfront fee and only charges a percentage upon disbursal of the loan.

MSME Loan / SME Loan FAQs:

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MSME Loan News:

Government’s ECLGS proving to be a benefactor for MSMEs

Emergency Credit Line Guarantee Scheme (ECLGS) saves up to 14% of MSME credit. The scheme is a part of the Rs 20-lakh crores Aatmanirbhar- Bharat- Abhiyaan which was announced in May 2020.

Due to pandemic-induced lockdown, the MSME sector has suffered the most. Under ECLGS, of the borrower’s total outstanding credit, 25% is given to MSMEs. Also, the government has guaranteed up to Rs 25 crore to the MSME sector. 

The report estimates that the scheme has saved almost 13.5 lakh MSME accounts. Of these accounts, micro borrowers estimated around 48%, whereas 46% belonged to small and 6% belonged to medium category. 

The report also indicates that the scheme has saved the livelihood of 6 crore families by preventing 1.5 crore workers from becoming unemployed. The sector that got most of the benefits includes the trading sector, food processing, textiles and commercial real estate. 

Apart from Gujarat, the scheme has benefitted Maharashtra, Tamil Nadu, UP. ECLGS has prevented up to 75% of MSME credit from slipping into NPA.  

The report also suggested that there is a need to restructure the old Credit Guarantee Fund Trust to boost MSMEs credit.

Updated Date: 26-01-2022

The government may extend the MSME credit scheme to make up for the dent caused by the pandemic

The Emergency Credit Line Guarantee Scheme (ECLGS), which was supposed to end on 31st March 2022, may get an extension for another year. 

ECLGS was launched as a part of the Atmanirbhar Bharat Abhiyan. The scheme has provided liquidity support to over 10 million enterprises. The MSME credit facility has protected about 54.5 million jobs. 

The fourth stimulus package announced by finance minister Nirmala Sitharaman is worth ₹6.29 lakh crore. Originally the package was worth ₹3 lakh crore, then raised to ₹4.5 lakh crore. 

Under ECLGS, about ₹2.82 lakh crore worth of loans have been sanctioned to about 11.5 million borrowers. Disbursed loans worth ₹2.28 lakh crore have benefited 9.52 million units.

PHD Chamber of Commerce and Industry (PHDCCI) president Pradeep Multani called ECLGS the “saviour of a large number of enterprises.” He also insisted on the need to extend the scheme for more benefits. 

The founder and CEO of fintech startup Buildd Sachin Gaikwad said the ancillary units and vendors should also benefit from the scheme. He also supported the extension to support the victims of the supply chain disruptions.

Updated Date: 05-01-2022

No plan to implement a rating system for MSMEs: Narayan Rane

Union Minister for MSME Narayan Rane has reiterated that the government doesn’t plan to implement a rating system for MSMEs. 

The announcement of launching a ‘Digital data-based credit ratings’ for the sector was made by the former MSME Minister Nitin Gadkari. The launch was supposed to enable MSMEs to get bank loans based on the ratings. 

The government was expected to buy 15 percent of the amount raised by MSMEs with AAA ratings as equity stakes. The move was aimed at encouraging MSMEs to raise money from public markets.

Gadkari, while addressing a webinar by the Chamber of Indian MSME (CIMSME) had reiterated the need for the credit rating system. He claimed that MSMEs could get decent investment from abroad with an effective rating system.

Earlier this year, the minister had called for the rating system. Further, Gadkari also suggested setting up a dashboard for monitoring schemes to prevent delays in decision-making.

The erstwhile Performance & Credit Rating Scheme of the MSME Ministry was intended to provide a third-party opinion on MSMEs’ capabilities and creditworthiness. 

However, the scheme was discontinued.

Updated Date: 21-12-2021

Loans to MSMEs in Uttar Pradesh have been increased 2.5 times

According to UP Chief Secretary RK Tewari, loans given to MSME units in the state have increased 2.5 times in the last 4.5 years. Tewari said at the launch of the UP Pavilion at ‘India International Trade Fair-2021’, Pragati Maidan in New Delhi that loan disbursements to MSME increased from Rs 28,136.00 crore in 2016-17 to Rs 73,765.00 crore in 2020-21.
According to him, UP leads the country in the establishment of MSME units. The state has over 90 lakh registered units, accounting for 14.2 percent of all registered units in the country. He stated that the UP government had established an investment-friendly atmosphere by providing time-bound approvals/licenses to investors. Under the MSME Act-2020, investors have been kept free from inspection of any department for 1,000 days by granting an acknowledgment certificate within 72 hours.

Updated Date: 08-12-2021

Vulnerable MSMEs and the Indian economy

Over the past few decades, the growth rate of the Indian economy is being determined by the rate of development of MSMEs. The contribution of 6.3 crore MSMEs is approximately 29% towards the country’s GDP by its national and international trade. However, the pandemic has drastically changed everything. 

Economic slowdown due to pandemic

Studies and surveys show around 95% of firms were impacted in April 2020. Even with progressive unlocking, things have remained unchanged. Disruption was observed in around 70% of businesses. 

While the business volume of Indian MSMEs declined by an average of 11% in 2021, a 46% decline was observed in the year 2020 due to lockdown. According to the All-India Manufacturers Organisation survey, 35% of the MSMEs sector are in no condition to recover. 

Reasons for losses faced by MSMEs

  1. The absence of proper transaction details makes it difficult for MSMEs to access loans.
  2. The high cost of transactions affects a company’s profit margin.
  3. Absence of high credit score and collaterals. A high-interest rate also creates problems for MSMEs to access loans.
  4. Vulnerability towards cybercrimes due to lack of knowledge about handling transaction data.

Factors to strengthen MSMEs

  1. Better credit facility 
  2. Better marketing support 
  3. Adoption of technology 
  4. Government should provide soft loans with a longer term of repayment to support MSMEs.

The recovery of small enterprises is necessary to achieve the required economic growth.

Updated Date: 15-11-2021

Banks ordered to clear all pending MSME loans by end of October

Additional Chief Secretary, Navneet Sehgal recently said that the implementation of the second loan scheme for the upgradation of units under the employment generation programme is slow as the rules were complicated.

During the committee meeting of the PMEGP, he also pointed out the fact that while loans of 3,267 units have been approved, the release of their margin is pending. There have been around 7,700 applications that are still pending, and Mr Sehgal has asked the banks to clear all claims by 31st October. So far 37% of the claims have been distributed

Updated Date: 20-10-2021

Emergency Credit Scheme for MSME’s extended till end of March 2022 by Government

The Coronavirus pandemic has affected the MSME sector severely. Several MSME sector businesses collapsed due to loss of revenue as a result of the various restrictions that were implemented by the Government for the safety of the citizens. The Government announced the Emergency Credit Line Guarantee Scheme (ECLGS) to offer them support for survival. Recently, the decision has been taken to extend the same till end of March 2020 with some modifications. Businesses who haven’t availed ECLGS can avail upto 30% of credit outstanding as on 31st March 2021 while some businesses have been listed eligible to 40% of the same. Incremental credit can also be availed within these limits by existing ECLGS borrowers because of change in cut-off date.

Updated Date: 11-10-2021

MSME manufacturers seek low interest rates and faster policy implementation to boost recovery

In May 2020, the government had capped interest rates at 9.25 % for collateral free loans provided by banks and financial institutions and at 14% for loans provided by the Non-Banking Financial Institution (NBFC). 

Since then, the MSME manufacturers have gone through a lot of turmoil and since things are a bit steady now, the manufacturers in various sectors like metal, capital goods, toymakers, etc. are seeking faster implementation of government policies meant for their recovery along with a cap on the maximum interest rate that can be charged to the MSME’s so that they are set on the path to recovery.

Updated Date: 24-09-2021

7,000 Jobs To Be Available With Four New MSME Industrial Clusters

The Tamil Nadu Government has announced a major reform. It is expected to change the lives of people who lost everything during the Covid-19 pandemic.

The Tamil Nadu Small Industries Corporation Limited has confirmed that it will set up four new MSME Industrial Clusters under the guidance of the Tamil Nadu Government. The units will be established in Chengalpattu, Trichy, Tiruvallur, and Madurai. It is estimated to cost around ₹218.22 crores to the Government. The money spent will be worth it as it will generate 7,000 jobs in the state. T M Anbarasan, the Minister of Rural Industries, assured that the fact was true.

The Coimbatore Sidco Industrial Estate Manufacturer’s Association is set to put a cherry on the cake. It has announced that it will also contribute to the direction of generating employment. It has committed to establishing a private industrial park with the assistance of ₹9.06 crore. It will receive the money from the Tamil Nadu Government in the form of a grant.

Updated Date: 14-09-2021

Nirmala Sitharaman Has Launched New Funds for MSMEs

The Union Finance Minister of India, Nirmala Sitharaman, has launched the Ubharte Sitaare Fund. The fund targets entrepreneurs who are operating in micro, small, and medium enterprises. The responsibility to spread awareness about the fund has been laid on Sidharth Nath Singh, the state’s MSME Minister. He has accepted the responsibility and plans to implement it by setting up MSME chambers in various districts.

While launching the fund, Nirmala Sitharaman said that the Modi Government had been working for the MSME sector for a long time. It first gave the MSME sector a proper definition. Now, with the announcement of the fund, the Government has rightfully given the sector its much-deserved place. The Ubharte Sitaare Fund, set up by Exim Bank & SIDBI, is expected to make India a major hub of exports. A company will be identified under the Ubharte Sitaare Programme (USP) only if it shows potential to fulfill global demands in the future.

Updated Date: 06-09-2021

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