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MSME business loan

 

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:

Top Disticts we serve in India

MSME Loan News:

Since May 2020, Rs 77,000 Crore MSME Dues Cleared

Ever since the launch of the MSME portal, about 1.14 lakhs of applications have been received from micro and small enterprises. Now, so far since May 2020 and during the Covid, about Rs, 77,000 crore worth of MSME dues have been cleared. The data was shared by the MSME Minister Narayan Rane via Twitter. This comes in right after the Modi government completes 8 years in the office on May 30th. The information showcases the initiatives taken by the government. The said cleared dues are believed to be on-time payments to MSMEs, due to the fact that the minister refrained to mention the delayed payments made to MSMEs. 

Reportedly, at the Calcutta Chamber of Commerce in the May 2020 video conference, the former MSME Minister Nitin Gadkari mentioned about 5 lakh crores were owed to MSMEs and not cleared.

Updated Date: 22nd June 20202

15% growth to be seen in FY22 for the MSME sector, while NPA’s to continue at around 12%

The overall annual MSME NPA (Non-Performing Assets) increased from 8.6% in FY19 to 12.6% in FY21. As per prior calculations and reports, it is likely to remain around the same level this financial year as well. With the steady reopening of business as COVID-19 restrictions are lifted, revenue growth is inevitable. The overdue demand has shifted ever since the start of this year, and also, the increase in prices due to inflation will impact the statistics. There is a rapid growth of loan prerequisites in banks at 8-10 percent compared to the 5-7 percent for NFBCs this year. The schemes like Emergency Credit Line Guarantee Scheme (ECLGS) and disbursements are said to expose the sector to more developments. Given that the third Covid wave hasn’t dampened the market.

News Updated Date: 27-05-2022

SIDBI’s 59-min loan scheme- a boon for fintech start-ups & micro-units

Online PSB Loans have announced that new fintech start-ups will get funds from SIDBI’s 59-minute in-principle loan approval scheme for MSMEs. 

Jinand Shah, Co-founder, and CEO of Online PSB Loans said that the strategic partnership would make lending easier. He added that earlier, getting funds for a start-up would take a lot of time. But with the new partnership, the start-up would just have to convince them to access funds. Banks will also leverage the portal to connect with these start-ups. 

Co-owned by SIDBI and other public sector banks, Online PSB Loans is willing to invest in young start-ups. Rs 50 crore investment from HDFC Holdings and Trans Union will also focus on creating awareness via marketing. 

With more than 21 partner banks, the portal has sanctioned 2,35,511 loans involving Rs 78,738 crore as of November 1, 2021, official data from the MSME Ministry. 

Renu Sud Karnad, Managing Director, HDFC Ltd on investment in Online PSB Loans, said that digitization would improve the customer experience while saving cost and time. 

This scheme, launched by Prime Minister Narendra Modi, will also explore micro-lending. Street vendors can get loans between Rs 1,000 and Rs 10,000. This partnership will improve credit disbursements for small businesses.

News Updated Date: 17-05-2022

The Number of Guaranteed Loans for MSMEs in FY22 Under ECLGS Dropped Significantly

Data from the National Credit Guarantee Trustee Company shows a sharp decrease in the number of guarantees issued to MSMEs under the Emergency Credit Line Guarantee Scheme. As of the end of February FY22, the drop is 76% under the said scheme. During the ongoing budget discussion, the Minister of State for Finance Bhagwat Karad shared that in May FY21, the number of loans guaranteed was 90.39 lakhs worth Rs 1.56 Lakh crore, while in FY22, the number recorded was 21.60 lakh worth Rs 54604 crore.

Most of the loans were guaranteed to the micro-enterprises. Ashok Saigal, Co-Chairman of the CII National MSME Council, stated that the data represents a rapid recovery among MSMEs. He also added that in FY22, 3.0 and 4.0 versions of the scheme automatically saw a drop that was launched to support the healthcare and hospitality sector.

News Updated Date: 05-04-2022

Rs. 500 Crores to Increase the Productivity of MSMEs in Pharmaceutical Departments

On Friday, the Department of Pharmacy, ministers of chemicals and fertilizers, has assigned Rs.500 crores for funding of the pharma bunches and MSMEs in this sector. In an attempt to cultivate their productivity and strengthen the industry’s infrastructure facilities, financial schemes are put in place by the ministry. Also, to make India one of the primary contributors in the pharmacy sector. This money is also put into the assistance of forming common services. With more upgrades in the production line of SMEs and MSMEs, the ministry hopes to meet the national and international regulatory standards required. This includes interest subvention and capital subsidy for loans to help in the growth. The ministry wants to focus on the rising demand, which brings to the point of increasing the division’s volume and quality of the products.

News Updated Date: 24-03-2022

Rs. 200 Crore MSME Technology Centre Revealed at Sindhudurg

In an attempt to boost the sales and popularity of small businesses, union MSME minister Narayan Rane reported the arrangement of Rs. 200 crores worth of MSME Technology centers at Sindhudurg, Maharashtra, on Friday. The two inaugural sessions focussed on how the ministry is helping in making an achievable benchmark to conquer in terms of exports, quality of products, and more by giving the best set-up. He also inducted the Konbac Sfurti Cluster, which helps small business artisans mainly deal with pottery, bee boxes, khadi, and agarbatti machines. Rupay card was also launched to help people with digital payments during the COVID-19 crisis. These recent developments have empowered small businesses lower economic classes to take up self-employment jobs. The importance of the various schemes like Udyam Registration for the MSME sector, this new initiative is said to boost sales.

Updated Date: 14-03-2022

RBI defers Non-Performing Assets till September 30, 2022; relief to NBFCs & MSMEs

In significant to the relief to the NBFCs, RBI has deferred implementation of the circular on the Non-Performing Assets (NPAs) until September 30, 2022. The relief came in after the central bank was briefed about the non-banking finance sector’s difficulties. The pandemic-induced lockdown has severely weakened the MSME sector in India. The banking regulator’s relief is expected to help MSMEs in India by not tagging the extended loans as NPAs, allowing businesses to seek further loans. 

When asked about his views on the decision, Raman Aggarwal, Director of Finance Industry Development Council (FIDC), asked about his thoughts on the decision, the RBI circular of classifying NPAs on a day-end basis would expose small borrowers to the risk of getting tagged as NPA. Also, the clause made small borrowers and MSMEs unable to earn money. He further added that FIDC induced the banking regulator to make separate clauses for banks and NBFC. Moreover, FIDC has proposed that RBI exempt the loan under Rs 2 crore.

Updated Date: 02-03-2022

Union Budget 2022: A Programme Worth Rs 6,000 Crore to Rate MSMEs

The Union Budget 2022 launched a program worth Rs 6,000 crore to rate the ministry of Micro, Small and Medium Enterprises. The Rs 6,000 crore program for MSMEs will be rolled out in the coming five years, the Finance Minister said on Tuesday. The government is launching the program to improve competitiveness and productivity while providing access to formal sources of finance. The program is expected to help the government to revitalize the MSMEs that are heavily affected by the COVID crisis.

Post-COVID recovery for the MSME sector has been tough due to low-income flow. The program launched in Union Budget 2022 supports the increased flow of finance to the MSME sector. 

FM in her presentation of the Union Budget for 2022-23 announced a Desh Stack e-portal to facilitate digital infrastructure. The government will also promote startups for Drone Shakti.

Updated Date: 25-02-2022

Emergency Credit Line Guarantee Scheme gets extension till March 2023

The government extended the ECLGS in the Union budget until March 2023 on Tuesday. Furthermore, the guarantee scheme was also extended from Fifty thousand crore to Five lakh crore under the scheme. According to SBI’s group chief economic adviser, Soumya Kanti Ghosh, the expansion of ECLGS will make it easier to lend to MSME firms. The government has also rebuilt the CGTSME to extend credit. In addition, the Emergency Credit Line Guarantee Scheme was introduced in May 2020, during the pandemic, to help the MSME sector. 

Banks and NBFCs will get a 100% guarantee on emergency credit extended to MSMEs. Sitharaman also informed that the Rs 6 thousand-crore program would advance the MSME sector over the next five years. The government will also launch the Desh Stack portal to increase digital infrastructure in addition to the scheme. Moreover, startups are supposed to be promoted through the drone shake program in the Union Budget 2022-23.

Updated Date: 14-02-2022

Gurugram MSMEs to Compulsorily Register on State and Central Portals to Avail Exemption from COVID-19 Restrictions

In the wake of the pandemic, if MSMEs want to be exempted from future restrictions that the government can implement, then MSMEs in the district of Gurugram, Haryana, have to be registered in both states and Central Government’s MSME portals.

Currently, in the Gurugram district, there are 34855 units registered with MSME portals. According to officials, all these registered MSMEs don’t face restrictions imposed by the government due to the covid-19 pandemic.

Also, the government has set up a helpdesk at the MSME center at ITC in sector 16 to help and inform about the registration of new and existing firms.

Out of the registered portals, 30,000 are registered in the Central Government portal named Udyam registration, and the remaining are registered in Haryana Udyam Portal.

The two portals to get registered are udayamregistration.gov.in and harudayam.edisha.gov.in.

Updated Date: 07-02-2022

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

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