MSME stands for Micro, Small and Medium Enterprises. India has a large number of MSME and SME businesses engaged in manufacturing, trading, and service sectors. These businesses often face a lack of funding due to which the government has come out with many SME loan schemes to promote these undertakings. Some frequently asked questions about MSME loans, eligibility, SME loan interest rates, application process and more are answered below.
Q1. What kind of businesses qualify as MSME?
As per the new government regulations in 2020, Micro, Small and Medium Enterprises are categorised as:
- Micro: Investment no more than Rs. 1 crore and annual turnover no more than Rs. 5 crore.
- Small: Investment no more than Rs. 10 crore and annual turnover no more than Rs. 50 crore.
- Medium: Investment no more than Rs. 50 crore and annual turnover no more than Rs. 250 crore.
Q2. Which government loans are available for MSMEs?
Over ten government loan schemes are available, the most popular ones being MUDRA scheme, National Small Industries Corporation Subsidies, Credit guarantee fund Scheme, MSME loan under 59 minutes, Credit guarantee fund government business loan scheme, etc.
Q3. Do these loans require collateral?
No, MSME business loans do not require collateral and are sanctioned to small businesses collateral-free. In addition, there is a 12 month moratorium period as well.
Q4. What is MUDRA?
MUDRA stands for Micro Units Development and Refinance Agency. It undertakes the sanction of MUDRA loan which is provided in three categories with loan amount starting from Rs. 10,000 to upwards of Rs. 5,00,000.
Q5. What is the PSB loan in 59 minutes?
This is a loan with a quick turnaround time of 7-8 days and the fastest application approval. Using this, you can get a loan of up to Rs. 5 crore in just 59 minutes, at competitive business loan interest rates.
Q6. How can I apply for the PSB loan in 59 minutes?
To apply for the PSB loan in 59 minutes, you need to visit the official website, and register your profile. Once the registration is complete, you need to answer a set of questions and enter information related to the business like GST details, bank statements, etc. If the loan application is approved, you can go on to select the bank of your choice and acquire the loan.
Q7. What are the eligibility criteria?
Some basic eligibility criteria that are common for all government loans include age compliance with the minimum and maximum limit, good credit score, successful business operation, business plan, etc. Reputed lenders typically have reasonable business loan eligibility conditions and offer financing to businesses of all sizes.
Q8. What documents are required for the application process?
Documents such as bank statements, proof of ITR, along with proof of identity, residence and age of the applicant are required.
Q9. What is the maximum and minimum amount I can loan?
You can get loans for amounts as low as Rs. 10,000 and secure up to Rs. 75 lakhs.
Q10. What are the interest rates for government loans?
The interest rates are different for every scheme, further depending upon the private or public lending institution and on your credit score and annual turnover. You can get lower rates if your credit score is better than the minimum requirement, which is 750.