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MSME Loans: Application Process, Documentation And Benefits

Jan 9, 2023

4 min. Read

MSME Loans: Application Process, Documentation And BenefitsSME Loan

MSME Loans: Application process, documentation and benefits


Every Indian is proud of the country we have become in the past few decades. As a developing country, India has seen massive growth in its economy in the last decade. A large chunk of credit for this growth in the Indian economy goes to small and medium enterprises. Did you know that as of 27th March 2022 India has more than 70 million micro, small and medium enterprises (MSMEs) and employ over 45% of our workforce?


The data itself is a testimony of how important micro, small, and medium business enterprises are for not just the Indian economy, but also the common Indian. As more and more people become interested in starting their own businesses, their need for funds will also increase.


What is SME Loan

SME loans are a special financial tool that aid small and medium enterprises in running their businesses and conducting their business activities. According to the RBI, for a business to be eligible for an SME loan, it has to fall under any of the two categories: small and medium. The size of these businesses is measured based on the annual turnover and investment threshold. SME loan have special importance for the economy as it help & run businesses for many many years.


SME Loans Process

Not only are the features of SME loans beneficial, but also the simple application process makes it something everybody would choose. At LTF, we aim to simplify the process of loan application and disbursal. If you are interested in obtaining an SME loan from LTF, visit the website and fill out the enquiry form. Our team will get in touch with you as soon as we can and we will take it from there.


SME Loans Interest Rate

SME loans are offered at reasonable rates because after all, we aim to help the common Indian achieve their dreams by setting up their own business. At LTF, we offer an SME loan from 5 lakh to 50 lakhs and the interest rate starts from just 12.5%. There are a lot of other factors on which your MSME loan interest rate depends. Here is a list of a few of those:

• Type of business:
Financiers always consider the type of business you are running when deciding your rate of interest. Some businesses are considered riskier than others and the interest rates for these businesses might be higher. The lesser the risk in your business the lower will be your interest rate.

• Type of loan:
You can either borrow a secured or an unsecured business loan but unsecured business loans have a higher interest rate as compared to secured ones. Secure loans offer banks the collateral which ensures safety, however, unsecured loans do not have any collateral therefore the interest rates are higher.

• Business stability:
If you have been running your business for a long time and there is a considerable amount of stability in your business, it might lead financiers to offer you a lower rate of interest. Unstable and recent businesses might get a higher rate of interest.

• Annual turnover:
Your annual turnover and profits are also important when it comes to business loan interest rate. The more profit you generate, the better your repayment capacity, and therefore the interest rate offered to you will also be low.



SME Loan Documents Required

Since SME loans are offered to businesses it can get risky for lenders. Therefore, there is a thorough verification process during the MSME loan application process. Here is a list of documents that you must have to borrow MSME loans:


• Company Documents:
PAN Card, address proof, GST registration certificate, and other applicable registrations

• Proprietor/Partner/Director documents:
PAN Card, Aadhaar card, Electricity bill, or Rent agreement

• Income Documents:
Income Tax Returns and computation for the latest 2 years, Profit or Loss statement and Balance Sheet for the latest 2 years, GST Returns

• Bank Account Statement:
12 months bank statement


If you are a small or medium business owner, this is your chance to apply for an MSME loan today and reap the numerous benefits offered. Through our seamless MSME loan process, difficulties and can borrow loans in a hassle-free manner.

Tips To Reduce EMI On SME Loans

 

 

EMI can be a source of stress for a small businessman but do not let this stress get to you. Here are some tips you can follow to reduce your EMI and eventually your stress:

 

 

• Borrowing the appropriate amount:
Make the effort to calculate and decide the exact amount you need to borrow as the more you borrow the bigger will be the EMI. Borrowing the right amount will help you avoid paying extra interest.

 

 

• Longer payment tenure:
Choosing a long repayment tenure will also reduce your EMI. However, you must remember that even though this reduces the EMI, it increases the interest outflow repay your loan the more

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