What is MSME Loan and How to apply it Online?

By | November 16, 2021

MSME loan, full form of which is Micro, Small, and Medium Enterprise. It was introduced under MSMED (Micro, Small and Medium Enterprise Development) Act in 2006, which stands for the benefit of small scale to medium-scale business firms. MSME came as a boon for business as it helped people in taking direct loans from the Government reducing the role of Informal sector loan providers.
Getting this loan sanctioned is easy as one can get this loan issued from any Bank, or any private organization.

Categorizing Loan in three parts

MSME loan is classified into three parts they are as follows:

Micro-Enterprise – This is the lowest category to get a loan. Under this heading one can attain a loan if only, its investment does not exceed Rs. 1 Crore, and turnover must not be more than Rs. 5 Crore.
Small- Enterprise – In this category, one can attain a loan only if they have an investment of Rs. 10 Crore, and their turnover must not exceed the limit of Rs. 50 Crore.
Medium Enterprise- This is the highest way of attaining a loan under MSME, as this heading grants loan, till the investment of Rs. 50 Crore, and at the same time their turnover must not increase Rs. 250 Crore.

Thus, these are three ways of attaining loans under the MSME Scheme.

Who all are eligible for attaining an MSME loan?

This scheme came in force to reduce the hold of the informal sector loan providers in the market. Who in reality exploit the loan takers by charging them a high rate of Interset. Here, in MSME, the Interest rate varies from bank to bank but is a fair means of taking a loan. Also, anyone who is a homemaker, a job worker, a doctor, trader, architect, engineer, or maybe one, who is just starting up with the business can apply for the loan, according to their category as specified above.

Documents required for MSME loans


There are certain documents required to apply for an MSME loan they are mentioned below:

  • KYC Documents
  • Proof of your Address
  • All your Financial documents
  • Proof of Your Business
  • MSME certificate is widely known as Uyam Registration Certificate

Procedure to Apply for MSME loan online

One way to apply online for an MSME loan is through Sidbi click on the link. Sidbi acts as the mediator between individual and bank, to provide and lend loans to people.
 Once you click on the link, you will reach the main page of Sidbi now on your left-hand side, you will see many options you need to click on MSME Loans.

Step1– once you click on MSME Loan, you need to click on this link, and you will be taken to the page, you need to select New Entrepreneur, and then you are asked certain details of yours like Name of Applicant, E-Mail, Mobile number

Once you fill in all the above details, you will get an OTP on your mobile number, and you will be registered, as a New Entrepreneur.

Step 2- In this step, you need to click the amount of loan you need, and in the next box, its scheme will be displayed, you will have to select the scheme you want to apply for.

Step 3-  In this step, you are asked with some personal details of yours, once you fill in all the details, you need to click on Register.

Step 4- After registering, you receive an E-mail where your user name and password are provided by them, with a link. Once you click on that link, you will be taken, to another page.
 
Step 5- Here, you can apply for Hand Holding Agencies, whom if you pay accordingly they will file your Application accordingly, or else you can click on the option which is Fill the application form and apply.

Step 6- Now, you are taken to another page where the full, Application is displayed.

Step 7– There are altogether 6 pages in this form. You need to fill them one by one.

Page 1– Fill in all your personal details asked on this page, keeping in mind everything you enter here is correct.
Later on this page, you will fill up about your Business Activity. Click Next.

Page 2–  This page asks about your Background and your partner’s background.

Page 3– Here you are asked, about any of your existing loans, their bank, rate of Interest, etc. 
Also, you need to share the details of your Current Bank Account, 
 Further, on this page, fill in the details like why you need loans? It may be a Term Loan, Working capital loan, or a Limit loan.

Page 4- This page asks about the Hypothesis that you have formed about your business. They also ask about the current profit and profit rate that you expect in the future. You also need to share the details of your Balance sheet.

Page 5- Here, you need to fill in all the acts under which you are registered. And, further, you are asked about your previous GST return, GST number, etc.
 
Page 6- Here, some further details are asked, which you must fill consulting your CA because they must be correct and accurate. You need to upload the Project report and all other documents here in this step. Once you complete this form, they ask for your Declaration, you need to click on Submit my Details,  and your form will be submitted.

In the end, on your E-mail comes a Reference number, through which further proceedings take place. Whichever bank you have selected, your Application is sent to them.
If the respected bank approves your Application further, documentation work and proceedings of loans happen face to face with the authorized bank employees.

This is how the whole procedure of MSME loans takes place online through the Sidbi website.

The whole process is not at all time taking rather, it is efficient and time-saving.