MSME Business Loan: Documents & Eligibility

If you are an entrepreneur who is looking to raise funds for business, you must consider applying for an MSME Business Loan. MSME Loans are a great way to get the money you need for your business. However, you must meet the MSME Loan eligibility criteria before applying for an MSME Loan. The primary criteria is that you must be an existing micro, small or medium entrepreneur in the services or manufacturing industry. Once you meet the MSME Loan eligibility for new business and raise the funds, you can use the money to boost cash flow, stock up on inventory, upgrade your firm’s infrastructure, meet working capital needs, meet overheads such as rent, repairs, accounting fees, advertising, etc.

Depending on the amount of loan, tenure, MSME Loan interest rate and your lender, you can opt for a Secured or an Unsecured MSME Loan. For you to secure an MSME Loan, you must meet primarily the following eligibility criteria:

1. Age

Your minimum and maximum age must be 18 years and 65 years respectively.

2. Who can avail

You can be a new MSME business or an existing one.

3. Collateral

You may or may not require any collateral or third-party security in order to avail the MSME Loan. Some lenders offer Unsecured Loans up to a certain extent without taking anything as collateral. However, most of the traditional lenders offer Secured Loans for which you need to offer something as collateral.

You can avail your MSME Loan from private sector banks, public sector banks, microfinance institutions and regional rural banks. Also, you need to present your identity proof, address proof and fill out an application form to avail the MSME Business Loan.

Below are the documents required for MSME Loan:

1. Identity proof

You and all your co-applicants applying for the MSME Business Loan must produce their identity proof. Valid identity proofs include PAN Card, Aadhar Card, Voters ID Card, Passport and Driving Licence.

2. Address proof

You and all the co-applicants applying for the MSME Loan must produce their residential address proof. The acceptable address proof documents are passport, telephone or electricity bill not more than three months old, Ration Card, Aadhar Card and Driving Licence.

3. Business address proof

While applying for an MSME Loan, you must also present the lender with your business address proof, which includes your Udyam Registration Certificate, lease agreement, GST Registration Certificate and telephone or electricity bill not more than three months old under the name of the business.

4. Income proof

To avail the MSME Loan, you must also produce the income proof of your business. It can be your income tax returns with the profit and loss account and balance sheet, bank account statement of the last six months under the name of the business and tax documents like GST return, PAN Card, etc.

5. Registration proof

An important documentation that is required to avail MSME Business Loans is your proof of business registration. This includes the partnership deed, Udyam Registration Certificate, Memorandum of Associations (MoA), Article of Associations (AoA), copy of licences and certificates, rent agreement and sales deed.

6. Other documents

Another important document that you need to apply for an MSME Loan scheme is your business plan. This document is needed to ascertain your business, its industry and its long-term growth prospects before the sanction of the loan. Also, you may need to present your MSME certificate also called Udyam Registration Certificate, which you receive upon registering as an MSME.

You need to fulfil the above eligibility criteria and present the list of documents required to apply for an MSME Business Loan in a hassle-free manner. You can apply in an MSME Loan scheme with the bank of your choice.