Funding is essential for small businesses and start-ups to grow and sustain. Yet it is difficult for new organizations to obtain sufficient financial backup. This is primarily due to a shortage of sales and capital investment. To assist these enterprises with steady cash flow for uninterrupted business operations, various financial institutions extend the MSME loan, a form of business loan or working capital loan.
Such credit is used for business expansion, meeting working capital requirements, purchasing equipment, etc. Therefore, with an MSME loan, businesses can take necessary steps towards developing their firms.
Ways to get MSME loans in India 2022
Due to the rising global competition and the need for constant innovation, it has been observed that MSME businesses need funds to meet elevated expenses and maintain stable cash flow.
Here are some of the ways to avail of an MSME business loan:
- Draft the purpose of loan
One of the important checklists before applying for a business loan is drafting the purpose of loan. This will allow borrowers to get clarity on the reason behind taking credit. Moreover, it ensures borrowers spend the credit towards their objectives. In an MSME sector, where businesses are continuously struggling with fund shortages, an advance sometimes distracts a borrower from the actual objective.
Usually, most lenders offer credit to meet daily business operations or expand a business. However, business owners need to be very clear about their objectives from the beginning. In other words, one should always make a plan and follow it before applying for a business loan.
- Restrict loan requirement
One of the crucial tips that will help loan repayment is to limit credit requirements. Often borrowers end up over-borrowing. However, one must not forget that he/she needs to repay the loan within a stipulated time, including the interest. If one applies for a higher business loan amount, EMIs will also be higher. Thus, it is an essential step to be taken carefully when availing of an MSME loan.
- Check eligibility parameters
When acquiring a working capital loan, borrowers must always check MSME loan eligibility parameters. One can check these eligibility parameters on the websites of the financial institution. Borrowers can also check third-party platforms to conveniently compare various lending institutions’ eligibility parameters. Lenders check the credit score and profile of the borrower before approving the loan.
It is not wise to have too many credit inquiries within a short span. Too many hard inquiries can negatively impact a borrower’s credit score. Therefore, it is wise to learn about the ideal credit score to have when applying for loans. However, when availing of MSME loans, there would be certain conditions like operational business years, minimum turnover, GST returns, etc. Therefore, one should always consider these factors and apply accordingly.
- Application process
Here are the simple steps to avail an MSME loan without any hassle:
Step 1: Click on ‘apply online’ to open the application form
Step 2: Input phone number for the OTP verification
Step 3: Submit personal and business details
Step 4: Upload financial statements for the last 6 months
After successfully submitting the loan application, one of the loan representatives will connect you to discuss further steps.
Therefore, by following the guidelines, borrowers can acquire affordable MSME loan interest rate and favorable terms. Apart from these, large-scale financiers like Bajaj Finserv also offer the benefit of pre-approved offers on a range of financial products, such as personal loans, business loans, etc., to existing customers.
By availing of these offers, borrowers can bypass the hassle of extensive documentation and save time. Therefore, prospective borrowers can check their pre-approved offers by mentioning their names and contact details.
To sum it up, this tailor-made MSME loan caters to entrepreneurs entering this space, thereby allowing them to focus on their growing businesses and thrive in this sector.