MSME loans are rapidly becoming viable means of accessing funds for meeting working capital and ancillary requirements for businesses. This credit option is tailored for MSMEs, making it easier for entrepreneurs of small businesses to account for their needs more readily.
Above all, the borrower centric features and benefits of this funding option add to its popularity among entrepreneurs. So in case you are planning to take out an MSME loan, make sure to weigh in the accompanying benefits to understand better how to utilise the credit option in your favour.
Take a quick look at the section below to gain an insight into the MSME loan benefits in brief.
7 Major Features of MSME loans
These are among the top features of MSME loans and their associated benefits for small businesses:
1. High loan value
Eligible businesses can easily take out a high loan amount to meet their business requirements. For instance, SBFC offers a high loan amount ranging from RS. 1 lakh to Rs. 75 lakh to MSME entrepreneurs.
Since there is no such end-use restriction, the high loan quantum proves useful in replenishing work capital, meeting growth capital requirements, funding expansion or backing up an investment.
2. Opportunity to leverage assets
Borrowers may leverage their property, machinery, or other valuable assets to raise funds based on lenders' guidelines. Typically, leading NBFC’s offers a high percentage of asset value as loan amount to eligible businesses to help them account for their requirements with ease.
3. Low-interest rate
The MSME loan interest rate is relatively lower. This lowers the cost of borrowing and helps lenders manage the same with ease.
However, note that having a high credit score often helps negotiate for a lower interest rate and other favourable repayment terms. So, before you apply for an MSME loan, try to boost your current credit score to make the most of the offerings of this funding option.
4. Flexible repayment tenure
Leading NBFCs set a flexible repayment tenure to repay MSME loans. For instance, SBFC offers MSME loans with a flexible repayment tenure of up to 15 years. This helps small businesses to pay off the debt at their own pace and as per their repayment capability. In turn, it helps manage repayment in the least cumbersome manner. Use an online loan EMI calculator in case you are unsure which tenure would suit your repayment capability the most.
5. Prompt loan disbursal
Most NBFCs follow a simple application, documentation, and verification process to keep the borrowing experience simple. This makes the entire process less cumbersome for borrowers and ensures the same is quick enough to provide them access to instant funding. For instance, SBFC disburses MSME loans to eligible applicants within 7 days to help them meet business requirements right away.
Besides these criteria’s, an MSME loan often comes with a simple eligibility requirement and documentation. This helps small businesses to access funds without going through much hassle. The following section highlights the basic eligibility criteria and documentation requirements set by SBFC to take out an MSME loan. Take a look at them to understand how the same helps small businesses access funding and boost their working capital.
6. Simple eligibility criteria for an MSME loan
Applicants who meet these criteria can qualify for an MSME loan from SBFC:
● Resident Indian who is at least 25 years of age
● Salaried individual with a monthly income of minimum Rs. 20,000.
● A self-employed individual with a regular source of income
● Individuals with valid property documents
7. Hassle-free documentation for MSME loan
SBFC follows simple documentation to ensure quick and hassle-free verification. In turn, it helps gain access to funds at the earliest.
Here is the complete set of documents required for an MSME loan:
● Proof of Address of residence
● Proof of address of the business
● Identity proof
● Income proof
● Proof of Business vintage
Note that the lender may ask you for additional documents to back up your eligibility. Therefore, make sure to find the entire set of documents before applying for an MSME loan to ensure quick verification and prompt disbursal of the loan amount.
Conclusion
Hence, the tailored features make up the MSME loan benefits by helping entrepreneurs of small businesses meet business requirements. As a borrower, make sure to find out more about them from your lender to make your borrowing experience more fulfilling.
