Things to Keep In Mind Before You Apply For MSME Loans
MSMEs or Micro, Small and Medium Enterprises, have seen a massive surge in recent times. Thanks to social media and enhanced networking software, it is now easier to connect with people who might become potential customers, encouraging many to start their own business. MSME start ups are now availing more loans than ever and thanks to adequate funding now, India has seen a huge rise in the number of startups today. If you are one such motivated individual, here are a few things to keep in mind when you apply for a MSME loan.
Get all your Documents in Place before you start Applying:
Today MSME loan without collateral are also available but before that it is important to establish your identity as a MSME to avail the adequate funding. The best way is to just download the sample application for a loan and start accumulating all the documents that one would have to submit along with it. While the usual documentation mostly includes all the KYC documents and identification documents, one would also have to attach certified copies of the deed of partnership/ Articles of Association or Memorandum of Association. The audited statements of financials of the last two or three consecutive years, IT returns of the directors or partners of the last three consecutive years, and MSME registration certificate. Depending upon the lender one is approaching, there might some added documents as well to avail the loan for MSME.
Prepare a Project Plan:
Having a detailed project report in place would go a long way in getting the MSME loans in India approved. The future business blueprint of the borrowing organization would put the lender at ease regarding the returns that are likely expected, helping him determine whether the borrower would be a safe company to lend to. A long term vision and well chalked out plan would convince the lender even more. Try to research new ways of doing business rather than depending on obsolete models, using new techniques of communication. Show your lenders how your business is relevant today and will continue to do so in the future, promising guaranteed returns for the business.
- Get yourself Rated: Getting your MSME rated from a reputed credit rating agency would be a good thing as it would scale up your prospects of getting approval for a loan. The overall viability of a company from a financial perspective can be evaluated through these rating agencies and it would be wise to back your project plan with a favorable rating to further convince your lenders. Do your own research regarding the various schemes that the lenders have in place to approach the ones whose criteria are going to best match your business profile to get approved for MSME finance faster.
By keeping all these points in mind, it would be easier to avail the loan as well as get the best MSME loan interest rate that would greatly help your business and give you the funds to grow it into something spectacular.