Small businesses often require financial assistance to achieve scalability and sustain growth. Micro, Small, and Medium Enterprises (MSMEs) can benefit from MSME loans for new business, which provide them with the necessary funds to progress on their growth trajectory. These loans can be used for various purposes, including equipment purchase, operational costs, infrastructure updates, and research and development.
Understanding the Benefits of MSME Loans
There are several significant benefits associated with MSME loan. If you are a small business owner seeking financial support, consider the advantages of availing such a loan.
- Multifarious Uses: MSME loans serve as a single source of funds for meeting the financial needs of small and medium business ventures. There are no limitations imposed by lenders on the usage of these loans, allowing you to address unexpected financial crunches, hire skilled staff, purchase advanced machinery or equipment, and stock up on raw materials.
- Great Accessibility: In situations where your business requires funds urgently, MSME loans provide a quick solution. These loans are sanctioned swiftly, and the disbursed amount reflects in your account within a day or two. Lending institutions may approve small business loans in as little as 24 hours. Additionally, online access allows you to conveniently monitor your loan account statements on the go.
- Retain Control: Small business enterprises need to maintain control over their financial requirements. Seeking funding from venture capitalists often means sharing control of your company. However, with an MSME loan, you retain full control over all business decisions. Small business loans enable you to avoid relinquishing control and retain autonomy.
- Collateral Not Needed: MSME loans are unsecured, meaning you do not need to pledge your company or home as collateral. Lending institutions understand that smaller enterprises may not have the capacity to keep their assets, equipment, or valuable resources as collateral, as it can negatively impact their productivity. Therefore, an SME loan provides an ideal funding source without the risk of losing an asset.
- Competitive ROIs: MSME loans are sanctioned at affordable interest rates. This ensures that only a minimum sum is allocated to principal and interest repayment, leaving the rest available for pressing business needs. Having more money on hand allows small businesses to take calculated risks and expand their offerings to capture a larger market share.
- Shorter Tenures: MSME loans are typically availed for short-term requirements by small or medium enterprises. This provides flexibility to the borrower, as there is no long-term commitment required. Shorter tenures allow businesses to allocate funds more efficiently and maintain a closer check on cash flow.
Documents Required to Apply for an MSME Loan
- PAN card
- Aadhaar card
- Credit (CIBIL) score
- Business-related KYC documents (company PAN card, certificate of incorporation, etc.)
- Last six months’ bank statements
- Address proof
The Bottom Line
Before applying for an MSME loan, utilize FullertonIndia’s user-friendly business loan EMI calculator. This tool will help you determine the optimal EMI based on your loan amount and tenure. FullertonIndia is fully equipped to assist you with all your business finance needs. Contact us today if you require an MSME loan urgently!