Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply

Quick Links for loans

Quick Links for Insurance

Investment

Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Back

New Commercial Vehicle Financing

  • First time user
  • Retail and strategic Clients
Know More
Back

Used Commercial Vehicle finance

  • Repurchase
  • Refinance
  • Top up
  • Balance Transfer
Know More
Menu  
 
Apply Now

Tata Capital > Blog > What Are the Eligibility Factors Considered for an MSME Loan Application

Loan for Business

What Are the Eligibility Factors Considered for an MSME Loan Application

What Are the Eligibility Factors Considered for an MSME Loan Application

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 categorises MSMEs into two classes of business – manufacturing and service. Interestingly, the MSME sector is set as a priority sector by the government; other priority sectors being agriculture, education, housing, etc. Thus, MSME loans fall under priority sector lending and comes with the associated benefits. If you’re thinking of applying for an MSME business loan for your small or medium-sized enterprise, read on to find out the eligibility factors and the application process.

Know More

1. What Is an MSME Loan?

An MSME (Micro, Small and Medium Enterprise) loan is an unsecured business loan offered to startups and small businesses meeting the eligibility criteria. MSME loans come with varying repayment tenures and interest rates, which are determined by the loan amount, the applicant’s profile, and the business’ history.

Some financial institutions offer SME loans under the following government schemes –

  • Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE)
  • Prime Minister’s Employment Generation Programme (PMEGP)
  • Micro Unit Development and Refinance Agency (MUDRA Loan)

2. Eligibility Criteria

To apply for an MSME loan, you must be at least 18 years of age. While the exact SME loan eligibility criteria will differ across lenders, the following are typically required –

  • The MSME must be operational in either the manufacturing or service sector
  • The MSME must have a proven business record of more than 2 years
  • The business must not possess a default history
  • The borrower must own the place of business

3. Documents Required

Typically, the following documents are required to apply for a small business loan –

  • Filled application form
  • ID Proof: Passport, driving license, PAN card, etc.
  • Residence Proof: Passport, electricity bills, sales tax certificate, etc.
  • Bank statements
  • Business registration proof
  • Proprietor(s) PAN Card
  • Partnership deed copy
  • Sales tax documents
  • IT returns
  • Business place address proof
  • Projected balance sheets

4. Where Can You Apply for an MSME Loan?

The RBI has prescribed MSME lending targets for all private and public-sector banks. Domestic scheduled commercial banks (except regional rural banks) and foreign banks with 20+ branches are to mandatorily allocate 7.5% of their Adjusted Net Bank Credit (ANBC) to the microenterprises sector. As per the RBI guidelines, lending institutions must offer MSME loans up to Rs. 10 lakhs without requiring any collateral. However, some lenders offer SME loans for even higher amounts.

Do note that this isn’t an exhaustive list and the lender may ask you for additional documents before approving your business loan.

5. How to Apply for an MSME Loan

It’s extremely easy to apply for an MSME loan online. However, applying for a small business loan can even be done by visiting the nearest branch of your lender. You need to fill in all relevant details in your MSME loan application and submit it to your lender along with necessary documents. Then, your lender will verify your application and documents for authenticity. Once that is done, your SME loan will be sanctioned. Shortly after, the loan amount will be disbursed to your bank account. 

Apply for MSME Loan

Eligible for an SME loan? Apply with India’s leading lending institution – Tata Capital! At Tata Capital, we believe that small businesses are the backbone of our economy. To give them access to the right financial support, we offer small business loans to give them the boost they need. 

Visit our website today and use our business loan EMI calculator to calculate your monthly interest payments!

Apply Now

Give Your Business the Right Boost: Apply for a Business Loan Today

Apply now
Popular Searches
business idea udyogini scheme hsn code full form low investment business ideas top 10 most successful businesses to start transport business import export business in india mineral water plant cost collateral free loans
Disclaimer

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Useful Links and Resources

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.