MSME stands for micro, small and medium enterprises, sometimes it is also shortened to SME for small and medium enterprises. But, in essence, MSME and SME Loans are the same and are offered to businesses that fall under these two categories. Mostly, these loans are given to startup owners, small business owners and women entrepreneurs on a short-term basis. The duration of MSME / SME loans varies from lender to lender. As MSME loans are unsecured MSME / SME Loanss, there are some minimum eligibility requirements in order to reduce the risk for lenders.
- Cash Credit / Overdraft for meeting working capital finance requirement.
- Export Credit to provide Pre-Shipment & Post Shipment finance. Letter of Credit to facilitate trade.
- Bank Guarantees for meeting performance and financial obligations.
- Term Loan for purchase of commercial assets & business expansion needs
Here is the checklist of the documents required to apply for a SME loan:
- KYC Documents – Identity Proof & Address Proof of the Borrower and all the Co-Borrowers
- PAN Card of Borrower and all the Co-Borrowers
- VAT returns of this year / GST Registration certificate / Last year ITR
- Last 3 months bank statement of main operative business account
- Property (residence or office) ownership proof
- Signed copy of Standard Terms (Term Loan Facility)
- Additional document(s) may be required for credit assessment and processing of loan request
There is no difference. MSME stands for micro, small and medium enterprises whereas SME stands for small and medium enterprises. MSME loans are sometimes termed as SME loans.
You need proof of business registration, 12-month bank statements, PAN card details, GST and IT filings, and KYC info in digital format. Also, a list of documents is mentioned above. Documents may vary for a different banks.
You can repay your business loan two-times faster by opting for bi-weekly installments.
Your credit rating and the financial health of your business i.e. revenues and profit margins are a deciding factor in determining the loan amount. You can increase it by improving the credit rating through the settlement of sundry debts and optimizing operating expenses.