MSME Loan: 2 Easy Methods to Apply for MSME Loans

When you apply for an MSME loan, you may feel that applying and getting approval of an MSME loan is not easy. But you know, Government of India and related agencies have initiated many digital platforms for the easy application of MSME loan. These facilities may help you to get an in-principal approval for an MSME loan in 59 minutes.

In this article, you can read details of MSME loan, required documents and how to apply for “PSBloanin59minutes” and how to apply for a business loan through udyamimitra online portal.

Micro Small Medium Enterprises (MSME)

For the promotion and development of small and medium business, the Government of India passed an Act in the Parliament, called  Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

It provides the classification of the Micro, small and medium enterprises in India. 

In India, Micro Small Medium Enterprises (MSME ) contributes around 28 per cent of the GDP and more than 40 per cent of the export. 

As per the old definition, the Micro Small Medium Enterprises (MSME) has classified into two. Manufacturing and service.

Based on the investment in plant and machinery, the business in India has classified into Micro, Small and Medium

On 13th May 2020, Union Finance Minister, Nirmala Sitharaman said the definition of Micro, Small, and Medium Enterprises(MSMEs) is revised. As per the new definition, the distinction between Manufacturing based and service based MSMEs will not exist.

As per the revised classification of MSME, the criteria for deciding the Micro, small or medium enterprises will be based on the investment and annual turnover of the business.

Revised MSME Classification Based on Investment and Turnover

ClassificationMicroSmallMedium
Manufacturing & ServicesInvestment < Rs 1 cr.
and
Turnover <Rs. 5 cr.
Investment < Rs 10 cr.
and
Turnover <Rs. 50 cr.
Investment < Rs 20 cr.
and
Turnover <Rs. 100 cr.

(i). Micro Enterprises

A manufacturing or service unit has an investment in plant and machinery or equipment up to one crore and an annual turnover of less than five cores considered as Micro Enterprise.

(ii). Small Enterprises

 If a manufacturing or service unit has invested up to 10 crores and the annual turnover is less than 50 crores, this businesses called as Small Enterprises

(iii). Medium Enterprises

A manufacturing or service enterprises have an investment in plant and machinery or equipment up to 20 crores, and an annual turnover of fewer than 100 crores classified as Medium Enterprises

Micro Small Medium Enterprises (MSME) has a huge contribution to the development of our country. Governments support these MSMEs by giving different schemes and financial aids.

We have educated technically qualified youth. If these resources can initiate small business with manpower of 10-12 employees, it will produce a great change in the economy.

This will help to abolish unemployment and add a new room to our GDP.

INR 3 Lakh Crore Collateral-Free Automatic MSME Loan

The Government of India recently announced that they will release 3 lakh crore collateral free loan for business. It is an automatic loan that gives you a 20 percentage of the loan on the entire outstanding you have with your banks as on 29.02.2020.  

This loan will benefit 45 lakh businesses across India.

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(i). Do we need to provide any other collateral security for availing this loan

No. You don’t need to provide any additional collateral security for availing this loan

(ii). How to Repay this loan

You can get a repayment period of 48 months and you will also be eligible to get a moratorium of 12 months on the principal loan amount. It means you are required to pay the interest-only for the 12 months and the rest you need to pay back within four years.

(iii). What is the eligibility of the MSMEs to get this loan

 All MSMEs having turnover up to 100 crores and the loan outstanding of INR 25 crore can apply for this loan if you need it

(iv). When this loan scheme  will end

This scheme will end on October 31st,2020. So if you need this loan facility, rush to your bank

MSME Loan Schemes

  1. Mudra Scheme
  2. CGTMSE ( Credit Guarantee Fund Trust for Micro and Small Business)
  3. PMEGP ( Prime Minister’s Employment Generation Program)

1. Mudra Scheme

Mudra loan or Pradhan Mantri MUDRA Yojana (PMMY) introduced on April 8, 2015. The purpose of this loan is to enable Commercial Banks, RRB, Small Finance Banks, MFIs and Non-Banking Financial Institution to provide loans to small and medium businesses.

As per this scheme, a borrower can get a loan up to 10 lakhs. Any borrower who wishes to apply for this loan can approach the financial institution directly or through the digital platform like www.udyamimitra.in., https://www.mudra.org.in/

2. CGTMSE ( Credit Guarantee Fund Trust for Micro and Small Business)

A hassle-free loan is an important factor for the promotion and improvement of the small and medium business. When we approach banks, the availability of adequate collateral securities to convince the banks may become a matter.

To strengthen the loan delivery system, the CGTMSE came into existence with the help of the Government of India and SIDBI.

This helped the small business promoters to mainly concentrate the viable projects and make the dream a reality with the help of a collateral-free loan. The lender will also verify the viability of the project and credit facility will be granted based on the primary security of assets financed. 

3. PMEGP ( Prime Minister’s Employment Generation Program)

This scheme was introduced in 2008 after merging the PMRY (Prime Minister’s Rojgar Yojana and Rural Employment Generation Program (REGP). The Government of India wanted to generate new employment opportunities in Rural and Urban areas by promoting the micro and small business units.

Once you apply for an MSME loan, the bank will appraise the project and will take their own decision. As per RBI guidelines, no collateral security will not be insisted for projects having loan up to 10 lakhs.

MSME Loan Through PSBloansin59minutes.com

You can apply for an MSME loan in 59 minutes through the ‘psbloansin59minutes.com’. To do so, you have to log in to this webpage and fill the application form.

This portal has created for the speedy approval and disbursal of the loan amount to the business from public sector banks. You can apply for a loan amount up to 5 crores through this option.

Under this loan application process, you even do not need to visit the bank branch as the process can be completed online and can get in-principal approval for MSME loan in 59 minutes.

Documents required

  1. GST number
  2. GST user id and password
  3. Current Account number
  4. Six-month bank statement in pdf format
  5. Last three years Income Tax Return in XML format
  6. Proprietor /partner /Director Details
  7. KYC documents
  8. Educational Details
  9. Business Experience
  10. Net worth
  11. Industry, sector, subsector
  12. Micro Small Medium Enterprises (MSME) registration number
  13. Pay fee by debit card/credit card

Steps to apply for MSME loan in 59 minutes

Step 1:

Login to the portal of PSBloansin59minutes.com.
Click for sign up and fill your name, email ID, Mobile number. Then click ‘Get OTP’ button. Enter the OTP received in your mobile, check the box to agree on the terms and conditions. Click “Proceed”

Step 2:

You have to change your password. You need to use at least 8 characters in the combination of alphanumeric and special characters (Eg. [email protected]). Then proceed

Step 3:

Select your Requirement, A new screen will open. You can see two options like a Business loan or Home loan/Personal loan/Auto loan. Select the Business loan option

When you select the Business loan, it will again show you two options.

  1. Mudra Loan
  2. MSME Loan

If you need a loan up to 10 lakhs, you can select the Mudra loan. In case the business loan requirement is more than 10 lakhs, you can click MSME loan. It will give access to apply loan up to 5 crores.

Step 4:

This screen will ask you some basic questions like

  1.  you a GST registered or not,
  2. Filing GST returns regularly
  3. Whether filing the Income Tax Return 
  4. Whether you pay your previous loans regularly 

Then check the box of “ I am a Registered Micro Small Medium Enterprises ( MSME) and agree with above-selected points”, then click” proceed”.

Agree with the “Consent & Undertaking “.click agree and proceed

Step 5: 

(You have to select YES to  “enable API Request “ from the GST site after login to GST Portal > Dashboard >My profile > Manage API Access. After this,

Fill your GSTIN details to retrieve the GST data.

You will get OTP verification.

Step 6: Upload the ITR in XML format for the last three years and click “Submit”

Step 10:

You have to enter the “Provisional for the current year” like Sales, Net Profit or Loss, Inventory, debtors etc. Then click “submit”

Step 11:

Upload your Bank statement in a PDF format. Select your bank and upload your six-month bank statement downloaded from Net Banking Facility

Step 12:

In the next menu, you can see almost all your data filled in the appropriate column. You have to fill the missing data only.

Then Enter your Udyog aadhar number, your competition level in the market, available technology,  loan requirement and purpose, existing loan details, etc,

Step 13:

You have to select the bank and branch where you wanted to apply for the loan and pay a convenience fee of INR 1000+GST.

Enough, then you will get intimation from the concerned bank. This process will help you to obtain an MSME loan in 59 minutes.

MSME Loan Application Through Udyamimitra Portal

msme loan

www.udyamimitra.com is another initiative and online platform by SIDBI to provide the end to end solution to the credit delivery and related services like handholding support, application tracking, Certified Credit Counselors, multiple interfaces with lenders, service providers, borrowers.

‘Udyamimitra portal’ also helps the new age financial lenders and Fintech to enter and participate in the development of the MSME loan sector.

Your business loan application through www.udyamimitra.in will auto attach your Credit Score and Credit Information (CIR) Report along with your loan application online for the examination of the lender. Before applying for g loan through the portal, it is better to check your Credit Score and CIR for the easiness of loan availability.

You can apply for many other loans and facilities through ‘udyamimitra’ portal apart from MSME loan. They are 

  1. Mudra loans like Shishu, Kishore, Tarun up to 10 lakhs.
  2. Stand up India loans from 10 lakhs to 1 crore
  3. MSME loan 
  4. Knowledge portal for young MSME s and handholding services and other resources 

Lenders in this Portal

There are three category of lenders in the portal

  1. Banks and Small Finance Banks 
    This category includes the Public Sector, Private banks, foreign banks, Small Finance Banks and regional rural banks
  2. Non-Banking Finance Companies – NBFCs licensed by RBI 
  3. Fintechs- who lay high thrust in technology and speed of delivery

How to Apply for MSME loan through “Udyamimitra” portal

The application of MSME loan through the udyamimitra portal is a six-step process.

Step 1 :

(A) . The first part of this step is to fill the Basic information like Business organizations’ name, Location address, Constitution of the business (Sole proprietorship, partnership, LLP, PVT Ltd etc), Select the available space as Rented, owned or leased.

Enterprise PAN card number means the business organization loan number. In the case of a sole proprietorship, you have to enter your PAN card number. It is an important data in the application process

Next part is to fill up the Business Activity of the applicant like

Whether the business is new or existing 

Whether first time entrepreneur or not

Industry type like Manufacturing or service, triaging or agriculturally allied

Industry group

Proposed business activity

CIN No  . need to fill in case the applicant is a company. 

CIN No stands for Corporate Identification Number. It is a twenty-one digit alphanumeric. This identification number issues to all the companies incorporated in India, with the Registrar of Companies (RoC).

GST Number need to fill in case of all existing business organizations.

Date of commencement means the date on which you began the business or the date proposed to start your new business.

The next section will ask you the registration details of the business unit. You need to enter the Registration Number and further need to mention the corresponding Act. 

If the business is ZED rated, you need to mention it in the column provided for it.

The Validation option available at the bottom will help you to discover the empty and relevant data to be filled. 

Step 2:

(B) Under this section, you have to enter all the details about the proprietor or directors of the business organization.

Step 3:

(C ) Here, you have to enter the Names of Associate Concerns, Address of the Associate concerts, the present bank which dealing with, nature of the Associate Concern and extend of interest in the Associate Concerns as a percentage 

An Associate Concern is a business organization like Proprietorship, firm or company in which the other concern has noteworthy influence.

(D) Next, we need to fill the existing Banking and credit facility 

We needed to enter the below details in the columns provided

  1. Saving Account – Saving Account is an account maintaining with the banks. This detail is mandatory for the application of loan 
  2. Current Account – Current Account is a deposit account with banks in the name of the business for a large number of business transactions 
  3. Cash Credit – Cash Credit means the short-term loan provided by banks for not more than one year. This loan may use mainly for meeting the working capital requirement.
  4. Term loan – This loan granted usually for a long period like 10 – 30 years and repaid as monthly basis.
  5. LC/BG Account – LC means the Letter of Credit used by the business. Under this, the bank undertakes to make payment to the seller on the submission of documents mentioned in LC.
    BG is a Bank Guarantee from a bank in which the bank would fulfil the obligation of the debtor in case the debtor fails to do so.

For all these elements, we need to fill the corresponding bank, Presently banking with, Available limit, Outstanding balance, Security Pledged, Asset classification (like standard, sub standers, Doubtful or Loss), Rate of Interest on the existing credit facility, and the Repayment Terms,

(E) Under this section, you need to enter the Credit facilities proposed to take

You need to enter the below mentioned information

  1. Working Capital 
  2. Term Loan
  3. LC/BG Credit

For all these components, you need to enter the Required Loan Amount, the Purpose for which required, details of the Primary Security offered for this loan, Whether any other Collateral Security offered, if yes, details of the collateral security offered.

Primary Security means the assets or property acquired for this project is offered as security for the financed amount to the lender.


In case the other Collateral Security is offered, then you need to fill the additional details in the application form viz the Third-party Guarantee details and Other Collateral Security

Under third party guarantee : You need to fill Name of Guarantor, father /Spouse name, Residential address, Residence Telephone number, mobile number, Net worth amount, Adhar and Pan number 

Under the Other collateral, you need to enter the name of the owner of the collateral, details and value of the collateral security.

At the bottom, you need to enter the expected number of persons to be employed 

Step 4:

(F) In this section, you need to enter the future business estimates

Required to enter the years of your business. 

Then you need to fill the details of estimates of the current year and projection of your sales and other business data up to 7 years. 

It is mandatory to fill at least current year estimates and the first year of the projection.

  1. Net Sales – You can get this figure from your Profit and loss account 
  2. Net Profit – This figure also can obtain from P&L Account
  3. Capital ( Net worth in case of Companies )
  4. Utilized Capacity. This is the actual level of capacity 
  5. % of the Utilization (of the total installed capacity). This can be calculated as (Utilized Capacity)/(Installed Capacity ) X 100
  6. Installed capacity. This indicates the maximum levels of output

(G) You have to enter the actual sales year and amount in case the banking capital 

(H) Under this section, you need to fill the details in case you need a Term Loan

  1. Type of machine / Equipment 
  2. Purpose
  3. Whether imported or indigenous
  4. Name of Supplier 
  5. Basic Cost
  6. Freight Cost
  7. Insurance/
  8. Customs Duty
  9. Total Cost of machine
  10. Promoters’ contribution
  11. Required Loan
  12. Required repayment period with Moratorium period in months 

You can check the box if you eligible for Special Credit Linked Capital Subsidy Scheme (SCLCSS)

Then ypu need to fill the Business Descriptions and can click “add more” to fill more than one machinery is eligible for SCLCSS subsidy.

You need to fill the financial position as given below

  1. Net Block means the Gross block (the total of assets ) less accumulated depreciation on assets
  2.  Current Assets means those assets which can be converted into cash within a short period like one year.
  3. Current Liabilities means those liabilities which are payable within one year
  4. Term Loan means a long term loan which is repaid in regular intervals 
  5. Share capital means the fund raised by the company in exchange for its shares 
  6. Reserve and surplus mean the funds keep back for a specific purpose.
  7. Net worth means the total of share capital, reserve and Surplus

Under working Results, you need to enter the 

  1. Total Sales 
  2. Gross Profit (Before Interest and Depreciation )
  3. Depreciation 
  4. Interest
  5. Operating Profit 
  6. Net Profit (After Tax)

Under Total Sources of Funding, you need to fill the Term Loan amount, Add Share Capital, Internal Accruals and Capital Subsidy.

Internal Accruals of a business means the accumulated retained earnings and depreciation charges

Then enter the date of the Completion of the Project 

Next, you need to fill the amount of total value for which the subsidy under SCLCSS  is claimed. Click “Add More “ in case you need to claim the subsidy for more than one machinery

Step 5:

(i) You need to fill the status regarding Statutory obligations and whether complied or not 

  1. Registration under the Shops and Establishment Act. 
  2. Registration under Udyog Aadhar 
  3. Drug Licence
  4. Latest Sales Tax Return Filed 
  5. Latest Income Tax Return Files
  6. Any other statutory  dues remaining outstanding 

(J)  then you have to upload the self-attested KYC documents of the proprietor

  1. ID proof
  2. Address Proof
  3. Applicant Photo
  4. Applicant Signature

Upload the KYC Documents of Entreprises

  1. Proof of Identity / Address of the business enterprises
  2. Balance sheet past year 1
  3. Balance sheet past year 2
  4. Balance sheet past year 3
  5. B/s (Last 2 years ) with IT/Sales Tax Returns (Mandatory if 2 Lac & above)
  6. Memorandum of Association & Articles of Association of the Co./ partnership Deed Etc
  7. In the absence of third party guarantee, Net worth statement of Borrower/Directors/partners etc
  8. Statement of accounts (Last 6 months )
  9. Projected Balance sheet
  10. Sales up to the Date of application (Current FY)
  11. Proposed Project Report ( Technical & Economical viability)
  12. Proof of Rental Agreement 
  13. Proof of clearance from the Pollution control board
  14. Proof of SSI /MSME Registration
  15. In case of takeover of advances, sanction letters of facilities being availed from existing bankers/financial institutions along with detailed terms and conditions 
  16. Photocopies of lease deeds/title deeds of all the properties being offered primary and collateral securities 
  17. Copy of GST Return of applicable 
  18. Positions of accounts from existing bankers and confirmation about the asset being standard with them
  19. PAS Financial Excel sheet

In the next step, you can select the Credit Information Agency and Credit Rating Agency with whom your organization possess the credit report and upload the same. 

Then you can choose the process ref the lender like Banks or Financial institution or  NBFC/Fintech/SFBs

Steps 6:

It is the declaration, you need to read carefully and sign and submit

You can check the status of the application after login to the ‘Udyamimitra portal’.

Conclusion

These are the best way to apply an MSME loan through a digital platform. I hope you enjoyed this article. Please share it with the ambitious or existing entrepreneurs to make use of these advanced platforms available in the market, especially for the business owners in the MSME sector. It may help them to get an opportunity to obtain an MSME loan in 59 minutes. We published this article for giving an idea about the importance and platforms of MSME loans. It is purely for an educational purpose. Applying through the above-mentioned web portal will not guarantee you the sanction of the loans as the commercial approval of a loan at the sole discretion of the lenders.

Disclaimer

All the information provided in this article is for educational and reference purpose only. As the tax-related matters amending time to time, the readers must verify the facts and laws with concerned departments or qualified professionals before acting based on the above information. The authors and www.finablow.com expressly disclaims any liability for any action taken based on the information provided in the article.Disclaimer

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