Understanding the Process of Applying for an MSME Loan Online: Tips and Tricks

Understand where you stand to obtain an MSME loan considering the eligibility criteria and make an informed decision to increase the chances of loan approval.

The Micro, Small, and Medium Enterprises (MSME) sector, comprising over six crore businesses, is vital in the economic development of India. The Ministry of MSME aims to boost the sector’s contribution to GDP – up to 50%– by 2025. However, the MSME sector goes through its own challenges, including financial stress, and infrastructure constraints. To address such challenges with timely funds, several financial institutions support MSMEs with their SME/MSME loans. 

Getting an MSME loan can be convenient if entrepreneurs know how to apply for MSME loan. Entrepreneurs can go through the post to know simple tips and tricks to make MSME loan applications hassle-free and access a high- loan amount of up to Rs. 50 lakhs.

  1. Personal and Business Credit Score

Lenders need a good credit score, preferably 750+. They look at applicants’ personal credit scores and business credit scores separately. A high credit score indicates high creditworthiness to repay the loan on time. Businesses with a high credit score can improve their chances of MSME loan approval in the first go. A few factors that help in maintaining a high credit score include reducing the credit utilization ratio (30% or less), a long and spotless credit history, clearing off existing loans, etc. 

  1. Sound Business Plan 

A well-defined business plan can help loan applicants to persuade the lender to sanction a small business loan MSME or  at favorable terms. Considering a business plan, lenders can get an overview of the business performance over the next few years. Include the financial projection based on the current business profitability and market analysis. The lender should get an overview of the company’s management and experience. Show how it can help to meet the business objectives with effective decisions. Also, acknowledge the use of the amount to meet business goals. This way, you can improve the chances of loan approval faster.


  1. Meet Eligibility Parameters Effectively

A business registered under the Micro, Small, and Medium Enterprises category can apply for an MSME loan. Reputed lending institutions offer MSME loans against simple eligibility criteria. The better the loan applicant meets the eligibility criteria, the higher the chances of getting approved for the loan. The eligibility parameters are as defined below:

  • Age Limit: A business person should be aged 22-65 years. 
  • Business or Company Type: In the case of an individual, the business owner should be engaged in the current business for a minimum of three years and the total business experience should be of five years. Proprietors, self-employed individuals, partnership firms, and private limited companies engaged in manufacturing, services, or trading sectors can apply for MSME loans. 
  • Turnover and Profit: The minimum annual income of the business should be Rs. 2 lakhs. The business should be in profit for a minimum of two years. The business turnover should be at least Rs.10 lakhs per year.
  1. Get Ready with the Documents Required For MSME Loans

For expedited loan processing, lenders ask for minimal documentation. Get ready with the following documents for effortless loan processing:

  • Certificate of incorporation or other business existence proof 
  • The applicant’s latest passport-size photograph 
  • The Id proof of the applicant and the company – PAN (Permanent Account Number) card 
  • Address proof of the applicant (Aadhaar, voter’s ID, passport, etc.) and the business (business registration certificate, etc.)
  • Bank statements for the previous 6 months
  • Income Statements or previous 6 months
  • Form 16
  • Income Tax or GST returns of the previous two financial years
  • Audited financial statements showing profits for at least two years

With such simple eligibility, MSME loans are the solution for many small and large businesses. Based on loan eligibility, renowned lenders can provide a small business loan or MSME loan at competitive interest rates. Also, there is no need to provide collateral. Grow by utilizing your personal or company assets. 

The Process to Apply for an Online MSME Loan

  • Entrepreneurs chasing their business growth goals can simply log on to a trustworthy lender’s official website offering affordable MSME loans.
  • Access the MSME loan application and fill it in with the required personal, financial, and business details correctly
  • Submit it accompanied by the required documents. Customers can request the lender for the doorstep pickup facility also for documentation.

The lender will verify the application and documents and disburse the loan amount after successful verification.

Thus, the MSME sector has the potential to contribute even more to the economy. Lending institutions can contribute to the sector’s growth with their high-value loans. Understand where you stand to obtain an MSME loan considering the eligibility criteria and make an informed decision to increase the chances of loan approval.