Loans offered to Micro, Small & Medium Enterprises (MSMEs), are called MSME loans. MSMEs are considered the backbone of the economy. Hence there are many schemes in place for the benefit of the MSMEs.
MSME loans are unsecured, and hence do not require a collateral pledge to avail of the loans. The loan process is therefore hassle-free and quicker to disburse. You can avail of up to 50 lakhs if eligible for an MSME loan. The loans are excellent to keep the funds moving around, which is necessary to keep the business going. The SME loan interest rate can vary between 11.99% to 21% based on your eligibility.
Benefits of MSME Loan
The MSME loans are specifically designed for businesses as they understand the urgent financing needs for
You can easily arrange funds with MSME loans as small businesses quickly satisfy the lenders’ eligibility criteria. This is because the loans are designed for small businesses, and hence the eligibility criteria are kept bare minimum. Many NBFCs are also happy to provide loans to small businesses as they are less risky and quickly recover the loan amount.
Reduced MSME loan Interest Rates
Though the MSME loans are unsecured as it does not require you to pledge any collateral, the interest rates are meagre compared to other unsecured loans. The MSME loans are given at competitive interest rates so that only the minimum amount is spent in repayment of the loan.
No Prepayment Penalties
Most business loans will require you to pay a certain prepayment charge if you decide to foreclose your loans before the stipulated tenure. But, this is not the case with MSME loans, as they are customized for supporting small and medium enterprises. MSME loans can be repaid when your finances improve well before the stipulated tenure, and you can pay off your loan without paying any extra processing free.
Does Not Require Collateral
MSME loans can be availed as collateral-free loans as small businesses cannot pledge any valuable resources to impact their process flow. However, if you have collateral in equipment or any valuable asset, taking a collateral loan is advisable.
MSME loans are primarily short-term commitments as most businesses take loans for a quick turnaround time to stabilize the cash flow. Hence the tenure is flexible and shorter.
As MSME loans are collateral-free, the loans are approved quickly and disbursed sooner. The loans are processed within as low as 1 hour to 24 hours, and the funds are sent to your bank account.
MSME loans provide you with tax benefits. You can avail of reimbursements on interest rates under section 80-IAC of the Income-tax Act, 1961. You need to maintain your correctly updated records to reflect your monthly commitments to your lender to avail of this.
Total Ownership over Your Business
When you lack reserves, you don’t need to resort to funds from venture capitalists to angel investors. Taking an MSME loan will help you arrange for the necessary funds without compromising on your business’s ownership. MSME loans are the best option to choose if you are a small enterprise looking for accessible, quick funds with a myriad of benefits. It does not require any detailed documentation to get started with. You can easily apply for an MSME loan with a lender through their online portal and get the loan amount disbursed to your back within no time. Look out for the best options in loan rates before zeroing in on one. Fullerton India offers MSME loan interest rates as low as 11.99%. Apply today to avail of the best loan services!