It has now become very easy for the MSME sector, which is considered the backbone of the Indian economy, to take a loan without any guarantee or collateral. Under various schemes of the government and the Reserve Bank, micro, small and medium enterprises (MSMEs) can easily get loans ranging from lakhs to crores of rupees even without mortgaging their property. Whether you want to start a new business, expand an existing business or need working capital, unsecured MSME loans are available through multiple schemes. But to get the loan successfully, it is very important to have correct information, qualification and completion of necessary documents.
How to take loan
It is now easier than ever for MSMEs to get collateral-free loans. According to Tata Capital, under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme, MSMEs can get loans up to Rs 10 lakh without any idea. It does not require collateral. Apart from this, under the Pradhan Mantri Mudra Yojana, free goods worth up to Rs 10 lakh is provided to MSMEs, individual entrepreneurs and professionals. Under the Stand-up India scheme, an attractive greenfield project has been launched for at least one woman and one belonging to the Scheduled Tribe (ST) in every bank branch. One can apply for up to Rs 5 crore without credit through PSB loan scheme in 59 minutes through AMSME offline portal. Additionally, non-banking financial companies (NBFCs) also offer loans without collateral.
Step-by-step process to apply
The process for applying for an unsecured business loan varies from lender to lender. However, when you apply for an unsecured loan for MSME online, the steps generally involved are:
- Step 1: Visit the official website of your chosen lender. Here, click on ‘apply for a business loan’ or any similar option to start the process of unsecured loan for MSME.
- Step 2: Next, create an account or log in.
- Step 3: Fill your personal and business related information in the online application form. This is the step where you have to specify your MSME loan limit without any guarantee.
- Step 4: Upload all the required documents and follow the instructions on your screen to complete your MSME loan application. Upon successful completion of this process, you will be notified once your application is approved.
What documents may be required to be submitted?
Most banks and financial institutions ask for some important documents while applying for a business loan. Generally the following documents are required:
- Completed and signed loan application form
- Passport size photographs of all applicants
- Identity proof like PAN Card, Aadhar Card, Passport, Voter ID or Driving License
- Residence proof like passport, electricity bill, ration card, Aadhaar or driving license
- Business address proof such as trade license, utility bill or lease agreement
- Age proof of all applicants
- detailed business plan
- Bank statement of last 6 months
- Income proof like ITR, Profit and Loss Account and Balance Sheet
- Business related documents like Partnership Deed, MoA, AoA, License, Rent Agreement or MSME Certificate
On the basis of these documents, banks assess the financial condition of the applicant, credibility of the business and ability to repay the loan.
