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What is An MSME Loan?

MSME Loan
MSME stands for a micro, small or medium enterprise. MSME businesses pivot quickly and adapt to changing market conditions. These businesses can often outmanoeuvre larger competitors despite their smaller size.
 
MSMEs often need help to secure funds. They toil to raise money, unlike larger corporations. NBFCs like Hero Fincorp help address these concerns by offering MSME loans. Read on to learn more about Hero Fincorp’s MSME loans.
 

What are MSME Loans?


MSME Loans are a form of financing that we provide to Micro, Small, and Medium Enterprises (MSMEs) to help address their business needs. The MSME Loan details are listed in the table below:
 
Information Details
Loan Type Unsecured Business Loans
Interest Rates Affordable Rates
Loan Amount Range Rs 3 Lakh - 40 Lakh
Loan Tenure Flexible tenures up to 60 months
Documentation Required Simple and Minimal
Approval Timeframe Within 48 hours (provided all required details and documents are furnished properly)
 

MSME Loan Scheme


We at Hero FinCorp offer two types of MSME Loan schemes:
 
Feature Secured Business Loans (LAP) Unsecured Business Loans
Collateral Required Yes No
Interest Rates Lower Competitive
Loan Amount Higher Lower
Tenure Longer Shorter
Approval Time Longer Shorter
Eligibility Criteria Easier Easier
Risk to Borrower Lower Moderate
Usage of Funds Flexible Limited
Documentation Usual Minimal
 
MSMEs must choose msme loans as per their requirements. Choosing the loan that helps get what MSMEs need goes a long way in helping achieve set objectives. Interest rates should not worry them. Hero Fincorp offers two different loan schemes. Both have fixed rates that remain unchanged during the repayment period.
 

Usage of MSME Loans


MSME loans can be used for various business purposes. These include:

  1. Purchase of Machinery or Equipment

    Most MSMEs need new machinery or equipment to enhance their business's production capabilities.

  2. Working Capital Requirements

    MSME loans can help businesses meet their short-term working capital requirements. Promoters can pay for raw materials, rent and utility bills from the loan amount disbursed.

  3. Expansion or Renovation of Existing Business Premises

    Renovating or expanding a business requires funding. Businesses need a lump sum amount to accommodate growing needs. Msme financing by Hero Fincorp helps run a business in India and address such concerns.

  4. Marketing and Advertising Expenses

    MSMEs enjoy the advantage of using such loans to bolster their marketing and advertising campaigns. They increase their brand’s awareness and attract more customers.

  5. Technology Up-gradation

    The best way to use MSME loan benefits is to invest in new technologies or software to streamline business processes and improve productivity.

  6. Inventory Management

    MSMEs can use the loan amount to buy or manage existing inventory and ensure smooth operations and timely delivery of goods. 

  7.  

Eligibility Criteria for Availing of an MSME Loan


The eligibility criteria for an MSME loan vary from scheme to scheme. Common criteria include:

  1. Age

    To be eligible for a business loan with Hero FinCorp, you must be an Indian citizen between the age of 21 years and 65 years at the time of loan application and loan maturity.

  2. Occupation

    We offer business loans to self-employed professionals (such as Architects, Chartered Accountants, Doctors and Company Secretaries), self-employed non-professionals (such as Sole Proprietors, Retailers, Traders, Manufacturers, Service Providers), and entities (such as Limited Liability Partnership, Private Limited Company, Partnership Firms, Trusts).

  3. Maximum Loan Tenure

    Hero FinCorp offers flexible tenure of up to three years for business loans.

  4. Maximum Loan Amount and Minimum Income

    You can get a business loan amount ranging from Rs 5 Lakh to Rs 25 Lakh with Hero FinCorp, depending on factors such as the applicant's age, income, business type, and credit history.
To Avail Unsecured business loans
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SMEs looking to apply for an unsecured small business loan with Hero Fincorp must have at least five years of experience and a positive financial and credit history.
 

Documents Required to Apply for an MSME Loan

The documents required to apply for an MSME loan are as follows:
 
Mandatory Documents Description
Application Form A completed form provided by the relevant authority or organisation.
PAN Card 10-digit alphanumeric ID number issued by Indian Income Tax Department.
Proof of Identity A document that verifies the applicant's identity, such as Voter ID, Passport, or Aadhaar Card.
Proof of Address A document that proves the applicant's residential address, such as Aadhaar Card or Utility Bill.
Business Continuity These are documents that establish continuity of an applicant's business, such as VAT/Excise/Sales Tax Registration or Trade License.
Signature Proof A document that verifies an applicant's signature, such as Banker's Verification or Passport.
Proof of Income These documents prove an applicant's income, such as the latest ITR, GST returns, audited financials, and account statement.
 

How To Apply For an MSME Loan?


MSMEs can apply for MSME loans both online and offline. To apply for an MSME loan, the business owner needs to look at the following steps:
  1. Provide your personal details:
  • First Name
  • Middle Name
  • Last Name
  • Date of Birth
  1. Enter your income details:
  • PAN Number
  1. Fill in your address details:
  • Postal Address
  • Pincode
  • State
  • City
  1. Give your contact details:
  • Email ID
  • Mobile Number
  1. Agree to the applicable T&Cs and GDPR and authorise Hero FinCorp to contact you.
  2. Agree to receive communications and authorise Hero FinCorp to contact you through Whatsapp.

Submit your loan application to Hero FinCorp after completing the above steps for further processing.
 

Conclusion


MSME loans are a crucial source of financing for Micro, Small, and Medium Enterprises in India. They help fulfil the working capital requirements, purchase machinery or equipment and expand the business. MSME owners must research all the available loan schemes and choose the most suitable one for their business needs. Supporting the MSME sector is crucial for the growth and development of the Indian economy, and promoting and encouraging entrepreneurship in this sector can have significant positive impacts.


To Avail Unsecured business loans
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Did You Know

Disbursement

The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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