MSME Loans : Advantages, Documents and Eligibilty

MSME Loans : Advantages, Documents and Eligibilty

You can get an MSME Loan without collateral, which means no assets need to be pledged to secure financing. Along with an attractive interest rate, the loan offers a unique Flexi loan facility, and approval in just 24 hours. Our MSME / SME Business Loan is the ideal source of hassle-free MSME finance for your enterprise.

What can an MSME / SME loan be used for?

• Invest in your firm’s infrastructure
• Meet working capital requirements
• Install new plant and machinery
• Pay for several overheads

A dvantages of MSME Loan.

• MSME / SME finance up to Rs.30 Lakh
• Collateral Free, Easy Processing and withing 24 hour approval
• Flexi loan, where you can have the loan sanctioned in your name, but you only pay interest on what you use
• Minimal Documentation

D ocuments

• KYC documents
• Statements of bank account
• Proof of business vintage

E ligibility

Applicants running a business for at least 3 years are eligible to apply for an SME/MSME Loan. They must also be within the age bracket of 25 to 55 years and have their business’ IT returns filed for at least the past 1 year.

Minimum credit score of 750 with no records of default.

Appraisal of MSME Loan

Entities, self-employed professionals and self-employed non-professionals like proprietors, retailers, traders and others can avail a SME/MSME Loan.

Appraisal of MSME proposals has four distinct stages:

• Conducting Due Diligence about the promoters & the proposed
• Conducting Techno-economic Feasibility
• Undertaking Financial appraisal & assessing Credit
• Credit Risk Rating, Compliance of Takeover Codes & Decision

Documentation

1. The existing units are expected to approach the bank with the following documents:

• For Existing Units seeking WC facilities:

• Last 3 years audited balance sheet with notes on account & annexure
• Last 3 years audited profit & loss statement with notes on accounts & annexure
• Last 3 years IT returns
• Last 3 years balance sheet & profit & loss statement of associate / sister concerns
• CMA data
• Order book position / contracts / proof of demand
• Last sales tax assessment order
• Statutory clearance certificate
• Lead Bank assessment note in case of consortium
• Details of Associate / Sister / Group Concerns with names, bankers, credit facilities enjoyed, present status
• Details of Collaterals wherever

A.2   Additional documents required in case of take over account:

• NOC / status of the account
• Credit report from the existing bankers
• Statement of account for last 1

A.3   Additional documents required for Term Loan / LC for capital goods application, if they are not included in project report:

• Cash flow statement for entire repayment schedule
• Fund flow statement for entire repayment
• Profitability projections and assumptions for entire repayment period
• Break-even
• IRR working
• DSCR working
• CA certificate for promoter's contribution
• Project: Report covering:

1. Details of cost of machinery, suppliers of machinery
2. Quotations / proforma invoices from suppliers
3. Installed capacity calculation
4. Raw material details & their availability
5. Market survey: viability reports from market, reports from associations
6. Project implementation
7. Status of various clearances

A.4   Additional documents required in case of factory building:

• Building approval plan
• Estimate from Architect
• Statutory clearances: Environment, pollution clearance, and other applicable
• Power & water sanction proof,
• Any other clearances like explosive license etc wherever applicable to different

A.5   Additional documents required for raw material LC:

• Pattern of purchase
• Quantum & Value of import and domestic
• Import license
• Percentage of Total Purchase under LC
• Lead-time required
• DA period in case of DA LC

A.6   Additional details required in case of Bank Guarantee:

• Details of existing guarantees & facilities
• Bid bond / security deposit Details

B.   In case of New Projects seeking TL & WC facilities Complete Project Report to be submitted including the following by the Entrepreneurs:

• Projected Balance Sheet for the entire repayment period,
• Projected P & L Account for the entire repayment period,
• Presumptions made in Projected Profitability Estimates
• Projected Cash Flow Statement for the entire repayment period,
• Projected Fund Flow Statement for the entire repayment period,
• Break Even Analysis
• DSCR Computation for the entire repayment period, with Average DSCR Calculation,
• IRR Computation,
• CA certificate for promoter's contribution
• IT return & personal Balance Sheet of the promoters & guarantors
• Bio data of Promoters / Directors
• Details of cost of machinery viz Name of Machine, Machine Capacity, Supplier of machinery, Quoted Value
• Estimates of Construction by Architect / Chartered
• Copies of Various Basic / Statutory Approvals to establish the unit & to run the
• Installed capacity calculation
• Raw material details & their availability
• Market survey: viability reports from market, reports from associations
• Project implementation
• Market Demand & Market Arrangements
• Details of Collaterals wherever

C.MSME Certificate or Incorporation Certificate not mandatory for opening of current account for Micro Enterprises