Business Loan Eligibility Criteria for MSMEs in the Digital Age

May 23, 2024
Updated on

The rising costs of raw materials and expenses in the supply chain have made it challenging for Micro, Small and Medium Enterprises (MSMEs) to manage their working capital, machinery, and raw material costs. This has resulted in a need for more funds, hindering MSMEs growth, expansion, and diversification opportunities. However, India’s lending scenario has significantly changed over the past 5 years.

The entry of private lenders and Non-Banking Financial Companies (NBFCs) have made lending more accessible and simplified the credit process. This has enabled MSME entrepreneurs to get access to formal credit, which was earlier a challenge due to the stringent lending policies of traditional banks. 

In the last financial year (FY22), NBFC loans grew by more than 10%, almost double bank loans signalling the rapid demand for simplified access to credit. In addition, NBFCs and other financial institutions have digitised platforms that provide business loans. These platforms or online applications have certain eligibility criteria that determine the entrepreneurs’ and businesses’ credibility to confirm business loan eligibility in India before the loan gets sanctioned.

Kinara Capital is an RBI Registered Systemically Important NBFC firm that provides collateral-free business loans to small business entrepreneurs in the manufacturing, trading and services sector. Kinara is a fast-growing fintech company that uses a proprietary AI/ML credit risk assessment process that removes any biases while sanctioning a business loan. Customers can check their eligibility on the myKinara app and apply for a business loan with minimum documentation.

Kinara Capital’s Business Loan Eligibility Criteria

MSMEs can check Kinara Capital’s business loan eligibility in these 3 steps:

1. Eligibility Check

Customers can check their business loan eligibility in just 1-minute on the Kinara Capital website or the myKinara app, which is available on the Google Play store. The versatility of this process is that 7 language options are available for the customers to navigate their business loan eligibility in their preferred vernacular. In addition, one of the app’s significant advantages is that no documentation is required for eligibility checks, making the process hassle-free for customers.

The app’s streamlined approach to business loan eligibility checks ensures that customers can quickly and easily determine their loan eligibility and progress with their business goals.

2. Secure KYC(Know Your Customer) and Income Verification

A set of documents is required to check and verify some basic information about the applicant and the small business before any business loan is sanctioned. The document list is as below:

  • Applicant’s KYC documents such as Aadhaar Card, PAN card
  • Co-applicant’s KYC documents like Aadhaar Card (PAN is recommended but not mandatory)
  • Business KYC documents like Udyam registration, MSME registration, address of the business location, industry-specific certification etc.
  • The last 12 months’ bank statements are mandatory for all the business owners
  • GST and ITR documents are optional, but it’s good to have them for a smooth process.

The whole process of document uploading is done in a highly secured online portal with no risk of data leaking.

3. Quick Loan Disbursal

Small business owners can receive loan approval and disbursement within 24-hours of submitting their documents once they are verified through digital channels. This streamlined process helps borrowers access the funds they need quickly and efficiently to support their business growth. In addition, this streamlined process eliminates the need for time-consuming manual verifications and accelerates the disbursement of funds to support the growth of small businesses.

Grow your MSME with collateral-free business loans

Some Important Things to Keep in Mind While Applying for a Business Loan

When applying for a business loan, here are some points that are considered mandatory. These useful tips and facts can make the application process simpler for MSME business owners availing business loans: 

  • First and foremost, the company should be operating in the manufacturing, trading or service sector as an MSME.
  • The small business should be operational for more than 2 years at the time of loan application.
  • The company’s turnover should not exceed INR 2 crore or be less than INR 50,000 annually.
  • The MSME business can be a sole proprietorship, partnership or private limited company.
  • The applicant must be at least 21 years old when requesting a loan application and a maximum of 60 years old (65 for existing customers) when the loan matures. 
  • It is mandatory to have a co-applicant to avail a loan. The age limit of the co-applicant is minimum 21 years and maximum 60 years (70 for existing customers).
  • To get a short-term loan, one should be an existing customer of Kinara Capital.

Types of Business Loans offered by Kinara Capital

Kinara Capital is a rapidly growing last-mile lending firm operating in India that offers a range of flexible financing options to suit the unique needs of business owners. They specialise in providing two types of business loans: working capital business loans and asset purchase business loans.

With working capital business loans, businesses can easily access funds to clear expenses, repair infrastructure, expand their product catalogue, pay salaries to their workforce, and more. On the other hand, asset purchase business loans are designed to help businesses purchase new or used machinery and equipment, which can enhance their production capabilities and help them grow their business. 

Working capital loans can be further classified based on their tenure as long-term or short-term. Long-term loans have a repayment tenure of 12 to 60 months and a ticket size of up to INR 30 lakhs, while short-term loans have a tenure of 6 to 12 months with ticket sizes ranging from INR 50,000 to INR 2 lakhs. 

This classification helps borrowers to select a loan that best meets their needs based on their business goals and financial requirements. For example, long-term loans provide a more extended repayment tenure with a higher ticket size, making them ideal for larger investments. In contrast, short-term loans are suitable for small, immediate expenses that can be repaid within a shorter time frame.

In addition to its existing range of programs, Kinara Capital has launched a dedicated initiative empowering women entrepreneurs in India. This program, called HerVikas, is designed to give women business owners the support they need to succeed in their ventures.

Through HerVikas, women entrepreneurs can benefit from an automated discount on their loans without additional documentation, making it easier for them to access the financing they need to grow their businesses. This program reflects Kinara Capital’s commitment to promoting gender equality and supporting women entrepreneurs who are driving innovation and growth in the Indian economy.

How to Improve MSME Business Loan Eligibility?

As we have covered the types of business loans and the criteria for checking eligibility, it’s time to delve into some useful tips that MSMEs can follow to improve their chances of securing an MSME loan. By following these tips, MSMEs can enhance their business loan eligibility and increase their chances of accessing the financing they need to grow and thrive.

  • Maintain a healthy credit score
  • Don’t make multiple loan enquiries with different lenders at the same time
  • Clear the past loan history by paying off previous loans and debts
  • Keep a balanced cash flow
  • Make sure that the revenues and expenses are well balanced
  • The small business should meet the vintage and turnover eligibility criteria
  • Keep all the necessary documents and information handy for the application process

The digitisation efforts to smoothen the lending process in India will enable MSMEs easily access credit ease and help them grow and expand their businesses. MSMEs are the backbone of the Indian economy and providing them access to formal credit will help boost growth in the country.


Understanding the eligibility criteria for business loans is essential for entrepreneurs and businesses seeking financing options. Proper preparation in meeting these requirements, such as maintaining a good credit score, keeping accurate financial records, and presenting a well-defined business plan, can significantly increase the chance of securing a business loan. In addition, the recent digitisation of the lending process in India has made access to credit more convenient and efficient for MSMEs.

The adoption of digital technologies by lenders has made it easier for businesses to apply for business loans online, track the progress of their loan applications, and receive funding quickly. With these advancements, businesses can access the funds they need with ease. It can eventually contributing to the growth and development of the economy.

Kinara Capital has been a reliable partner for MSME entrepreneurs, providing unsecured business loans to help them achieve their goals. With a quick and digital-first 3-step eligibility process, MSMEs in India can easily apply for a business loan from Kinara Capital. The process is streamlined and straightforward, starting with downloading the myKinara app and checking the loan eligibility in just-1 minute.

Also, we have a dedicated customer support team available between Monday – Friday (9.30 AM – 6.00 PM) at our toll free number 1800-103-2683 for any questions or assistance. This ensures that entrepreneurs can get the help they need throughout the loan process. With Kinara Capital, MSMEs can access the financing they need to grow and expand their businesses without the hassle of complicated loan applications or collateral requirements.


Who is eligible to apply for a Business Capital Loan from Kinara Capital?

MSMEs in the manufacturing sector must be registered for more than one year. Businesses in the trading and services sector can apply for a Business Loan only if the firm is registered for 2+ years.

Is collateral required for a business loan from Kinara Capital?

Kinara Capital provides collateral-free business loans. This means that MSMEs will not have to submit any property documents while applying for a loan from Kinara. 

What is machine hypothecation?

The machine is hypothecated for issuing an Asset Purchase Loan from Kinara Capital. As long as MSMEs meet the EMI obligations, machine hypothecation will not occur. Machine purchase invoices and relevant documents will be required in exchange for the Asset Purchase Loan.

What is the tenure of MSME business loans from Kinara Capital?

The tenure of MSME business loans from Kinara Capital varies by lender and can range from 12 to 60 months. 

What is the maximum loan amount that an MSME can apply for?

The maximum loan amount that an MSME can apply for from Kinara Capital is INR 2 crore.

Do I need to visit Kinara Branch to take a Business Loan?

No, you need not visit any branches. For support, you can contact us, and our field officer will visit you at your place of business to provide information and help you with the loan application process.

What is Business Loan EMI?

Business loans are typically repaid in Equated Monthly Instalment (EMI). Every month, the borrower repays a portion of their principal loan amount and interest rate charges to the lender in the form of an EMI. Typically, the EMI payment date is the same every month to make it easier. 

By ensuring you have the requisite cash flow to make your EMIs, MSMEs can avoid missing a payment. This approach enables you to build your credit score and increase your future opportunities to avail credit access.

Check your Eligibility in 1-minute!

Check your Eligibility in 1-minute!

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