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June 28, 2022

Navigating through the Maze of Eligibility for Business Loan in the Digital Era

    • June 28, 2022
    • By Team Kinara
    • < 1 mins read

    MSME Loan

    With the increase in cost of raw materials and increased expenses in the supply chain, small business owners find it difficult to manage their working capital, machinery and raw material costs. Lack of funds strifles growth, expansion, and diversification opportunities for small business enterprises. India’s lending scenario has witnessed a drastic transformation in the last 5 years. The influx of private lenders and NBFCs is simplifying lending and is helping MSMEs entrepreneurs get access to formal credit. According to the Reserve Bank of India (RBI), the credit gap in the MSME sector is projected to be around INR 25 trillion and these last-mile lending companies are trying to bridge this gap by offering hassle-free, unsecured business loans to MSME entrepreneurs in India.

    NBFCs and other financial institutions have digitised platforms that provide business loans. These platforms or online applications have a certain eligibility criteria that determines the entrepreneurs’ and businesses’ credibility to confirm business loan eligibility in India, before the loan is sanctioned.

    Kinara Capital is an RBI registered NBFC and 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.

    Grow your MSME with collateral-free business loans

    Kinara Capital’s Business Loan Eligibility Criteria:

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

    1. Eligibility Check

    Customers can check their eligibility in just 1 minute on the website or on the myKinara app which is available on Google Play store. The versatility of this process is that 7 language options are available to choose from, for the ease of the customers to check their loan eligibility in their preferred vernacular. No documentation is required for eligibility check.

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

    There is a set of documents that 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:

    a. Applicant’s KYC documents such as Aadhar Card, PAN card

    b. Co-applicants KYC documents like Aadhar Card (PAN is recommended but not mandatory)

    c. Business KYC documents like Udyam registration, MSME registration, address of the business location, industry specific certification etc.

    d. Last 12 months’ bank statements are mandatory for all the business owners

    e. GST and ITR documents are optional but it’s good to have 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

    As soon as the documents are verified in the digital mode, small business owners clear the MSME business loan eligibility criteria and the loan amount gets sanctioned and is disbursed within 24 hours.

    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.
    • Company’s turnover should neither exceed INR 2 crore mark nor should it be less than INR 50,000 annually.
    • The MSME business can be a sole proprietorship, partnership or private limited company.
    • It is mandatory to have a co-applicant to avail a loan.
    • The age window for the applicant is 25 to 65 years when loan application is processed.
    • For getting a short term loan, one should be an existing customer of Kinara Capital.

    Maximum Business Loan Amounts Sanctioned

    Kinara Capital, an RBI registered Systemically Important NBFC in India provides two types of business loans, working capital business loans and asset purchase business loans. Working capital business loans can be utilised to clear the expenses, repair infrastructure,expand products catalogue,pay workers’ salary etc. Asset purchase business loans on the other hand can be used to buy new or used machinery and equipment.

    Yet another classification of working capital loans as per tenure of the loan, they are long-term and short-term loans, first one has a tenure of 12 to 60 months with a ticket size upto INR 30 lakhs and the next has a tenure of 6 to 12 months the ticket size has the bracket of INR 50,000 to INR 2 lakhs.

    Apart from the above mentioned programmes, Kinara Capital has a special program for women entrepreneurs called HerVikas which is oriented towards empowering women business owners. Under the HerVikas programme, women entrepreneurs in India can get an automated discount with any additional documentation.

    How to Improve MSME Business Loan Eligibility?

    Now that all the information for the type of business loans and on how to check business loan eligibility are listed, here are tips that MSMEscan follow to improve their loan eligibility or avail an MSME loan.

    • 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 to access credit with 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.

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    Written by
    Team Kinara
    • Tags
    • Eligibility for Business Loan
    • business loan eligibility
    • check business loan eligibility
    • MSME business loan eligibility
    • business loan eligibility in India

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