An A to Z Guide to Getting an MSME Business Loan in India

November 3, 2023
Updated on

An MSME Business Loan in India is a form of financial assistance provided by the Government of India and the Reserve Bank of India to support Micro, Small, and Medium Enterprises (MSMEs). The availability of collateral-free loans secured by the assets being financed has encouraged more MSMEs to benefit from this program. Today, numerous financial institutions and banks offer MSME Loans to aid and facilitate the expansion and growth of MSMEs. Small business entrepreneurs can opt for MSME Loans to maintain a stable working capital, which is crucial for conducting essential business operations, paying employees, recruiting new talent, procuring inventory, renovating their premises, or expanding their businesses.

In a developing country like India, MSME businesses are pivotal for the economy. However, only a limited number of banks in India offer MSME business loans to small businesses in need of financial support. In such cases, fintech firms like Kinara Capital can be a valuable source for obtaining Business Loans in India without requiring property collateral. In this article, we will explore the availability of MSME Loans in India and their benefits in more detail.

Types of MSME Loans from Kinara Capital

Kinara Capital offers three types of MSME Loans to small businesses: Working Capital Loan, Machinery Purchase Loan, and HerVikas Program. MSMEs can choose from these loans based on their specific business requirements. Let’s delve into the details of these three MSME loans.

Working Capital Loan

Working Capital loans are short-term financing options that businesses can use to cover their everyday operational expenses. These loans are typically used to fund costs such as payroll, inventory, and other short-term operating expenditures. Working capital loans are an attractive option for businesses in need of quick funds to cover short-term costs. The application process is often faster than traditional loans, and the funds become available much more quickly. Additionally, working capital loans are generally more flexible than traditional loans and have less stringent requirements.

MSME owners can apply for working capital loans ranging from Rs. 1 lakh to Rs. 30 lakhs, with repayment tenures ranging from 12 to 60 months, and interest rates between 21% to 30% per annum. Kinara also offers flexible short-term working capital loans for existing customers to meet immediate capital needs. These loans have smaller ticket sizes, starting from Rs. 50,000 to Rs. 2 lakhs. The loan tenure varies: 6 months for those borrowing Rs. 50,000, 9 months for those borrowing Rs. 75,000, and 12 months for amounts of Rs. 1 lakh or more.

Machinery Purchase Loan

The Machinery Purchase loan is a funding option designed to purchase new equipment or machinery or upgrade/repair existing ones. It offers MSMEs the opportunity to enhance their operations and increase productivity. By investing in new equipment, MSMEs can reduce production costs, improve efficiency, increase profits, and remain competitive in the market. Machinery purchase loans also enable MSMEs to expand their business capacity, allowing them to take on larger orders and grow their customer base.

Larger businesses in the manufacturing sector frequently use equipment financing to acquire the latest technology machines. Typically, most MSMEs cannot afford expensive machinery, so they opt for Machinery Loans to secure the necessary funding. MSME owners can apply for MSME loans ranging from Rs. 1 lakh to Rs. 30 lakhs, with interest rates of 21% to 30% per annum and repayment tenures from 12 to 60 months.

HerVikas Program

The HerVikas Program from Kinara Capital is a special SME loan program designed for women entrepreneurs. The program’s mission is to help women entrepreneurs pursue their entrepreneurial dreams and empower them to create a positive, multi-generational impact in the community. Women MSME business owners engaged in the manufacturing, trading, and service sectors can avail themselves of a 1% interest discount on their loans under the HerVikas program, without the need for additional documentation.

Grow your MSME with collateral-free business loans

5 Advantages of Obtaining MSME Loans in India

Collateral-Free MSME Loans

The Kinara MSME Loans from Kinara do not require security. With a flexible and digital application process, Kinara provides collateral-free MSME Loans with minimal documentation. Consequently, all registered MSMEs in the manufacturing, trading, and services sectors can apply for unsecured MSME Loans without the burden of mortgaging property collateral.

Easy Application Process & Fast Digital Disbursement

Business owners can initiate the MSME Loan application process with a quick 1-minute eligibility check using the myKinara App, available in seven vernacular languages, including English, Hindi, Tamil, Telugu, Kannada, Gujarati, and Marathi. Kinara supports its customers in every possible way and streamlines the loan approval process. Through online document submission and expedited verification, there are no extended waiting periods between sending and receiving documents. Loan amounts are digitally disbursed to the borrower’s bank account within 24 hours.

Loans of up to ₹ 30 Lakhs

Kinara Capital provides flexible ticket sizes for MSME Loans, ranging from ₹1 lakh to ₹30 lakhs. This makes Kinara Capital’s SME Loans an excellent option for registered MSMEs in need of immediate funding.

Flexible EMI Payment Options

Kinara offers various EMI payment options to its customers, allowing borrowers to use different methods to repay the loan amount, including digital wallets such as Google Pay, PhonePe, and Airtel.

Doorstep Customer Service

Kinara provides multilingual support to all customers, with doorstep customer services available in their preferred vernacular language to simplify the loan application process. Registered customers from over 300 sub-sectors across 100+ cities can apply for MSME loans from Kinara Capital after completing the 1-minute eligibility test on the myKinara App.

Eligibility Criteria for Getting MSME Loans in India

To be eligible for an MSME Loan from Kinara, businesses should be registered as MSMEs and operate in the manufacturing, trading, or services sectors. They should also fall within the serviceable pin codes in specific locations, including Andhra Pradesh, Telangana, Karnataka, Gujarat, Maharashtra, Tamil Nadu, or UT Puducherry. The total monthly turnover should exceed Rs. 50,000 but be less than Rs. 2 crores, and the business must fall under the list of sectors and sub-sectors serviced by Kinara.

Documents Required for MSME Loans in India:

  • Proof Of Business Registration: Evidence of the company’s existence, such as water or electricity bills, Udyam Registration, company registration, PAN card for your business, etc.
  • Proof Of Individual Identity: Identification proof for individuals, such as Aadhar card, PAN card (personal), Driver’s License, Passport, etc. Co-applicants can provide Voter ID, Driver’s License, or Passport.
  • Financial Documents: Finance-related documents, including bank statements, profit and loss accounts, balance sheets, passbooks, account statements, and GST filings if applicable.

How to Apply for Kinara Capital MSME Loans Online

Kinara Capital offers a streamlined SME Loan process. After the initial application and approval, loans can be disbursed within 24 hours. You can start the process with an MSME Loan eligibility check on the Kinara Capital website or by downloading the myKinara App. If you meet the eligibility criteria, a Kinara Loan Officer will guide you through the remaining steps. The documentation process is flexible and allows for the substitution of certain documents with others, subject to availability.

Business Loans in India are instrumental in providing growth opportunities to various MSMEs. These loans can be acquired for various purposes, depending on the needs of the business. Common reasons for obtaining MSME loans include business expansion, procuring raw materials or inventory, business renovations, machine purchases, and more. Unsecured MSME Loans do not require property collateral or personal guarantees, allowing MSME owners to rapidly grow their businesses without waiting to accumulate security collateral.

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