Understanding SME Loan Eligibility: A Comprehensive Guide

May 23, 2024
Updated on

SME loans are given to provide financial support for small and medium-sized companies. The SME loan offers a flexible capital to meet SME needs. It can be used both for long-term needs and as working capital. This loan is approved after considering the company’s type, cash flow and time of formation. All small and medium-sized enterprises, including micro-enterprises specified under the MSMED Act, can apply for this loan with a specified sales turnover. For MSME loan eligibility, specifications vary from lender to lender. The loan interest rate depends on the profile, business history and loan amount of the borrower.

How are SME Loans Helpful for Small Business Owners?

  • A small business might benefit from MSME business loan by supporting the owner to buy inventory without waiting for cashflow.
  • Small businesses profit more from different forms of MSME loans. 
  • Compared to other business loans that need heavy paperwork and good credit history, MSME loan eligibility is basic, and hence these loans are quick to get.
  • Often, MSME loans are unsecured. This means that collateral is not needed for them. 
  • You would not have to give property documents or mortgage business machines to get funds as an MSME member. Some basic evidence would be important for business records.
  • Mostly MSME loans are used to fulfil short-term and long term plans. This will help you with the day to day working of your business.
  • You will tap into growth opportunities with MSME loans, thus increasing your sales and number of customers.

Grow your MSME with collateral-free business loans

Let us Understand MSME Loan Eligibility in Detail

Kinara Capital is an RBI-registered fintech NBFC that provides collateral-free business loans to MSMEs. The eligibility criteria for NBFCs are less stringent than those of banks and small businesses can benefit from this. The basic eligibility criteria at Kinara Capital are based on the below-mentioned parameters eligibility criteria:

1. Sector/Sub-Sector – Manufacturing, Service and Trading 

As per the latest definition of MSMEs, micro-units can have investments up to Rs 1 crore and a turnover of less than Rs 5 crore. The investment limit has been raised from Rs 5 crore to Rs 10 crore for the small units with less than 50 crore turnover. Thirdly, the enterprises with investments up to Rs 20 crore and a turnover of less than Rs 100 crore will now be called medium units. Earlier the MSMEs were defined based on the investment, but now the company’s turnover is also included.

2. Requested Loan Amount: 

Requested loan amount should be between Rs 50,000 and Rs 30,00,000.

3. Pin code: 

The business should be in a pin code area that Kinara Capital is serving. We are currently serving 4500+ pin codes across six states. (Karnataka, Andhra Pradesh, Telangana, Gujarat, Maharashtra, Tamil Nadu)

Post the basic eligibility test; many other parameters are considered, such as credit score, bank statements, personal & business KYC, GST and other certifications such as Udyam registration, GST, NOC etc. 

Once you clear all the steps, our loan officer will follow up with you and process the rest of the application. Kinara Capital is now able to give a loan within 24-hours.

How to Apply for SME Loan in Kinara?

With Kinara’s AL/ML-led decisioning models, you can receive your business loan in just 24 hours. All you have to do is download the myKinara App and apply for a business loan online. Kinara Capital has a simple 3-step SME loan application process. Here’s how to apply MSME loan from Kinara:

Step 1: Eligibility Check
To start your SME loan loan application, download the myKinara App and take a 1-minute eligibility check. You can apply for a business loan by accessing the eligibility check in seven different languages for a seamless experience.

Step 2: Screening
The business and the entrepreneur are screened following Kinara’s MSME loan criteria by validating the KYC and registration details.

Step 3: Document Upload
You need to submit your KYC, applicant, co-applicant, business KYC (ID and address proof), applicant PAN Card, business registration document, last 12 months’ bank statements, GST registration (if available), and business vintage proof.

Documents Required for SME Loan in Kinara 

Every lender requires a particular set of SME loan documents to approve and process business loans. Kinara asks for minimal documentation for MSME loans. Here are the documents required for SME loan from Kinara Capital:

1. Proof of Identity

You will have to provide proof of the company’s existence. This may be presented as water or electricity bills, Udyam Registration, Company registration, the PAN card of your business, etc. 

2. Proof of Individual Identity

You need to provide your proof of identity as well. This can be fulfilled by Aadhar card, PAN card (personal), Driver’s License, Passport, etc. Your co-applicant can skip the PAN card if it is unavailable.

3. KYC Documents

Documents needed for business loan include KYC, which are the most important and common documents for business loans. These include the incorporation certificate, partnership deed, identity/address proof, PAN cards, etc.

4. Financial Documents

Finance-related documents like profit and loss accounts, balance sheets, passbooks, account statements, etc.

5. Bank Statements

Business loan documents include bank statements. Check and confirm what period your lender needs your bank statement for and have them ready. 

6. Certifications

Some more certifications like GST certification and if valid Shops & Establishment Certificate, Trade License Certificate, or Factory Registration Certificate are also important documents for business loans.

What Customers have to say about SME Loans from Kinara Capital:

Customer Name: Mohan Ramchandra Mali

Company: Shree Packaging

“After I started my business, I needed working capital urgently for a big order. Kinara approved my loan very quickly. I was able to increase production and add another unit. Now, I have a staff of 24 people, and my turnover has increased by four times!”


SME loan eligibility is a main factor instrumental in small businesses accessing business loans. The eligibility criteria can vary from lender to lender, but overall, NBFCs like Kinara Capital have less stringent requirements than traditional lenders. Factors like the age of the business, sector, age of the borrower, turnover, and certain documents are taken into consideration. SME entrepreneurs can simply download the myKinara App and take a 1-minute eligibility check to find out if they qualify for a loan from Kinara. Once they do, they can proceed to upload their documents and complete the application online. With Kinara’s AL/ML-led decisioning models, the loans can be processed and disbursed in just 24 hours.

These loans are tailor-made to meet the requirements and needs of MSMEs. The MSME loan from Kinara Capital will prove to be the smartest financing choice for your business. Whether you are looking to invest in infrastructure or maintain a regular cash flow, we are here to help you with 133 branches across Andhra Pradesh, Telangana, Karnataka, Gujarat, Maharashtra, Tamil Nadu and UT Puducherry. 71,000+ new jobs were created as a direct result of the loans provided by Kinara. Total loans that we have given till now are of Rs 6,768 Crores.


Is collateral required for SME loans?
Kinara Capital doesn’t require any collateral to issue SME loans. The company uses AI/ML-led decisioning models for loan approval.

Can start-ups qualify for SME loans?
While Kinara Capital requires MSMEs to be established for some time before applying for a loan, under the company’s new expanded benefits under the HerVikas scheme, women-owned start-ups can qualify for a loan.

What is the maximum loan amount available under SME loans?
Kinara provides SME loans in the range of Rs. 1 lakh to Rs. 30 lakhs.

Are government schemes available to support SME loan eligibility?
The government has launched the Udyam registration portal for MSMEs. SMall businesses can register as formal entities in the platform, which makes it much easier for them to qualify for SME loans.

What is the repayment tenure for SME loans?
The repayment tenure for Kinara Capital’s SME loans is 6 months to 60 months, depending on the nature of the loan.

What is the role of credit history in SME loan eligibility?
While traditional lenders still rely on credit history to gauge the eligibility of borrowers, Kinara Capital is a new-age lender that takes multiple other factors into consideration for loan decisioning.

Are there specific loan products available for women-owned SMEs?
Under Kinara’s HerVikas loan program, women-owned SMEs can access discounted business loans, which come with additional benefits like a repayment holiday of up to 60 days and 50% discount on processing fees.

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