Shriram Finance: One stop solution for the needs of MSMEs
Micro, Small, and Medium Enterprise (MSME) loan is a form of financial aid usually offered by financial institutions to individuals, Small-and-Medium Enterprises (SMEs), and MSMEs to support their expansion needs, meet their working capital requirements, aid them in equipment purchase, etc. Generally, banks and NBFCs are the financial institutions that offer collateral-free business loans to MSMEs with less paperwork and processing time. Shriram Finance is one such NBFC that supports MSMEs by providing them loans with or without collateral. Shriram Finance is a trusted NBFC that holds a legacy of 43 years and has nearly 2,875+ branches across the country. We believe in providing quality service to each of our clients and empowering them to make an impact in today’s competitive world.
What are the eligibility criteria for MSME loans?
To apply for an MSME loan, one needs to:
- Be an Indian citizen whose age is between 23 to 65 years.
- Give a permanent residential proof and must be living in the same residential address for at least 1 year.
- Conduct business for at least 3 years.
- Have a minimum turnover of approximately 20 lakhs.
- Fulfill the credit evaluation process.
- Give the declaration of existing credit obligations.
- Have a valid business registration certificate.
- Deal in manufacturing and service-based sectors.
What are the different types of loans offered to MSMEs?
The different types of loans offered to MSMEs are:
Working Capital Loan :
Working Capital loans (WCL) aid business owners in meeting their daily business requirements. These are short-term loans with a repayment tenure of 1 year. Generally, WCL is a collateral-free business loan in which the business owner does not have to submit any collateral or security with the financier. The interest rate for WCL is a bit higher than any other business loan. The financier sets a limit for the business owners to take a loan and the loan amount can only be used for special purposes.
Term Loan:
Term loans are of two types: short-term loans (having a repayment tenure of 1 year) and long-term loans (having a repayment tenure of more than 1 year to 5 years). As per the requirements of the enterprise, financial institutions can offer a loan amount ranging from INR 1 lakh to INR 1 crore and even more to the enterprises through this credit facility. The amount of the loan can only be finalized by the financier at the time of the loan application. The borrower of the credit facility needs to repay the loan amount at regular intervals over a particular period of time.
Equipment finance:
The equipment finance credit facility aims to assist the borrowers in purchasing new equipment/machinery or in upgrading the existing one. This type of loan is available for enterprises that deal in the manufacturing sector. The borrowers of this credit facility also enjoy tax benefits.
Bill Discounting:
Bill discounting is a credit facility in which the financier offers an amount in advance to the seller at discounted rates. The borrower, while using this credit facility, needs to pay the interest rate or a monthly fee to the financier.
What are the steps involved in applying for an MSME loan?
MSMEs need to analyze the purpose of taking the loan, and then choose the most favorable loan as per their requirement.
After ascertaining the purpose and type of loan, the business owners should also consider various factors such as interest rates, terms and policies, eligibility criteria, and the EMI amount while choosing the right financier for a loan.
The next step is to apply for an MSME loan online by simply visiting the official website of a financial institution and filling out the application form. In this application form, business owners need to fill in their organizational details such as:
- Name of the enterprise
- Date of incorporation
- Registration number
- Business address
- Trade license number
- Monthly turnover for the last 1 year
- Purpose of the loan
After submitting a duly filled application process, the next step is to submit scanned copies of necessary documents online so that the verification process can be conducted by the financial institutions. These documents are:
- Proof of Identity (Aadhar Card, Pan Card, Passport, Driving License, Voter Id, etc.)
- Proof of Residence (Ration Card, Electricity bill, Telephone bill, a Gas bill with the Gas book, Trade license, Lease agreement, etc.)
- Financial Documents of the concern (Trading/Profit and Loss account for last 3 years, Income tax statement for last 3 years, Bank statements for last 6 months, Balance Sheet for last 3 years, Projected turnover, etc.)
- Business Proof (Registration Certificate, Memorandum of Association, Articles of Association, etc.)
- The last step is to get the desired funds from the financial institutions as soon as the loan gets approved and documents are verified.
Why choose Shriram Finance?
Shriram Finance offers a one-stop solution to all your financial requirements.
- We know the importance of our clients and value their time by offering them loans with interest rates starting from 15% based on the eligibility of individuals, SMEs, and MSMEs. We offer working capital loans, term loans, etc. to our valuable clients.
- Our agents help our clients in the loan application process. Once they meet the credit eligibility requirements, the loan will be disbursed in the shortest span.
- We offer customized loan solutions at competitive interest rates to each of our clients.
- We offer our services to even those who lose their hope of getting loans from any other financial institution. We are here to support new as well as existing clients. These clients have to pledge their assets (self-occupied residential, commercial properties) for obtaining the MSME loan, and we offer them 60% of the market value of the pledged asset.
We provide secure financing options with flexible repayment tenure to our clients.
What charges are to be paid by the borrower to Shriram Finance Union Finances?
After procuring the loan amount, the borrower needs to repay the same through equated monthly installments (EMIs). One can set up ECS payments so that the EMI will automatically be debited from the preferred bank account every month till the end of the loan tenure. The amount to be charged as EMI is communicated to the loan borrowers at the time of approval of the loan amount and is also mentioned in the loan documents. Shriram Finance charges a minimal amount for disbursing the loan amount. It includes:
- Interest rates - Starting from 15%
- Processing fee – Less than 2%
- Loan Foreclosure charges – 3% to 6% (Depending upon the outstanding principal amount and the remaining tenure)
Note that loan foreclosure charges are only charged from those clients who want to repay the outstanding principal amount in one single payment instead of regular monthly EMIs. They can foreclose their loan any time after paying the EMI for the 6th month.
