How can I determine if my business qualifies for an MSME loan?

Determining if your business qualifies for an MSME (Micro, Small and Medium Enterprises) loan typically involves evaluating several factors based on the requirements of financial institutions. Here are some key points to consider:

• Check business type eligibility: Generally, MSME loans are available for proprietorships, partnerships, private limited companies, limited liability partnerships and other similar business legal structures.
• Review annual revenue: Depending on their criteria, loan providers typically have minimum business revenue requirements that vary from one loan provider to another. Checking your latest annual revenue against common thresholds can provide an indication.
• Assess years in business: Usually, a minimum of 3 years in business is required. However, relatively newer businesses may also receive loans subject to other eligibility factors.
• Evaluate credit score and financial documents: Generally, a high personal and business credit score (over 700) strengthens approval chances. Tax returns, bank statements, and other financial paperwork are also typically assessed.
• Confirm registrations and licenses: Most loan providers require businesses to have Goods and Services Tax (GST) registration, Udyog Aadhar, shop establishment licence, Food Safety and Standards Authority of India (FSSAI) and other applicable registrations to showcase validity and compliance.
• Check if collateral is available: While collateral requirements differ between banks or Non-banking Financial Companies (NBFCs), plant, machinery, property, or fixed deposits may need to be pledged against higher-value loans.
• Read loan eligibility lists: Many loan providers provide an MSME loan eligibility checklist or criteria list on their website to self-assess qualifications.