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MSME loan in India

The MSME sector is one of the essential contributors to India’s economic growth. According to a government report, the MSME sector accounts for nearly 50% of the country’s exports. The same report also reveals more than 6.8 million MSME/SME units have registered under the Udyog Aadhaar Memorandum as of December ’19.

The whopping scale of registration and exports is invariably linked to the Central government’s intervention in terms of providing an MSME loan/SME loan. Apart from the government, banks and NBFCs provide MSME loans to maximise reach among these establishments.

Purpose Of MSME/SME Loans

MSME loans are a significant financial device that companies can avail to ensure stability and sustenance in the ever-growing competitive Indian market. Several reasons account for availing an MSME/SME loans. Some basic causes include

  • Expand or diversify into different markets
  • Streamline cash inflow and outflow
  • Purchase raw materials, tools and vehicles etc.
  • Upgrade or buy plant and machinery, equipment
  • Undertake new projects

The Government of India has taken significant measures to elevate the MSME sectors as well as the economy of India. In this process, it has introduced several MSME schemes for new and growing enterprises in India.

MSME Loan/SME Loan Schemes

Funded by the Ministry of Micro, Small and Medium Enterprises, the various schemes include:

  1. Mudra loan

Mudra stands for Micro Units Development and Refinancing Agency. Under Pradhan Mantri Mudra Yojana, non-corporate MSME units can avail loans of up to Rs. 10 lakhs. The maximum loan tenure is 7 years.

The scheme is further classified into three categories, namely Shishu Loan (up to Rs. 50000), Kishor Loan (from Rs. 50001 – Rs. 500000) and Tarun Loan (from Rs. 500001 – Rs. 1000000).

  1. CGTMSE

The CGTMSE scheme offers a guarantee of repayment to financial institutions against their lending to MSMEs up to a predetermined limit. For an MSME project loan as high as Rs. 200 lakhs, the scheme offers a repayment guarantee of up to Rs. 150 lakhs shall the borrowing unit default.

  • PMEGP

PMEGP is a credit-linked subsidy plan linked with two other schemes, namely Pradhan Mantri Rojgar Yojana (PMRY) and Rural Employment Generation Program (REGP). It offers a subsidy of 15% - 25% of the project cost, and the remaining fund is offered as a business loan by the participating bank.

Individuals can avail up to Rs. 10 lakhs from this scheme without collateral. Any amount above that requires collateral. The MSME loan procedure for this scheme varies based on the project.

MSME/SME Loan Eligibility Criteria

Under the MSMED Act, 2006, entities that align with the revised MSME criteria are eligible for the schemes mentioned above. Besides that, companies also need to satisfy the lending institution’s qualifying yardsticks as well. It includes a credit score of 750 or higher, minimum bona fide business vintage ranging from 6 months to 2 years, and a minimum annual turnover of Rs. 25 lakhs. Besides that, companies also need to submit numerous documents to apply for an MSME loan/SME loan.

MSME/SME Loan Documentation

The documents required for an MSME loan differ across financial institutions. The list, however, usually comprise –

KYC

 Basic Documents

Business address and existence proof

MOA, AOA, BOD’s approval (if a joint-stock company), partnership deed (if a partnership firm)

Last 12 month’s bank statement

Business registration proof

Proprietor’s PAN card copy

Financial Documents

P&L copy and Balance sheet (certified by CA)

Sales tax documents

Municipal tax documents 

ITR documents

Besides the many benefits and details of a conventional MSME loan/SME loan, it is also vital to know about the limitations of this financing option. Enterprises can make a sound decision thereby.

Shortcomings Of MSME/SME Loans

There are two primary downsides to MSME loans. These are –

  1. Higher Interest Rate

MSME/SME loan interest rates can be a tad steep if it’s not backed by any asset. Financial institutions levy high charges to compensate for the risk they’re assuming by extending a business loan. The applicable rate of interest depends on the applicant’s eligibility. It can be as high as 21% p.a.

  1. Credit Score Requirement

Banks and NBFCs demand high credit score as well as 2 years audited financial statements to sanction an MSME loan/SME loan. Most new and micro-enterprises, thus, find it challenging to secure institutional finance.

  • Lengthy Processing Time

Availing an MSME loan involves a lot of paperwork. In case it involves collateral like equipment, accounts receivables, P&M, land, or the likes, the verification process is also extensive. Thus, a conventional MSME loan may not be an appropriate choice to address urgent obligations.

Apart from the above-mentioned points, small business owners who lack the required minimum turnover and investment capacity fail to register under the Udyog Aadhaar Memorandum. Hence, it automatically makes them ineligible for government-backed MSME/SME loan in India.

But, in an ever-growing and ever-competitive market, it’s never an option to put your monetary obligations on hold. Entrepreneurs can avail a gold loan in such a scenario to avoid these limitations. 

Gold Loan As An Alternative

Business owners wondering how to get MSME loan can consider gold loan as an alternative option due to the several benefits it ensues. Some of these include,

  • The gold loan procedure involves lesser paperwork, which quickens the processing time.
  • The minimal risk of future loss in the case of gold loans helps to curtail down the overall cost of borrowing.
  • The short loan tenure of gold loans enables business owners to pay off the debt within 4-6 months as opposed to 1-7 years.

Businesspersons willing to avail all the gold loan features mentioned above and more must find the right financial partner to maximise their benefits. Rupeek’s services are ideal in this case with a host of features custom-made for entrepreneurs.

Features And Perks Of Rupeek’s Gold Loan

To make the entire gold loan process hassle-free and consumer-friendly, Rupeek has come up with a 100% transparent process and several repayment schemes. Take a look at the various industry-first features MSME/SMEs can enjoy with us.

  1. Disbursal In 30 Minutes

With Rupeek, business owners can enjoy loan disbursal instantly. After a loan request on our app, our company representative reaches the applicant’s house as per the schedule. And after the verification of documents and valuation of gold, borrowers can easily get the loan amount transferred to their account in just 30 minutes.

  1. Instant Doorstep Service

With Rupeek, businesspersons search for ‘gold-backed MSME loan provider near me’ comes to an end. We provide doorstep instant gold loan services in 30 minutes. Apply for a gold loan with us and enjoy quick financing up to Rs. 1.5 crores.

  1. 79% Monthly Interest Rate

We offer MSME loan/SME loan against gold at a starting interest of 0.79% per month. Furthermore, our consumer-friendly repayment schemes enable the business to pay as per their convenience. There’s no fixed mandate of EMIs with us. Pay instalments any time you want within the tenure or pay the entire amount at once. You can also earn refunds on interest if frequent with repayments.

  1. Gold Loan Calculator

To check out the amount you’re eligible for against gold, check our gold loan calculator online. This consumer-friendly gold loan calculator enables borrowers to evaluate the loan amount as well as help them to find out how much gold they need to get a certain amount. 

  1. International-Standard Security

To ensure the maximum safety of our client’s valuables, our executives use GPS-activated bags while taking them to the nearby partner banks and store them in secured bank-lockers. Also, we provide insurance against any theft or accident between the transits of gold jewellery from and to our client’s doorstep.

Rupeek’s financial solutions encompass further facilities and benefits. Continue reading to secure the most of it.

Gold Overdraft Facility

One of the distinct benefits of availing a gold loan for MSME with Rupeek is our overdraft facility against gold. The overdraft facility, also known as ‘Rupeek Quick’ enables borrowers to access funds from the sanctioned limit round the clock. Not only that, businesspersons save a substantial amount by paying interest only on the expended amount. 

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Benefits of Gold Loan over MSME/SME loan.
  • <1 lakh
  • 2 lakh
  • 3 lakh
  • 5 lakh
  • 10 lakh
  • 20 lakh
Comparision Parameters MSME / SME Loan Gold loan
Interest Rate 2.39% .79%
Monthly Interest Amount
Eligibility & Documentation More Documents Needed Only KYC Needed
Processing Time & Disbursement 2 days to 1 week Within a day
Required Gold Weight -
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Frequently asked questions

Simple Steps To Get MSME/SME Loan Against Gold

  • Request A Loan

Visit the official website of Rupeek or download the app or dial at 08068186818.

  • Complete The Formalities At Your Home

Complete the KYC verification with the loan manager. Get the pledged gold appraised and sign the loan agreement thereafter.

  • Get Instant Funding

The loan amount will be transferred to the borrower’s account after the completion of required formalities and secured deposit of valuables at the nearest lending partner of Rupeek.

Boost your business with the hassle-free financial solutions available at Rupeek.

Feel free to contact us and resolve any queries related to our MSME loan/SME loan against gold online.

  1. Do I need an MSME registration for a gold loan?

MSME registration is not mandatory. However, business persons can register their enterprises to secure the advantages offered under it.

  1. What is the benefit of CGTMSE?

The scheme enables new and even dilapidated enterprises to avail loans from banks and NBFCs. CGTMSE offers a guarantee of reimbursement up to Rs. 150 lakhs if the borrower defaults in repayment.

  1. What is the investment limit as per the revised MSME definition?

Companies with investments in P&M and equipment less than Rs. 1 crore, Rs. 5 crores, and Rs. 50 crores are considered as micro, small, and medium enterprises, respectively.

  1. Which institutions can get CGTMSE loans?

CGTMSE scheme extends to several institutions, including Scheduled Commercial Banks, Regional Rural Banks (RRBs), National Small Industries Corporation (NSIC), North Eastern Development Finance Corporation (NEDFi), and Small Industries Development Bank of India (SIDBI).

  1. Does MSME loan require GST return documents?

Yes, the previous year’s GST return is mandatory for existing MSMEs to acquire financing.

  1. What is the repayment process for MSME loan/SME loan against gold?

One can repay through Rupeek’s gold loan payment portal or app. Log in with an OTP sent to your registered phone number. View the account summary and pay via any of the available payment methods to complete the procedure.

  1. Does Rupeek allow partial repayment of an MSME loan against gold?

Yes, individuals can partially repay the loan amount. The payable amount must range between the monthly interest rate and the full foreclosure amount.

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