Eligibility Criteria for MSME loan
The easy-to-meet MSME loan eligibility criteria help avail a hassle-free MSME Loan from Bajaj Finserv. These relaxed requirements simplify the loan application process and also expedite loan processing. To qualify and get funding through a Bajaj Finserv MSME loan, you must meet the following criteria:
The eligibility criteria for MSME loans are as follows:
Based on your loan amount, repayment period, interest rate, and the lender you choose, you can apply for either a secured or unsecured MSME loan. To be eligible, you generally need to meet the following conditions:
- Age
You should be at least 18 years old and not older than 65. - Who can apply
Both new and existing MSME businesses can apply for the loan. - Collateral
Some lenders offer unsecured MSME loans without asking for any security, usually for smaller amounts. However, many traditional lenders require collateral for higher loan amounts.
You can get an MSME loan from public or private banks, microfinance institutions, or regional rural banks. To apply, you must provide identity proof, address proof, and complete the loan application form. Before applying, it’s advisable to check your business loan eligibility to understand which loan options best suit your profile and needs.
Additional initiatives for MSMEs in budget 2025
- Credit cards for micro enterprises: Customised credit cards with a Rs. 5 lakh limit will be introduced for micro enterprises registered on the Udyam portal, with 10 lakh cards planned for issuance in the first year
- Fund of funds for startups: The Alternate Investment Funds (AIFs) for startups, with a total commitment of Rs. 91,000 crore, will be expanded with an additional Rs. 10,000 crore Fund of Funds
- Scheme for first-time entrepreneurs: A new scheme will support 5 lakh first-time entrepreneurs, including women, SCs, and STs, offering term loans of up to Rs. 2 crore over the next 5 years
Before you apply, it’s also useful to check your pre-approved business loan offer to see if you have any pre-qualified options available, which can speed up your loan approval process.
Documents required for MSME Loan
To apply for an MSME loan, you need to submit the following documents:
- ID proof
You and any co-applicants must provide valid ID proof such as PAN card, Aadhaar card, Voter ID, passport, or driving licence. - Address proof
You must also provide proof of your residential address. Accepted documents include passport, recent electricity or phone bill (not older than 3 months), ration card, Aadhaar card, or driving licence. - Business address proof
For your business address, you can submit your Udyam Registration Certificate, GST registration, lease/rent agreement, or a utility bill (not older than 3 months) in your business's name. - Income proof
You must show documents that prove your business income. This includes recent ITRs with profit & loss account and balance sheet, last 6 months' bank statements in your business name, GST returns, and PAN card. - Business registration documents
To prove your business is legally registered, you may need to provide your partnership deed, Udyam Registration Certificate, MoA, AoA, licences, certificates, rent agreement, or sale deed. - Other documents
A detailed business plan is also often required, which helps lenders understand your industry and future growth potential. You may also be asked to submit your Udyam Registration Certificate as proof of MSME status.
How to apply for MSME Loans?
Entrepreneurs can apply for MSME loans either online or offline. If you choose to apply online, here are the basic steps:
Step 1: Go to the official website of the bank or lender, choose the MSME loan option, and click on ‘Apply’.
Step 2: Fill in the online application form and submit it.
Step 3: A bank or lender representative will get in touch to confirm your loan needs.
Step 4: You’ll be asked to submit the necessary documents.
Step 5: Once your documents are verified, your loan application will be approved.
Step 6: The lender will send you a loan agreement to review and sign.
Step 7: After signing, the loan amount is usually transferred to your account within 48 hours.
Common challenges in meeting MSME loan eligibility and solutions
Low credit score
Problem: Not having a strong credit history.
What to do: Pay your existing EMIs and bills on time. Start with smaller loans to build a better credit score gradually.
No collateral
Problem: Many small businesses don’t have assets to offer as security.
What to do: Look for unsecured business loans or government schemes that provide loans without needing collateral.
Poor financial records
Problem: Business accounts and financial documents are not maintained properly.
What to do: Keep your records up to date. You can use accounting software or hire an accountant to manage this easily.
Frequently asked questions
Yes, women entrepreneurs are eligible for several special MSME loan schemes designed to promote and support women-led businesses. Many financial institutions and government initiatives offer concessional interest rates, relaxed collateral requirements, and simplified processes to encourage more women to start and expand their ventures under the MSME category.
To get a personal loan for your MSME, your business must be officially registered, have a minimum turnover, and follow all legal rules. You should also have a good credit score and stable business operations. Lenders may also check your industry type. You’ll need to submit documents like financial statements, ID proof, and a business plan.
Any business that falls under the Micro, Small or Medium category, based on the official MSME classification, can apply for MSME registration. Individuals on their own cannot register. However, proprietorships, partnership firms, companies, trusts or societies with an investment of less than Rs. 50 crore and yearly turnover under Rs. 250 crore are eligible to register.
The business applying must usually be a registered micro, small or medium enterprise (MSME) as defined under the MSMED Act and must have a valid UAM or Udyam Registration. For manufacturing MSMEs, it is preferred that the unit has made a profit in the past year, though this requirement may be relaxed by PMAC. The designer hired under this scheme must be a qualified industrial designer with relevant experience. All related documents must be properly checked by the implementing agencies.
To check your MSME loan eligibility, visit your preferred bank or lender’s website and use their loan eligibility calculator. You'll need to enter basic details like your business type, turnover, credit score, and years in operation. Eligibility depends on factors such as business registration, financial records, credit history, and compliance with MSME classification norms.
