While India is home to several multinational companies (MNCs) of the world, the country still boasts of a large number of companies being a medium, small and micro enterprises (MSMEs). In 2019, India was reported to be home to more than 63 million MSMEs.
Despite the predominance of MSMEs, their economic state continues to be less than ideal. Many MSMEs suffer a cash crunch which results in them being unable to continue operations and they eventually end up shutting shop.
In light of this, the Indian government has taken several steps to protect MSMEs by launching MSME loan schemes that provide capital to the MSMEs and enable them to stay afloat. MSMEs can also avail loans such as the Bajaj Finserv MSME Loans, available on Finserv MARKETS, which allows MSMEs to quickly avail loans of up to Rs. 30 lakh by processing documents online and requiring no collateral. Borrowers can also opt to repay their loans over flexible tenures ranging from 12 to 60 months.
While several of these have previously proven to be successful in helping MSMEs operate, the Covid-19 pandemic has resulted in further stress to the sector.
As the whole country and indeed, the world, reels under the effects of the pandemic and the resultant lockdowns, industrial output has fallen sharply and many MSMEs are failing to make ends meet.
In view of the situation, the government has introduced the Guaranteed Emergency Credit Line (GECL) which seeks to provide MSME loans that can immediately provide relief to these enterprises. The entire scheme has been funded with Rs. 3 lakh crore, and is meant to be an automatic loan scheme. While the MSME loans themselves will be disbursed through banks and lenders, the National Credit Guarantee Trust Co. Ltd. (NCGTC) is sharing an emergency credit line facility as guarantee for these loans.
The maximum amount that can be borrowed under this scheme is Rs. 5 crore, but the credit limit would be capped at 20% of the applicant’s total outstanding credit. The interest rates for this MSME loan scheme have also been restricted to 9.25% per annum to ensure that the borrower is not subject to any enormous financial burden. This is expected to significantly help MSMEs since usually business loans are subject to high amounts of interest.
The Bajaj Finserv MSME Loan, available on Finserv MARKETS, also provides borrowers with significant benefits especially by waiving off the need for any collateral while availing the loan. Upto Rs. 30 lakh can be availed by borrowers which can be repaid over a flexible tenure of 12 to 60 months. The application can also be filled out online, and be approved within 3 minutes which negates the need for follow-ups by the borrower.
While the GECL seeks to provide borrowers with significant relief, there are quite a few MSME loan eligibility criteria that an applicant must fulfill in order to avail this loan. Read on to learn more about what these criteria are.
- In order to avail the loan from the lender of your choice, you need to already have an account with the lender
- To be eligible for this MSME loan scheme, the borrower must have outstanding loans amounting up to Rs. 25 crore across all their bank accounts as in February 2020, and their annual turnover for 2019-2020 must be only up to Rs. 100 crore.
- No loans provided to borrowers in their personal capacity is eligible for consideration under this scheme
- The borrowers must be GST registered if it is mandatory according to the laws pertaining to the GST rules.
It is important for applicants to apply for and avail the benefits of this MSME loan scheme at the earliest, since it is only valid until 31st October 2020 or until the amount of Rs. 3 lakh crore has been sanctioned under the scheme.
The government has also notified the repayment period for loans availed under the GECL. Borrowers can repay the loan within a maximum of 4 years from disbursement, and in 36 equal installments which need only be paid once the moratorium period has passed. A moratorium of one year on the principal amount shall be applied, during which, however, interest has to be paid by the borrower.
This MSME loan scheme is a boon for MSMEs struggling to make ends meet during the CoVid-19 pandemic. It can significantly help them meet their working capital requirements, make payments to their staff and meet other operational expenses, and also aid them in preparing for the ‘New Normal’.
Businesses will be required to take steps, especially in terms of sanitation of their premises and training of their staff, to prepare for the New Normal; and during such times, a working capital term loan is of great use.
Businesses can also avail the Bajaj Finserv MSME Loan, available on Finserv MARKETS App, which lets them avail up to Rs. 30 lakh and can be disbursed to their account within 24 hours. The loan can be approved online within 3 minutes of application and allows the borrower to repay at ease over a period ranging from 12 to 60 months thereby ensuring the loan can first be used to meet their capital requirements.
