MSME full form – Micro, Small and Medium Enterprises, are growing gradually over the years. The ready availability of business loans is one of the reasons for this growth. Simultaneously, the threat of NPAs is also rising. Therefore, to reduce the delinquency rate, lenders set strict eligibility criteria that borrowers have to fulfill to be eligible for the funds.
Firstly, individuals need to know that several types of business loan are available in the market such as MSME loans, machinery loans, working capital loans, etc. they should choose which favours their business purpose.
Secondly, deciding the purpose of borrowing also plays a vital role. It allows them to choose right loan amount and eventually facilitates easy repayment.
Thirdly, several lenders are available in the market and choosing one is crucial. Thus, borrowers need to consider several factors like interest rates, tenor, credit amount, service terms, etc. thoroughly before choosing one.
Fourthly, lenders check the credit profile and credit score of the applicant before sanctioning funds. Preferably, you should maintain a credit score of 750 and above for guaranteed loan approval.
Lastly, to validate yourself, you need to submit a list of documents like Identity proof, address proof, financial documents, IT documents, business-related documents. Lender will also assess the balance sheet, business vintage, age of the applicant, etc. before disbursing the amount.