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7 Ways MSMEs Can Apply for a Business Loan

Updated: Apr 14

Access to Business Loans is a vital component of any successful business. However, small and medium-sized enterprises (MSMEs) may face some difficulty in securing the funding they need in time. Nevertheless, small businesses can apply for an MSME Business Loan to help them reach their goals.

For many MSMEs, applying for a Business Loan can be a complicated and daunting process. However, with the right information and understanding of loan processing, it is easier than ever to access the funds you need to grow and develop your business.

This article will provide you with seven useful tips to help you secure a Business Loan quickly and without hassle. Learn about the various loan options available and how to make your application successful.

What are MSMEs and How Can an MSME Business Loan Help Them Grow?

MSMEs stand for Micro, Small, and Medium Enterprises. It is a term used to describe businesses that are either independently owned or part of a larger corporate group and have fewer than 250 employees.

MSMEs play a critical role in the economic development of India and are considered one of the most important sectors of the economy. They are also seen as engines of economic growth, as they offer an important source of employment to an otherwise untapped segment of the workforce. Additionally, they provide goods and services at a lower cost than larger firms, allowing them to compete in the market. They also serve as a great source of innovation and new ideas, especially in rural areas.

Hence, it is important to provide strong financial assistance to such businesses in the form of financial products like Business Loans. These come with a host of different features and benefits catering to the needs of MSMEs.

Advantages of Getting an MSME Business Loan

Business loans offer a range of features and benefits for businesses seeking financing. Some of the top ones are:

  • Favourable & Flexible Terms - Favourable terms, including low fixed interest rates, flexible repayment schedules, and long repayment terms, make business loans an attractive option for businesses.

  • High Loan Amount - Additionally, businesses can access larger amounts of capital than they would be able to with other financing options, such as credit cards or personal loans.

  • No Collateral Necessary - Some NBFCs also offer collateral-free Business Loans, which means you are not required to put any asset as security against the loan.

  • Boost Working Capital - Business loans can also provide business owners with access to additional capital to help them reach their goals faster.

  • Attractive Interest Rates - Additionally, competitive interest rates can help businesses save money in the long run on financing costs.

Furthermore, numerous other benefits are associated with these types of loans, such as - tax deductions for interest payments and the potential for increased credit ratings due to timely loan repayments.

All in all, business loans can be an invaluable resource for businesses looking to increase their capital and achieve their goals.

Top Seven Ways MSMEs Can Apply for a Business Loan

Here are some of the different ways through which MSMEs can avail of a Business Loan

  • Traditional Bank Loans - You can take the traditional offline route and apply for a Business Loan at any bank of your choice. However, this could involve long lines and lengthy paperwork.

  • Government Loans - Several government loans have been introduced to help MSMEs flourish. Some of them include the Pradhan Mantri Mudra Yojana (PMMY), the Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT MSE), and more.

  • Angel Investors - Angel investors can help MSMEs to meet financial needs for various business operations.

  • Crowdfunding - Some crowdfunding platforms can help MSMEs find the necessary funding to fulfil various business requirements.

  • Credit Unions - MSMEs can also apply for financial support from credit unions, which are non-profit and formed as cooperative financial institutions.

  • Microfinance Institutions - Microfinance institutions provide small-size Business Loans to MSMEs as per their specific requirements.

  • Non-Banking Financial Companies (NBFCs) - Getting a Business Loan via an NBFC is an excellent way to finance business requirements. Not only is the loan process faster, but the eligibility criteria are simple as well. It also involves minimal paperwork when you apply online.

How to Apply for an MSME Business Loan with an NBFC

You can follow the steps mentioned below to apply for an MSME Business Loan online:

  • Step 1: Visit the lender’s website

  • Step 2: Click on ‘Apply Now’

  • Step 3: Enter the required KYC details and upload all the necessary documents

  • Step 4: Wait for application assessment & verification

  • Step 5: Receive loan approval confirmation

  • Step 6: Authorize the disbursal of the MSME Business Loan


MSME Business Loans are typically offered by financial institutions, such as banks and other lending institutions. These can be used for a variety of purposes, such as expanding operations, acquiring equipment, hiring new staff, and more. The benefits of these loans include the ability to access funds quickly, allowing small businesses to take advantage of opportunities as they arise.

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