MSME (Micro, Small and Medium Enterprises) loans are a quick, convenient and hassle-free way to procure working capital and to fulfil the financial requirements of a business. Leading financial agencies and banks provide MSME loans, which may go up to lakh. These loans can be used for investing in infrastructure, meeting the working capital requirements, paying for overheads and to creditors, and for installing new machinery and plants. The MSME loan scheme offers collateral free loans and therefore the company does not has to pledge any assets to get the loan.

MSME Loan

To get an MSME loan, a firm has to be registered as an MSME with the Government of India. The country has implemented the Micro, Small and Medium Enterprises Development (MSMED) Act 2006. According to it, the small and medium-sized businesses can be classified in the below-given categories (in accordance with the investment made in them).

Manufacturing Businesses-
These are the units that produce the goods in accordance with the provisions of Schedule 1 of the Industries Development and Regulation Act 1951 or are adding value to the final form of a tangible product.

●Micro- INR 25 lakh
●Small- INR 25 lakh to INR 5 crore
●Medium- INR 5 crore to 10 crore

Service Industry/Business-

The classification here is on the basis of investment in equipment.
●Micro- up to INR 10 lakh
●Small- INR 10 lakh to INR 20 crore
●Medium- INR 2 crore to INR 5 crore

It is not mandatory for the small and medium-sized businesses to get registered under the MSMED Act. But they can get various subsidies, loans, tax rebate and other privileges by registering. Some of the benefits include:
●Subsidy of up to 75% on product licensing fee
●Purchase preference by the Government of India
●Price preference
●Subsidies towards a technological upgrade
●Availability of fast financing options

Leading financial institutions can provide the loans under the MSME loan scheme on priority. Eligibility criteria are that the business owner should have age lying between 25 to 55 years and the business should have been in existence for the past three years.