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What are the documents required for MSME loans?

    Does your Micro, Small, and Medium Enterprises (MSME) need financial assistance to pursue larger goals? An MSME loan might be the answer.

    MSME loans are financial products designed to meet the requirements of micro, small, and medium enterprises. You can use these loans to fund day-to-day operations, purchase machinery, fix cash flow problems, hire additional staff, open a new branch, or meet other business-related expenses.

    However, when you apply for an MSME loan, one important step that significantly impacts the process is submitting the right documents. This is a critical requirement by banks to verify your identity, address, and business legitimacy, which helps them decide whether to approve your loan. Read on for more details.

    A brief look at the documents required for MSME loans 

    You can easily apply for an MSME loan by providing the following documents:

    1. Identity proof 

    Acceptable forms of identity proof include:

    • PAN card
    • Aadhaar card
    • Voter ID card
    • Passport
    • Driving licence

    These documents must be valid and clearly show your name and photo. 

    1. Address proof

    To verify your residential address, the following documents are typically required:

    • Utility bills such as electricity, water, or telephone bills (not older than 3 months).
    • For rented properties, the lease agreement may be needed as proof of address. Property documents can be required for owned properties.
    • A ration card, Aadhaar card, and driving licence can also be used. 
    1. Business address proof 

    Documents establishing the existence and legitimacy of your business are crucial. These may include:

    • Trade licence
    • Lease agreement
    • Udyam registration certificate
    • GST registration certificate
    • Property tax receipt
    • Utility bills (electricity or water) with a date not exceeding 3 months in the business’s name
    1. Financial documents 

    To analyse the financial health and repayment capacity of the business, banks require several financial documents, such as:

    • Bank statements for the last 6 months
    • Income tax returns for the past 2-3 years
    • Profit / loss statement and balance sheet for the last 2-3 years
    • Audit reports (if applicable)
    • Tax-related documents like PAN card and GST returns
    1. Registration proof

    Business registration documents are necessary to confirm a company’s legal status. These documents show the bank that a business operates lawfully and adheres to all relevant regulations. You may have to provide:

    • Partnership deed
    • Udyam registration certificate
    • Rent agreement and sales deed
    • Copy of licences and certificates
    • Memorandum of Association (MoA)
    • Article of Association (AoA)

    Note: In addition to the documents mentioned above, you may need to provide a business plan. This allows the bank to evaluate your business, the industry, and long-term growth prospects before approving the loan.

    Process of MSME loan application and steps to apply 

    Here’s how you can instantly apply for an MSME loan online:

    • Visit the official website of your bank.
    • Locate the ‘Loans’ section on the website and select ‘MSME Loans’ from the available options.
    • Carefully read the details regarding loan terms, interest rates, and eligibility criteria.
    • Prepare all the required documents mentioned above. Check out if any additional documents are required.
    • Complete the application form with relevant business and personal details.
    • Upload the required documents and submit your application.
    • The bank will review your application and documents. After verification, your MSME loan may get approved and sanctioned. 

    Key takeaways 

    Having the right set of documents can help expedite the MSME loan approval process and eliminate potential delays. This means quicker access to the capital your business needs to grow and thrive. So, always prepare and organise all required paperwork before applying. Most importantly, make sure that every document is up-to-date, accurately filled out, and thoroughly checked for compliance.