Textiles, being one of the essential commodities is always a good business opportunity. And the Indian textile industry is a lucrative business and one of the oldest industries in the world. Exports of textiles contribute majorly to the economy of the country and it seems to be the largest industry.
What is MSME Loan or Textile Loan?
MSME loans are the monetary help provided to the Micro, Small and Medium Enterprises (MSMEs) for their emergence and expansion. And Government realizes the contribution of Textile industry towards the economy and therefore has launched several MSME loans Schemes and Textile Loans.
What Are the Benefits of MSME Loans?
Availability of MSME loans without collateral, affordable MSME loan interest rate and flexible MSME loan repayment terms make it favourable for MSMEs to apply for business loans.
Many small and medium enterprises have come up with textile manufacturing and exports, creating more employment opportunities in the country and adding to the economy of the country.
What Are the 5 Smart Things to Know Before Applying for Textile Loan?
Below detailed are the 5 smart things which an MSME must note before applying for Textile Loan:
What Should be The Textile Business Model?
It’s important for an MSME to choose between the various textile-based products to plan the business model and that would help to determine the Textile loan required. The textile business ranges from the thread, wool to sewing machinery and readymade clothes. And MSME loans requirement will largely depend upon the kind of the textile business.
For the business of thread/wool, the MSME loan requirement would be less compared to the business of sewing machinery readymade clothes.
Moreover, MSMEs may opt for MSME business loans to venture into exports of Textile and also enjoy the export incentives offered by the government for the textile export industry.
How Much is the Credit Score Required?
Credit Score is the foremost essential factor scrutinized by the financial lender to decide the MSME loan to be granted and also, MSME loan interest rate.
Credit Score reflects the repayment capacity of the MSME by determining the earlier loan taken by the MSME, present income generated by the MSME, etc.
An MSME with high credit score is more likely to get good MSME loan and customized MSME loan interest rate.
How Much is the MSME Loan Interest Rate?
An MSME needs to check and compare with the MSME loan interest rate being offered by several financial institutions as well as Non-Financial Instructions before choosing one.
For this, first, the MSME may view the MSME loan interest rate by visiting the online portals of the institutions and then later can personally approach the institution to get a better deal.
Who is Eligible for MSME Loan or What is MSME Loan Eligibility?
MSME loan eligibility is as follows:
- The MSME should be having a business for more than six months.
- The applicant of the MSME must be 25 years old.
- The money invested in the manufacturing sector must not exceed Rs. 10 crores and in the servicing sector must not exceed Rs. 5 crores.
- How much would be the EMI and the MSME Loan repayment term?
Before planning to opt for a Textile loan, an MSME needs to determine the Equated Monthly Instalment (EMI) that would be payable, to determine if the income generated by the MSME can allow them to pay the EMI in a timely manner.
Moreover, the income generated by the company should be enough to help the MSME to take care of the MSME loan repayment terms, as agreed with the financial lender.
To conclude, it’s important for an MSME to first choose a textile business model, determine the textile loan needed, improve its credit score, check & compare the MSME loan interest rate, check their eligibility for the business loan, determine EMI and MSME loan repayment tenure to plan their business and other financial obligations carefully.
Frequently Asked Questions:
1. Is SME loan same as MSME loans?
2. Is MSME loan apply easy?
Yes, MSME loan apply is very easy owing to everything being made available online.
3. How to get MSME loans or Textile loans?
MSME loans/MSME business loans can be easily availed by uploading duly filled application form along with the documents required for the MSME business loans such as Proof of Identity, Proof of Address, Rent Agreement Copy, Business Registration Copy, Bank Statement Copy, ITR, Passport-sized Photo, etc. This online facility makes MSME loan apply very easy, quick and hassle-free.
4. Is MSME loan without collateral available?
Yes, almost all the MSME loans available are MSME loan without collateral.