According to the new guideline provided by the government, the investment limit has been revised upwards and an additional criterion of turnover introduced for the MSME loans. Previously, the Micro, Small and Medium Enterprises Act (MSME Act) 2006 defined a micro-unit with the investment of up to Rs 25 lakh, a small enterprise with investment between Rs 25 lakh and Rs 5 crore and a medium one with investment between Rs 5 crore and Rs 10 crore.
There was a distinction between the manufacturing and services, so in case of services, the investment limit for
micro was up to Rs 10 lakh, for small, the investment cap was Rs 10 lakh to Rs 2 crore and for medium, the limit was Rs 2 crore to Rs 5 crore.
Now the revised definition of MSMEs introduced recently removed the distinction between manufacturing and services. This means a micro firm is one with investment up to Rs 1 crore and turnover less than Rs 5 crore, the small firm has investment up to Rs 10 crore and turnover up to Rs 50 crore and the medium-firm will be one with an investment of up to Rs 20 crore and turnover under Rs 100 crore. This new changes not only help a startup or the already functioning business to grow but it also helps them gain more benefits with greater transparency in the classification. This will also allow the government to verify a company’s turnover using the GST data than the investment in machinery. If you are looking to get an MSME loan, here is a step-by-step guide on how to apply for MSME loan online.
Documents Required for MSME Loan
- Duly filled Application form
- Identity Proof: Passport, driving licence, PAN card, Voter’s identity card
- Residence Proof: Passport, lease agreement, trade license, telephone and electricity bills, ration card and sales
- tax certificate
- Age Proof: Passport, Voter’s identity card, Photo PAN card
- Last 12 months’ bank statement
- Business registration proof
- Proprietor(s) PAN Card Copy
- Partnership deed copy
- Company PAN card copy
- P&L and balance sheet copy of last 2 years
- Sales tax documents
- Municipal tax document