As we all know the current situation due to COVID-19 pandemic led to a cash crunch in the businesses, specifically MSME, or SME. The government recently announced a collateral-free loan of up to Rs 3 Lakh crore to help the businesses dealing with the cash crunch problems. The emergency credit line guarantee scheme is announced for the MSMEs, so that, they can begin the operations as soon as possible without any hassle.
It’s a 100% collateral-free loan offered to the MSMEs along with the guidelines issued by National Credit Guarantee Trustee Company (NCGTC) to all the banks and financial institutions. To combat this situation of economic crisis, this special scheme is announced by the government of India to at least lessen the impact of Coronavirus and thereby, continuous lockdown from the last three months.
The emergency credit line guarantee scheme or loan has several benefits for the MSMEs. Let’s move forward and take a look at what all are the advantages to be taken into account.
Whether your firm is into proprietorship, partnership, a registered company or trusts and limited liability partnership (LLP), all are eligible for the MSME loans. Only business loans are being covered under the scheme, and if the loan is taken by the director for his/her personal capacity will not be covered.
Interest Rate on Loans
First of all, the MSME loans provided to the borrowers are beneficial in terms of interest rates. Even the loan announced by the government for MSMEs is beneficial for the borrowers because of low-interest rates. Banks and all the other financial institutions have kept the interest rates to a maximum of 9.25% per annum. Moreover, the NBFCs cannot even charge more than 14% interest rates on the loans offered to the MSMEs under this scheme.
Therefore, if you are planning to apply for this loan, then it is available from May 23, 2020, till October 31, 2020. Till the amount of Rs 3 lakh crore, a borrower can avail the loan, whichever is earlier, date or amount.
The highlighting part about MSME loan announced by the government is that it has a pre-approve mechanism, which simply means you don’t have to go to the lender to apply for the loan. If you fulfil the eligibility criteria for the loan scheme, then the lender will automatically offer you the loan scheme. Although documentation procedure is still there, it is more convenient, and easy peasy.
There are several benefits of MSME loans offered to the small business owners to help their business grow potentially with great opportunities further. Otherwise, you can get in touch with the top financial advisors in Delhi, India, for all your queries and issues.
Nowadays, there are countless financial consultants available to assist and guide you throughout the loan procedures. One such ideal financial advisor is Consult Avenue for all your finance related assistance.