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What are the Documents Required for MSME Loan?

27-Jun-2024 | MSME

What are the Documents Required for MSME Loan?

MSME (Micro, Small, and Medium Enterprises) loans are essential for the growth and sustenance of small businesses in India. However, to avail of these loans, proper documentation is important. In this blog, we'll highlight the specific documents required for MSME loan applications, particularly focusing on the prerequisites set forth by Aavas Financiers, a leading financial institution in India.

Importance of Proper Documentation

Before we delve into the specifics, let's understand why having the right documentation matters. Proper documentation not only streamlines the loan application process but also instil confidence in lenders regarding the borrower's credibility and ability to repay the loan.

Documents Required for MSME Loan Application

Identity Proof

To begin with, a valid identity proof is indispensable. Aavas Financiers accepts various documents for this purpose, including PAN Card, Passport, Voter ID, Aadhaar Card, and Driving License.

Address Proof

Similarly, proof of address is essential. Acceptable documents include Passport, Voter ID, Aadhaar Card, utility bills like electricity, water, or telephone bills, and Driving License.

Proof of Income

Proof of income is crucial to ascertain the borrower's repayment capacity. For this, applicants can provide Income Tax Returns and/or Financial Statements for the last three years, along with informal income documents if applicable.

Other Documents

In addition to the aforementioned, applicants need to submit a signed application form with a picture, a cheque for processing fee, bank statements for the last six months, and property documents such as title deeds and proof of no encumbrances.

Documentation for Self-Employed Individuals

Self-employed individuals need to provide additional documentation to validate their income sources. This may include business registration certificates, GST registration, and other relevant documents showcasing the business's financial health.

Detailed Explanation of Required Documents

Each document plays a vital role in the loan approval process. PAN Card and Aadhaar Card serve as primary identification proofs, while utility bills and rental agreements verify the applicant's address. Financial statements and bank statements provide insights into the applicant's financial stability and repayment capability.

Note on KYC Requirements

It is important to adhere to KYC norms set by regulatory authorities. Aavas Financiers recommends verifying the full list of KYC documents at their nearest branch to ensure compliance.

Importance of Validity

Lastly, ensure that all documents are valid and not expired. This applies particularly to documents like Driving License and Passport, where expiry dates are crucial.

Conclusion

In conclusion, securing an MSME loan requires meticulous attention to documentation. By furnishing the required documents accurately and ensuring their validity, borrowers can expedite the loan approval process and pave the way for their business growth.

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