MSME Loan Schemes: How to Apply without Business Vintage Proof

Posted by Rupeek Fintech Pvt Ltd. on May 20th, 2021

The recent economic disruptions in 2020 severely impacted the Indian market. Many start-ups and small businesses were caught off guard; some of them were even temporarily closed, and nearly 83% of them reported a reduction in revenue. Despite facing such severity, the Indian MSME sector took only a few months to regain its position and recorded transactions worth US.5 billion within September 2020.  

MSME loan schemes came as an effective source of funds to help entrepreneurs meet their urgent financial requirements during that period. However, for new business owners availing MSME loans can be comparatively challenging as supportive documents like business vintage proof are mandatory.

• Financiers emphasize vintage of at least 2 years (6 months in some cases) when evaluating an application.

In its absence, borrowers can opt for secured loan variants as a substitute to avoid the lengthy documentation procedure. Nevertheless, individuals choosing conventional MSME loans without vintage proof should be aware of what it entails.

Availing MSME Loans without Vintage Proof

In metro cities like Bangalore, where the cost of living is comparatively high, only a few financial institutions offer business loans sans vintage proof. Here’s what involves applications of that sort.

• Credit Score 750 and above: Start-ups owners who do not have the necessary documents and have just started out should at least have a high CIBIL score to prove their creditworthiness. From purchasing advanced machinery to investing in the infrastructure, entrepreneurs apply for a bulk amount under MSME loans schemes. Therefore, financial institutions check their repayment track record before sanctioning.
• Short Repayment Tenure: Your business vintage proves how long you have been running the business, and depending on that, lenders decide. In order to avoid repayment defaults, lenders generally keep the tenure short for individuals who are unable to provide their business vintage proof.
• High Interest Rates: Apart from checking your creditworthiness, financial institutions need adequate information on your business to avoid additional risks. Without such documents, lenders tend to levy higher interest rates on MSME loans in Bangalore and elsewhere to compensate for the significant risk assumed.

Apart from that, individuals are also required to keep additional documents handy, such as KYC documents and bank statements. One of the convenient ways to deal with the stringent documentation procedure would be to opt for secured gold loans as NBFCs mainly focus on KYC verification in this case. Thus, one can obtain funds without business vintage.

Process to Apply for Gold-backed MSME Loans

If the primary focus is to avoid the lengthy documentation procedure and get monetary benefits instantly, a gold loan should be an ideal alternative to MSME loans. Here is how you can apply:

Step 1: Compare some of the best gold loan providers in your city and check the EMI charges, including other requirements as well.

Step 2: Since the process involves pledging gold pieces of jewellery as collateral, make sure to evaluate the offered LTV against the gold so that you can obtain adequate funds to support your business.

Step 3: Some financial institutions like Rupeek also provide additional features and facilities like doorstep service, overdraft facility, etc. Borrowers can consider going through the Rupeek app to utilize such customer-friendly benefits.

To support your budding venture, make sure to check what different lenders are offering under MSME loan schemes and what are the prerequisites. In case you are looking for affordable interest rates, lenient eligibility criteria, and an option that doesn’t need vintage proof, consider secured financing options that offer substantial funds to keep your business’s financial health intact.