SME loans are credit facilities provided to small and medium enterprises to cater to their financial needs. SME loans are tailor-made to suit the specific requirements of SMEs. For instance, you can use the loan amount to invest in your factory infrastructure or maintain a healthy cash flow in your business. 

SME loans are particularly beneficial for women-run businesses. Through proper funding, small businesses can flourish in their operations and make significant contributions to India’s GDP. 

It is mandatory to prepare the following small business loan documents to apply for an SME loan.

• Identification Proof: Passport, Aadhaar Card, Driving License, Voter ID Card, PAN Card. 
• Address Proof: Aadhaar Card, Driving License, Voter ID Card, Passport, Utility bill, etc
• Valid Business Proof: Business Entity Proof, Incorporation Certificate, Article of Association, Partnership Deed, Shops and Establishment Certificate. 
• PAN Card of business entity and those of partners. 
• Company financials: Tax audit reports, Balance Sheet, Profit and Loss, VAT returns for the past three years. 
• Last three months’ bank statement. 
• Duly signed application form. 

Before applying for an SME loan, you will need to make sure that you meet the underlying eligibility criteria: 

• You must be a proprietor, self-employed individual, or a private undertaking. 
• The borrower must be 21 years old at the time of application and 65 years old at the end of the loan tenure. 
• You must show a minimum income and turnover of the business based on your lender’s policy. 
• Your business must have been making profits for at least 2 years.
• You must have a minimum of five years of business experience.

It is one of the popular options among small business owners to secure funding for their businesses. Its popularity stems from features and benefits like minimum business loan documents requirement, collateral-free, flexible tenure, and no prepayment charges. 

Must Read: 5 Major Obstacles That Confront MSME Loans in India