What is MSME Loan Restructuring

MSME stands for Micro, Small and Medium Enterprises in India. With such MSME ventures growing constantly, lenders as well as the government itself has brought forward many loan products to help people partaking in MSME enterprises. Small-scale businesses usually apply for MSME loans in order to expand their business, purchase new equipment or raw materials.

Due to the Covid-19 pandemic those with ongoing MSME loans have been heavily affected because of lockdowns and their loan repayment has become quite difficult. This has led to the MSME Loan Restructuring initiative from the government. The new loan structure will help borrowers repay their existing loans according to their repayment capacity.The MSME Loan Restructuring has been planned to be implemented from 1st March, 2021. It is bound to provide relief to thousands of MSMEs that have borrowed funds for their businesses. Persons with MSMEs facing salary cuts and job losses will mainly benefit from the loan restructuring as the new structure will bear the weight of their existing loan and formulate a new repayment plan.

- Proprietorships- One Person Company- Partnership Firms- Limited Liability Companies- Co-operative Societies- Limited Company- Hindu Undivided Family- Producer Company- Private Limited Company

The government has newly defined MSMEs and from henceforth any enterprise that falls under this definition will be eligible to be termed as an MSME.

Micro Enterprise

- Business with investment of less than Rs. 1 crore and turnover of up to Rs. 5 crore.

Small Enterprise

- Business investments of up to Rs. 10 crore and turnover of up to Rs. 50 crore.

Medium Enterprises

- Business investment of up to Rs. 50 crore and turnover up to Rs. 250 crore.

To apply for MSME loan online, follow the steps given below:1) Register yourself on udyogaadhaar.gov.in 2) Fill in all the details on the MSME registration form.3) Upload required documents like Aadhaar, Bank details, Address proof etc.4) After uploading your application, you’ll receive the registration number for your MSME loan.

• Age of the applicant must be between 25-55 years.
• A business that is at least three years old is required.
• The business must have filed ITR for at least the past year.
• Minimum credit score of 750 of the borrower.
• Clear repayment history of past loans either for the applicant or the business.

• Identity proof, such as driving license, voter’s ID, PAN Card, Aadhaar Card etc.
• Address proof, like electricity bill, passport, Gas connection etc.
• Proof of existence of business, like ITR filings, bank account statements of the past 3 years etc.
• Passport size photographs.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.