Micro, Small, and Medium Enterprises (MSMEs) are the backbone of the Indian economy, contributing significantly to employment and economic growth. 

However, one of the major challenges faced by MSME owners is access to timely and adequate financing. MSME loans provide much-needed funds for business expansion, working capital, equipment purchase, and other operational needs. 

If you are planning to apply for an MSME loan, you might be wondering: How long does it take to get an MSME loan approved?

The approval time for an MSME loan depends on various factors, including the lender, type of loan, documentation, and applicant’s creditworthiness. Let’s explore these aspects in detail.

Factors Influencing MSME Loan Approval Time

1. Type of Lender

The approval process can vary depending on whether you apply for a loan from a bank, Non-Banking Financial Company (NBFC), or fintech lender.

1. Banks: Traditional banks generally take 7 to 15 days to approve an MSME loan, as they follow stringent verification procedures.
2. NBFCs: NBFCs offer more flexibility and faster processing compared to banks. Approval usually takes 3 to 7 days.
3. Fintech Lenders: Digital lenders have revolutionized the loan approval process with AI-based algorithms and automated verification. MSME loans from fintech platforms can be approved within 24 to 72 hours.

2. Type of Loan

1. Secured Loans: These loans require collateral, which involves asset valuation and legal verification, increasing the processing time to 7 to 15 days.
2. Unsecured Loans: Since these loans do not require collateral, the approval process is quicker, usually within 2 to 5 days.

3. Documentation and Verification

The time taken for loan approval also depends on how quickly you provide the required documents. The basic documents include:

1. Business registration proof
2. GST registration
3. PAN and Aadhaar card
4. Bank statements (last 6-12 months)
5. Income tax returns (ITR)
6. Profit & loss statements and balance sheets

If all documents are submitted correctly, verification is faster. Any missing or incorrect documents can delay the process significantly.

4. Credit Score and Business Performance

Lenders assess the creditworthiness of the applicant through:

• Credit Score: A CIBIL score above 700 enhances the chances of quick approval.
• Business Vintage: Lenders prefer MSMEs that have been operational for at least 2-3 years.
• Financial Stability: A steady cash flow and profitability can expedite approval.

5. Loan Amount Requested

Higher loan amounts typically require more scrutiny and evaluation, which may take longer. Smaller loan requests often get approved faster.

6. Relationship with the Lender

If you have an existing relationship with the bank or lender, your loan processing time may be shorter due to a pre-established trust factor.

How to Speed Up MSME Loan Approval?

If you need quick access to funds, follow these tips to accelerate your MSME loan approval process:

1. Choose the Right Lender: Opt for fintech lenders or NBFCs for faster approval.
2. Ensure Proper Documentation: Double-check and submit all required documents accurately.
3. Maintain a Good Credit Score: A high CIBIL score improves credibility and speeds up approval.
4. Opt for Pre-Approved Offers: Some lenders offer pre-approved loans to existing customers.
5. Apply Online: Digital applications reduce manual intervention, resulting in quicker processing.

Conclusion

The time taken to get an MSME loan approved varies depending on multiple factors, including the lender, type of loan, documentation, and financial health of the business. 

While banks may take up to two weeks for approval, NBFCs and fintech lenders can process applications within a few days. To ensure a hassle-free experience, MSME owners should prepare all necessary documents in advance and choose a lender that aligns with their urgency.