You are currently viewing MSME Loan – Check Features, Eligibility & Interest Rates in 2024

MSME Loan – Check Features, Eligibility & Interest Rates in 2024


MSME Credits, otherwise called Miniature, Little, and Medium Venture Advances, are kinds of credits which you can profit on the off chance that you own a business or are a business person. This sort of advance furnishes you with working capital which you can use for different purposes like buying new stock, purchasing new gear, paying your staff their compensation, or helping yourself in growing your business. There are numerous moneylenders in India who offer MSME advances to their clients. The premium charged additionally contrasts from one bank to another.


MSME Loan Details

Interest Rate 7.75% p.a. onwards
Loan Amount Rs.50,000 onwards
Loan Tenure Up to 15 years
Processing Fee Subject to the lender


New Definition of MSME

  • The meaning of MSME was modified and was reported by the Public authority of India on thirteenth May 2020. Given underneath is the new meaning of MSME:
  • The rules for MSME characterization have been changed from one Venture to another and Yearly Turnover.
  • The Public authority of India likewise expanded as far as possible for arrangement of MSME units. This implies, that more firms and ventures can now profit MSME plans.
  • Rules for the characterization of MSMEs is currently uniform for Assembling and Administrations Ventures which is given underneath in the table beneath:
Classification       Micro           Small         Medium
Manufacturing and Services Enterprises Investment does not exceed Rs.1 crore and Turnover does not exceed Rs.5 crore Investment does not exceed Rs.10 crore and Turnover does not exceed Rs.50 crore Investment does not exceed Rs.20 crore and Turnover does not exceed Rs.100 crore


Miniature, Little, and Medium Ventures can benefit MSME advances for the development of organizations or for setting up new endeavors. The financing costs on MSME advances start at 7.65% p.a. The credit sum endorsed goes from as low as Rs.50,000 and can go up to a couple of crores. Based on the endorsed credit sum, the advance reimbursement residency can go as long as 15 years.

MSME Loan Interest Rates by Top Banks in 2024

                Bank Name                       Interest rate
Central Bank of India 9.90% p.a. onwards
Indian Bank At the discretion of the bank
Punjab and Sind Bank 9.30% p.a. onwards
Punjab National Bank At the discretion of the bank
State Bank of India At the discretion of the bank
UCO Bank 8.85% p.a. onwards
Union Bank of India At the discretion of the bank

Popular Banks offering MSME Loans in India

Listed below are some of the most popular banks in India which offer MSME loans:

SME Loans from SBI

Interest Rate At the discretion of the bank
Processing Fee 1% of the loan amount onwards
Loan Amount Depending on the scheme
Loan Repayment Tenure 12 months onwards Up to 120 months


SME Loans from HDFC Bank
Interest Rate At the discretion of the bank
Processing Fee Up to 1% of the loan amount
Loan Amount At the discretion of the bank
Loan Repayment Tenure At the discretion of the bank

Bank Name Interest rate
LendingKart 1.25% per month
SFMG India Credit Up to 21%
Mahindra Finance 7.75% onwards
Muthoot Fincorp

At the discretion of the lender

Top NBFCs Offering MSME Loans Interest Rates

There are various Non-Banking Financial Companies (NBFCs) in India who offer MSME Loans to its customers at attractive interest rates. Given below are some of the NBFCs from whom you can avail an MSME Loan.

Popular NBFCs offering MSME Loans in India

Listed below are some of the most popular NBFCs in India which offer MSME loans:

SFMG India Credit Business Loan
Interest Rate Up to 21%
Processing Fee Contact the lender for more details
Loan Amount Up to Rs.75 lakh
Loan Repayment Tenure Up to 5 years


Lendingkart Business Loan 
Interest Rate  1.25% per month 
Processing Fee  2%-5%
Loan Amount  Rs.50,000 to Rs.2 crore
Loan Repayment Tenure  Up to 36 months 

Other MSME Loan Schemes

In addition to the loan schemes offered by the banks and NBFCs, there are a host of government schemes as well. These schemes have been listed below:

Name of Scheme Sub-Schemes
1) MUDRA Loan
  • Micro-Credit Scheme
  • Credit for Micro Finance
  • Refinance Scheme for Banks
  • Mahila Uddyami Scheme
  • MUDRA Card
  • Equipment Finance Scheme
  • Credit Guarantee Scheme
2) Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) N/A
3) Prime Minister’s Employment Generation Programme (PMEGP) N/A

MSME Registration

Given beneath are the means you should follow to enlist for MSME as another client

In the event that you have not enrolled previously, click on ‘New Business people who are not Enlisted at this point as MSME or those with EM-II’.

You should give your name and Aadhaar subtleties and snap on ‘Approve and Create OTP’. A One-Time Secret phrase (OTP) will be shipped off your portable number. Enter the OTP to confirm. You will then, at that point, need to give the subtleties of your Skillet, association you are a piece of and approve it.

In the subsequent stage, give your own subtleties and the subtleties of the business or plant you are a piece of.

Subsequent to entering every one of the subtleties, click on ‘Submit and Get Last OTP’. An OTP will be shipped off your versatile number. Enter the OTP following which you will get a directive for the effective enrollment of MSME.

Enrollment For Business visionaries Previously Having UAM

On the off chance that you have previously enrolled as a UAM, you should tap on the connection

Click on either ‘For those having enlistment as UAM’ or ‘For those previously having enrollment as UAM through Helped recording’.

Enter your Aadhaar number.You can decide to get the OTP either on your enlisted portable number or email ID.

Whenever you have given the OTP, click on and ‘Approve and Produce OTP’.

Enter the OTP and your enlistment cycle will be finished.

What are the Qualification Measures for Profiting a MSME Credit?

You’re expected to satisfy the qualification standards set by your moneylender to get endorsed for a MSME advance. The prerequisites will shift from one bank to another, and even changes with the sort of plan advertised. In any case, recorded underneath are the overall rules you should meet:

Particulars Criteria
Type of business
  • Manufacturing Sector
  • Service Sector
Size of business (in terms of investment) – Manufacturing Sector
  • Micro – < Rs.25 lakh
  • Small – < Rs.5 crore
  • Medium – < Rs.10 crore
Size of business (in terms of investment) – Service Sector
  • Micro – < Rs.10 lakh
  • Small – < Rs.2 crore
  • Medium – < Rs.5 crore

What are Documents Required to Apply for a MSME Loan?

Listed below is a generic list of documents that you can keep in hand for your application:

Particulars Document Required
Proof of Identity PAN card, Aadhaar card, Voter’s ID, passport
Proof of Residence Rental agreement, ration card, utility bills
Proof of Business Address Rental agreement, lease agreement, utility bills
Proof of Income P/L account and balance sheet copies of last 2 years
Tax documents IT returns, sales tax return, PAN card
Proof of securities provided Photocopies of title deeds/lease deeds offered as securities
Other documents Projected balance sheet, project report, etc.

Note: The list of documents mentioned above is indicative only. Applicants might be required to provide other documents as well as per the requirement of the lender.

How to Apply for a MSME Advance?

There are two different ways of sending in your application for a MSME advance. Assuming the loan specialist has a web-based office, you can fill the structure with the necessary subtleties and present the application through the site.

On the other hand, you can visit the closest branch and solicitation them for an application structure. You can call ahead and ask them what the documentation prerequisites are.

Guarantee for MSME Credit

The majority of the moneylenders in India will offer you a MSME credit without you giving any guarantee or security. MSME credits are viewed as unstable advances for which guarantee isn’t needed. Be that as it may, on the off chance that any loan specialist requests a guarantee, do reach out to them and request the subtleties of the security you might have to give.

FAQs on MSME Loans

What is priority sector lending and does it include the MSME sector?

Lending to the priority sectors, which are sectors that impact large segments of the population, are employment-intensive, and are weaker sections, is known as priority sector lending. The MSME sector falls under the priority sector and hence, can avail the benefits of priority sector lending. Some of the other sectors that can enjoy priority sector lending are education, housing, agriculture, and the export sector.

Do all banks offer MSME loans?

All private and public sector banks in India have targets prescribed by the Reserve Bank of India (RBI) for lending to the MSE sector. Under these guidelines, domestic scheduled commercial banks (except small finance banks and regional rural banks) and foreign banks with more than 20 branches will allocate 7.5% of their Adjusted Net Bank Credit (ANBC) or credit equivalent amount of off-balance sheet exposure, to the microenterprises sector.

Do MSME borrowers need to have a credit rating?

Though it is not a mandate for the MSME borrowers to have a credit rating, getting it done will aid in credit pricing which may help them to get better interest rates, lower processing charges, etc.

Is it possible to get MSME loans without providing collateral?

As per the RBI regulations, banks have been mandated to offer MSME loans of up to Rs.10 lakh without accepting collateral. Sometimes, depending on the financial position and track record of the MSME units, banks can increase this limit to Rs.25 lakh.

What happens if I fail to make the payment for my MSME loan on time?

In cases where the buyer is unable to pay the supplier, he/she shall be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or on the agreed day, at 3 times the bank rate notified by the RBI.

Are there any guidelines laid down by the RBI regarding interest rates on MSME loans?

Yes, RBI has advised all banks to price the interest rates on MSME loans only with reference to the base rate to enhance transparency in lending rates.

Does the government of India offer any other support to the MSME sector besides offering loans?

Apart from offering loans to the MSME sector, the Ministry of MSME extends support for the promotion of Information and Communication Touls (ICT), cluster development, skill development, improvement of manufacturing competitiveness, improvement of quality of products, etc. The Ministry also provides market support to the sector through the Marketing Assistance Scheme.

Do all branches of public sector banks offer MSME loans or are there any specialised branches?

The RBI has directed all public sector banks to open at least one specialised branch in each district for lending to the MSME sector. At present, there are 2,032 such branches.

I am an MSE entrepreneur. Will banks extend any guidance to me besides offering me a loan?

Yes, entrepreneurs in the MSME sector can avail the following services offered by banks:

I am an MSE entrepreneur. Will banks extend any guidance to me besides offering me a loan?

Financial literacy and consultancy support Rural Self Employment Training Institutes (RSEITs)

What is the Stand Up India scheme?

This scheme offers financial assistance to women entrepreneurs and individuals from the SC/ST caste. The finances can be used to set up greenfield projects. It can be applied for first-time ventures in industries like trading, manufacturing, and service.

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