MSME Loan/SME Loan for New and Existing Business

What is MSME Loan?

Micro, Small and Medium Enterprise (MSME full form) loan is the credit facility in form of business loan offered by financial institutions to individuals, SMEs, MSMEs and Startup enterprises for more business opportunities and to promote MSME sector. MSME loan schemes are majorly used by business owners and enterprises to meet their working capital requirements, to manage or increase cash flow, for business expansion purposes and much more. Usually, most of the banks and NBFCs offer SME and MSME loans without demanding any collateral or any security from the borrowers.

Compare MSME Loan Interest Rates – 2021

Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges

MSME Loan – Features, Fees & Interest Rates

Note: All the above mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank/NBFC and RBI. GST and service tax shall be levied extra on the mentioned charges.

Apply for Business Loan @ 14.99% onwards per annum Apply Now

Eligibility Criteria for MSME Loan

• Age: Min. 18 years and Max. 65 years
• Eligible Entities: Individuals, SMEs, MSMEs, business owners, women entrepreneurs, self-employed professionals, people falling under SC/ST/OBC category, Private or Public Limited, Sole Proprietorship, Partnership Firm, Limited Liability Partnership engaged only in trading services and manufacturing sectors
• Business Turnover: Min. Rs. 10 lakh for existing enterprises
• Good repayment history with CIBIL score above 700

Documents Required for MSME Loan Application

• Self-drafted business Plan
• Duly filled Application form with passport-sized photographs
• KYC documents of applicant and co-applicants that include Passport, Aadhar card, Voter’s ID card, Driving License, PAN Card and Utility Bills (Telephone, Electricity)
• Last 12 months’ bank statement
• Copy of Business Incorporation or Company Establishment
• Any other document required by the lender

Also Read: MSME Registration – All You Need To Know

The MSME/SME loan’s interest rates offered by various private and public sector banks, NBFCs, Small Finance Banks (SFBs), Regional Rural Banks (RRBs) and Micro Finance Institutions are (MFIs) are based on various factors, such as desired loan amount, repayment tenure, nature and tenure of business, and applicant’s profile, financial history, creditworthiness and repayment capability. Below mentioned is the MSME loan procedure:

5 Steps to apply for MSME/SME Loans

Below mentioned are 5 simple steps for MSME loan process:

• Visit Paisabazaar.com to check and compare from top SME/MSME loan deals
• Pick the loan deal that suits your business requirements
• Fill up the application form for SME/MSME loan with basic details and submit to get a call from Paisabazaar’s expert
• Submit all the required documents for bank’s representative to proceed with loan formalities
• After loan approval from bank, get money disbursed in your bank account

MSME Loans under Government Schemes – 2021

SME/MSME schemes initiated under Ministry of MSME are offered to Micro, Small and Medium Enterprises (MSMEs) by various banks and NBFCs. Popular MSME schemes offered by financial institutions and initiated by the Indian Government are below mentioned:

• CGTMSE: Credit Guarantee Fund Trust for Micro and Small Enterprises
• CLCSS: Credit Linked Capital Subsidy Scheme
• Credit Guarantee Scheme
• MUDRA Yojana under PMMY
• National Small Industries Corporation (NSIC) Subsidy
• PMEGP: The Prime Minister Employment Generation Programme
• PMRY: Prime Minister’s Rojgar Yojana
• PSB Loans in 59 minutes
• Standup India
• Startup India

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MSME Business Loans Without Collateral/Security

MSME Business Loans are availed by customers to meet their working capital requirements and for business expansion purposes. Most of the unsecured business loans offered by financial institutions are collateral-free in which the borrower is not required to submit any collateral or security with the bank.

MSME business loans without collateral are offered at competitive interest rates that can be repaid with flexible repayment options in the form of EMIs. Collateral free loans are usually short-term loans that can be repaid within a tenure of 12 month, and may exceed up to 5 years depending upon the business requirements.

The loan amount offered shall depend on the applicant’s profile, creditworthiness, repayment capability and financial stability. Most of the financial institutions like private and public sector banks, Non-Banking Financial Companies (NBFCs), Regional Rural Banks (RRBs), Small Finance Banks (SFBs) and Micro Finance Institutions (MFIs) offer MSME Business Loans without Collateral.

Purpose of MSME Loans

• Meet working capital requirements
• For new business expansion
• Manage business cash flow
• To install new equipment or machinery
• For the purchase of raw materials, vehicles, tools, etc
• To stock up inventory
• To pay-off rent, salaries, hire staff, train staff, etc.

MSME Scheme – New Definition

The distinction between the manufacturing and services enterprises has been removed by making the investment amount and annual turnover similar for enterprises engaged in both the sectors.

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MSME Toll-Free No: 1800-123-7376
General Enquiries: 011-23063288/011-23063643

FAQs on MSME Loans

Q. Is credit score important for MSMEs in getting MSME loan?
Ans. Yes, possessing a good credit score that is above 700 is always an added advantage for MSMEs.

Q. Is MSME registration voluntary or compulsory?
Ans. MSME registration is totally voluntary and businesses do it to utilise the benefits offered under it.

Q. How much loan is offered under MSME schemes?

Ans. The business loan amount for an MSME ranged between Rs. 1 lakh to Rs. 2 crore, may exceed depending upon business requirements.

Q. How can I get collateral-free MSME loans?

Ans. If you want to get collateral-free loans for MSME or startups, then you will have to apply for unsecured business loan that is maximum up to Rs. 1 crore.

Q. Is there any turnover limit for MSME Schemes?

Ans. The minimum annual turnover limit is defined by the lender and it shall very from applicant to applicant.

Q. Is machinery loan offered to MSMEs?

Ans. Yes, a machinery loan is a type of business loan offered by various banks and NBFCs to MSMEs and entrepreneurs.

Q. What is the MSME loan interest rate offered by SBI?

Ans. The MSME loan interest rate offered by SBI is 8.00% onwards.

Q. What is MSME registration fee?

Ans. The MSME registration is free of cost and obtaining MSME certificate is also absolutely free.

Q. Who is eligible for MSME/SME loan?

Ans. MSME loans can be availed by self-employed professionals, entrepreneurs, business owners, micro-small and medium enterprises, sole proprietorship, partnership firms, limited liability partnership (LLP), etc.

Q. How can I avail MSME loan in 59 minutes?

Ans. To apply for MSME loan online in 59 minutes, you can visit the official website of psbloansin59minutes.com, an initiative by Government of India that approves business loans in just 59 minutes after application form submission.

Q. Is GST mandatory for MSME Loans?

Ans. Yes, last years’ GST return is necessary for existing MSME and salaried professionals who want to start their new business.

Q. What is the validity of the Provincial Registration Certificate (PRC)?
Ans. The validation of a Provincial Registration Certificate (PRC) is for 5 years.

Q. Is there any validity of MSME certificate?
Ans. The validity of MSME certificate is of 5 years.