Small Business Loans

Small business loans are offered to small businesses or MSMEs to fund their working capital and other financial needs. These loans are offered by private and public sector banks and Non-Banking Financial Companies (NBFCs) to help small businesses fund, expand or grow their business units.

Small business owners can apply for a business loan on Paisabazaar with interest rates starting from 13%. However, the final rate of interest depends on multiple factors, including the credit profile, loan amount, loan tenure and the business profile of the borrower.

Most lenders have prescribed their own set of eligibility guidelines for small business loans. However, the common set of eligibility criteria is listed below:

• Age Criteria: Minimum 18 years and maximum 65 years on maturity
• Business Tenure: Minimum 2 years (in profits)
• Business Turnover: Depends on the lender
• Credit Score: Preferably above 750, with a strong repayment history
• Good financial history with no defaults
• An Indian citizen with no criminal records
• Applicant should have a self-owned house or shop

Various banks and financial institutions in India offer small business loans to their customers. Let us take a look at the loans being offered by some of the leading players in the market.

State Bank of India (SBI)

SBI offers a range of products for small business owners. Its financing for small businesses includes:

SME Credit Card

SBI Pradhan Mantri Mudra Yojana (PMMY)

The loans come in three categories based on the amount needed:

Provided under the aegis of Micro Units Development & Refinance Agency (MUDRA), an initiative of the government to drive credit into enterprises at the grassroots level.

SME Smart Score

Punjab National Bank (PNB)

PNB extends various financing options to small businesses to meet their business requirements. Some of these loans include:

Digi MSME Loan

PNB SEVA

SME Sahayog Scheme:

Bank of Baroda (BOB)

Bank of Baroda offers a range of SME loans for general as well as specialised end-use or sectors. For instance, the bank offers credit products for artisans, for educational institutions, etc. Though most of these loans are secured loans, the bank also offers small business loans without any collateral:

Baroda Laghu Udhyami Credit Card

Baroda MSME Capex Card and Loan

SME Short-Term Loan

ICICI Bank

ICICI Bank offers a variety of loans for small businesses. Some of its products include working capital finance, term loans, loans for start-ups, collateral-free loans, loans without financials, and so on. Here is a look at some of these loans:

Working Capital Finance

Term Loan

Loan for New Entities

In addition to these banks, various other regional rural banks and NBFCs provide startup funding for small businesses with the help of small business loans. The financial institutions also provide the necessary support to various SMEs and MSMEs through government-backed schemes.

The government has come up with various small business loan schemes and initiatives for the MSME sector and small businesses, such as Mudra Loan, Prime Minister’s Employment Generation Programme (PMEGP), subsidy scheme for term loans, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), SIDBI Make in India Loan for Small Enterprises (SMILE), and so on.

Pradhan Mantri Mudra Yojana (PMMY)

Provides loans up to Rs. 20 lakh to non-corporate, non-farm micro and small enterprises under the MUDRA framework.

SIDBI SMILE (Soft Loan Fund for MSMEs)

Offers soft loans to MSMEs to support establishment and expansion by addressing debt–equity requirements.

Swarojgar Credit Card

Enables simplified and timely access to credit for small entrepreneurs and self-employed individuals.

PSB Loans in 59 Minutes

Facilitates quick, digital in-principle approval for business loans up to Rs. 5 crore within 59 minutes.

Credit Guarantee Scheme for Startups (CGSS)

Provides credit guarantee cover to lenders to support funding for eligible startups.

Startup India Seed Fund Scheme

Extends early-stage financial support to startups for validation, prototyping, product trials, market entry, and commercialisation.