Tamil Nadu MSME Schemes

As of 2026, the latest MSME classification in Tamil Nadu is as follows:

Revised Classification applicable w.e.f. 1st April 2025

The Government of Tamil Nadu has initiated multiple schemes to help MSMEs in the state expand their business. A few common schemes are listed below:

Tamil Nadu Credit Guarantee Scheme (TNCGS)

Objective: To boost credit access to MSMEs by providing collateral-free loans up to Rs. 2 crore.

Key Features:

• Government-guaranteed loans up to Rs. 2 crore.
• The government covers 90% of eligible loans of up to Rs. 40 lakh.
• MSMEs availing the TNCGS scheme are assigned a credit score, helping them obtain credit more easily in the future.

Annal Ambedkar Business Champions Scheme

Objective: To support the economic development of SC/ST entrepreneurs through financial aid.

Who Can Apply: Tamil Nadu residents belonging to the SC/ST communities can apply for the scheme.

Key Features:

• A 35% capital subsidy on eligible project costs, not exceeding Rs. 1.5 crore.
• 6% interest subvention for loans to procure machinery and equipment for a maximum period of 2 years.

Back-Ended Interest Subsidy (BEIS)

Objective: To reduce the financial burden of MSMEs that have already borrowed from financial institutions.

Key Features:

• If a new micro, small and manufacturing business takes a loan up to Rs. 2 crore, it will get a 5% subsidy for a maximum amount of Rs. 20 lakh for a period of 5 years.
• If a new micro and small manufacturing business takes a loan of Rs. 5 lakh for buying new technology, machinery, or modernising the business, it will get a 5% subsidy for a maximum amount of Rs. 25 lakh for a period of 5 years.
• Under BEIS, a business can get a subsidy of up to Rs. 10 lakh on an eligible loan.

New Entrepreneur-cum-Enterprise Development Scheme

Objective: Aims to educate, train and provide financial assistance to youth in Tamil Nadu to become first-generation entrepreneurs.

Key Features:

• Training to educate youth on conceiving, planning, initiating and launching a manufacturing or service enterprise successfully.
• On training completion, assistance will be provided for the preparation of business plans.
• Assistance in getting term loans from financial institutions for project costs up to Rs. 5 crore.
• 25% capital subsidy for a maximum of Rs. 75 lakh with a 3% interest subsidy to be provided by the State Government.
• A reservation of up to 25% for the allotment of plots/sheds in SIDCO Industrial Estates in the State, subject to availability.

Central Government MSME Schemes Available in Tamil Nadu

MSMEs in Tamil Nadu can also apply for various central schemes. These schemes provide credit guarantees, capital access and subsidies to MSMEs.

Pradhan Mantri Mudra Yojana (PMMY)

Provides collateral-free loans to micro businesses up to Rs. 20 lakh in the following tranches:

• Shishu - Loans up to Rs. 50,000
• Kishore - Loans from Rs. 50,000 to Rs. 5 lakh
• Tarun - Loans from Rs. 5 lakh to Rs. 10 lakh
• Tarun Plus - Loans from Rs. 10 lakh to Rs. 20 lakh. (Provided to borrowers who have fully repaid their loans in the Tarun category)

Prime Minister's Employment Generation Programme (PMEGP)

• A credit-linked subsidy programme that aims to generate employment by helping individuals set up micro-enterprises in the non-farm sector.
• Provides a subsidy in the form of margin money ranging from 15%-35% based on the new business.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

• The Credit Guarantee Scheme (CGS) for Micro and Small Enterprises (MSEs) offers collateral-free credit to MSEs up to Rs. 10 crore.
• Credit guarantee is provided up to 75%-85%.
• 90% of credit guarantee coverage is provided to women borrowers.

PSB Loans in 59 Minutes

• A digital lending platform providing in-principle loan approval from banks in under 59 minutes to MSMEs.
• Covers loans ranging from Rs. 10 lakh to Rs. 5 crore.

MSME Scheme Eligibility in Tamil Nadu

While the eligibility criteria for each MSME scheme in Tamil Nadu may differ, the common eligibility criteria are mentioned below:

• Must be an Indian citizen.
• A credit score of 700+, with a strong credit profile.
• Age between 21 and 65 years at the time of loan maturity.
• At least one year of established business operations.
• Annual revenue as specified by the lender, which can vary from one bank to another.
• Type of business: Engaged in manufacturing, trading, or service sectors, excluding agricultural activities.

How to Register as MSME in Tamil Nadu

To register as an MSME in Tamil Nadu, businesses can use the Udyam Registration Portal. Udyam is a free online portal used to officially register MSMEs in India. To register, MSMEs would need:

• Aadhaar number
• Details of managing partner, proprietor, etc.
• PAN Card
• GSTIN
• Business address
• Bank account details
• Investment and turnover details
• Other required details

How to Apply for Tamil Nadu MSME Schemes

To apply for Tamil Nadu MSME schemes, borrowers can follow the steps mentioned below:

• Visit the Tamil Nadu MSME Department portal.
• Register as an entrepreneur on the portal.
• Select the relevant scheme as per your business requirement.
• Check eligibility for the scheme before applying.
• Fill in the online application with the required details.
• Upload the required documents to the portal.
• Submit the application and save the application/reference number.
• Depending on the scheme, the application may go through departmental scrutiny/committee recommendation and then to a bank or financial institution for loan sanction.

MSME Loans vs Business Loans

The difference between an MSME scheme and a business loan is mentioned below:

Common Reasons for Scheme Rejection

Multiple factors can contribute to MSME scheme or loan rejection, including:

• Not meeting the eligibility requirements of the scheme.
• Missing mandatory registration, such as Udyam registration.
• Incomplete or outdated documentation.
• Low credit profile of the borrower.