5 Banks Offering Easy Loans to Small Business Entrepreneurs in 2022


27 Jan 2020 | 5 min read

As per the recently concluded data, India is now home to almost 70 Lakh Micro & Small business units registered with the Micro, Small and Medium Enterprises Ministry. These units are a part of the entire MSME ecosystem where the Government of India incubates and provides financial assistance to small business entrepreneurs. 

As on date, as suggested in a report by Crisil India, over ₹ 1,700 Crore has already been disbursed to these units through various channels and this particular segment accounts for 25% of the entire corporate lending that took place in our country till last year. The most important factor is the banks that are making it possible by providing excellent opportunities to their borrowers from time to time. 

However, whenever this segment has faced any kind of financial crunch or lack of access to credit, there are some institutions who have come forward and provided their support. Here we will discuss in detail about these banks/institutions which provide financial schemes for small businesses:


YES Bank is amongst the top-five private sector banks in India and is primarily known as the corporate bank in its segment. YES Bank provides loans to small businesses in terms of various products like:

  • YES Samriddhi – A loan is provided up to ₹ 4 Cr as a credit line in terms of a cash credit facility, overdraft, a term loan or a working capital loan. The loan is offered in both fund-based and non-fund based credit, as it can also be used as a buyer’s credit or in the form of a letter of credit. 
  • YES Suyog – This scheme is offered on a scorecard-based appraisal model wherein as the score improves with time, the quantum of loan amount increases. A maximum loan amount of ₹ 2 Cr is offered in the form of a fund-based and non-fund bases credit line. 
  • Smart Overdraft & Cash-backed lending Program – The Smart overdraft facility is available for both business owners as well as self-employed professionals like Doctors, Chartered Accountants and others. The min loan amount is ₹ 20 Lakh and a max of ₹ 1 Cr. The cash-backed lending program is a non-fund based credit arrangement where a borrower can avail a credit limit for 180 days to 3 years at max. 


India’s largest private sector lender offers business loans to its customers under three generalised segment and the rate of interest charged for the same are considered to be low. The segments are as following:

  • Working Capital Loan – The loans offered under this category are processed at priority via relationship manager added with services right at your doorstep. The type of service included in this facility are Overdraft, Letter of credit, Bank Guarantee, Bill discounting and others.
  • Term Loan – These types of loans are offered for a tenure up to 5 years, and the proceedings can be used for capacity expansion or investment in fixed assets. The repayment schedule for such loans are fixed according to the ongoing cash flow of the business unit. 
  • Business Loan – These loans are free of collateral or guarantor to the tune of ₹ 50 Lakh. The business unit applying for this loan can either apply for a fresh loan or can also avail of a balance transfer on their existing loan. A borrower can also avail benefits like an Overdraft facility and flexible repayment tenures. 

More: How to Get Business Loan From HDFC Bank?

State Bank of India

SBI is the largest bank in the country in terms of bank customers and as a lender both. In terms of extending credit support to its customers, SBI offers a huge range of small business finance schemes. The list is as given below:

Name of the Scheme Nature of Business
Asset-Backed Loan For all types of businesses
Asset-Backed Loan – Commercial For Commercial Real Estate
Cotton Ginning Plus For cotton cultivators and processors
Doctor Plus Scheme For Doctors
Export Packing Credit For Export operations/warehousing
E-Dealer Finance Scheme For authorised dealers of Industry Majors
E-Vendor Finance Scheme For vendors of reputed corporates
Fleet Finance For new vehicle finance
Lease Rental Discounting To meet borrower’s liquidity mismatch
Medical Equipment Finance For purchase or funding ancillary equipment
PM Mudra Yojana Working capital and term loan
SME E-Biz Loan For registered sellers at e-commerce portals
Simplified Small Business Loan For current & fixed asset build-up
Stand Up India Credit Scheme Type of a composite loan
SME Smart score For cash credit facility
SME Credit Card For instant credit requirements
Warehouse Receipt Finance For traders/owners in goods manufacturing
Finance to Food Processing Unit To encourage units in Food processing
Loans for Business Correspondents For all types of businesses
SBI OD Product For overdraft facility through correspondents
SBI Exporter’s Gold Card Scheme For export credit on best terms

Explore More: Everything You Need to Know about SBI Mudra Loan

All these loans as provided above belong to micro and small units and are classified by the nature of business. Most of the banks offer a limited number of options when it comes to small businesses, and try and lure the borrowers for generic offerings. However, backed by the Government of India, the State Bank offers the loans according to the nature of business and defined the terms & conditions accordingly. 

Bank of Baroda

Bank of Baroda provides economic financing solutions for all types of corporations. Outside the regulatory definition of the SME units, there are several products on offer as given below:

  • Bank of Baroda SME Loan Pack

Under this credit facility, BOB extends financial support for both working capital & long-term requirements. The cumulative limit is approved by the bank which can be utilized as per need. The bank takes into account major points like the nature of the business, cash-flow projections, cyclical trends, and other peak time constraints. 

  • SME Capex, Short Term, Medium Term Loan

The CAPEX loan is basically for the capital expenditure related to the business, like purchase of machinery, research & development, technology upgrade and others. 

Short & Medium-term loans are to provide working capital support as well as to pay-off high-interest burden.

Small Industries Development Bank of India (SIDBI)

SIDBI was established as a subsidiary to the Industries Development Bank of India in the year 1990, since then the bank’s sole focus is on growth and development of small-scale industries in the country by extending the credit support to those in need. As compared to the State Bank of India, SIDBI also offers a wide range of customer-centric loans. The list is as given below:

  • SMILE (SIDBI Make in India Soft Loan Fund for MSMEs)

It is a credit facility offered to new enterprises in the field of manufacturing and services. It is a unique combination of both debt and equity, the loan provided under this scheme are in the form of soft loans towards equity and a term loan towards debt to keep a balance between the two for efficient running of a business. The most prominent feature of such loans is that the repayment period is up to 7 years. 

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)There is another major body other than the banks which provide credit support to small business units and is specifically meant to serve this purpose. As stated below:

Name of the Scheme Nature of Facility
SMILE Equipment Finance For small scale equipment finance
OEM Partnership loans For registered dealers of Original Equipment Manufacturers
Working Capital Loans For all types of small businesses
SIDBI (STFS) Trader Finance Scheme
SPEED SIDBI Loan for Purchase of Equipment for Enterprise’s Development
SPEED Plus For the purchase of high-end machinery
RLS Retail Loan Scheme for Trade Finance
TULIP Top-Up Loan for Immediate Purposes
STAR SIDBI Term-Loan Assistance for Rooftop Solar PV Plants

Prime Minister Narendra Modi described this initiative last year while unveiling the 12-point action plan for the MSME sector. The initiative aims at automation of various processes to loan appraisal in such a way that one gets an eligibility letter, in-principle approval in less than 60 minutes and chooses the bank that one may prefer to ease access to credit to smaller and micro-enterprises.
The CGTMSE is the Government of India Initiative and is unique as it forms a consortium of various banks to provide credit facilities to small business units. 

The consortium major banks from the country namely –

SIDBI State Bank of India UCO BANK Bank of India
Punjab National Bank Indian Bank IDBI Bank Central Bank of India
Kotak Mahindra Bank IndusInd Bank IDFC First Bank HDFC Bank
Union Bank Canara Bank Union Bank ICICI Bank

Post the in-principle approval, the time taken for business loan disbursement depends on the information and documentation provided on the platform and to the banks. Generally, post the in-principle approval, the loan is expected to be sanctioned/disbursed in 7-8 working days.Under this scheme, a finance of ₹ 1 Lakh to ₹ 1 Crore is provided to the SME units at an interest rate as low as 8% per annum. The rate provided for these schemes are one of the lowest in the market.

Apart from the above mentioned schemes, the government of India has launched portal for applicants to get an instant business loan in just 59 minutes from the time of submission. 

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