Description

MSME stands for Micro Small and Medium Enterprises. Generally, MSME are  small businesses or start-ups. Under the MSME loan scheme, the loan is given to such start-ups and small business owners. However, the loan amount may vary based upon the applicant’s profile and business history.

MSME loans are collateral free loans that are offered by banks and NBFCs. If the applicant meets certain eligibility criteria, the loan can be availed under the MSME schemes to support the business.

Who is eligible for MSME loan?

Service Enterprises

  • Micro scale organisations  that have not invested more than Rs 10 lakh in purchasing equipment.
  • Small scale organisations  that have invested between Rs 10 lakh and Rs 2 crore in purchasing equipment.
  • Medium scale organisations  that have invested between Rs 2 crore and Rs 5 crore in purchasing equipment.

Manufacturing Enterprises

  • Micro scale organisations that have not invested more than Rs 25 lakh in purchasing equipment.
  • Small scale organisations  that have invested between Rs 25 lakh and Rs 5 crore in purchasing equipment.
  • Medium scale organisation  that have invested between Rs 5 lakh and Rs 10 crore in purchasing equipment.

Best Banks/Lenders for MSME Loan

 

MSME Loans from Lendingkart Finance

Interest rate

15%

Maximum loan amount

Up to 2 crores

Min loan amount

Rs 50,000

Processing fee

Up to 2% of the loan amount

Repayment tenure

Up to 36 months

Loan processing time

Within 3 working days

Collateral

Nil

Pre-payment charges

Nil

 

MSME Loans from State Bank of India (SBI)

Interest rate

8.80%

Maximum loan amount

Up to 20 crores

Age of business

Min 5 years

Processing fee

Up to 2% of the loan amount

Repayment tenure

Up to 120 months

Bank account history

applicant should have a 2 years old current A/C

 

MSME Loans from HDFC Bank

Interest rate

15%

Maximum loan amount

Up to 5o lakh

Overdue EMI Interest

2% per month on principal overdue

Processing fee

Up to 2.50% of the loan amount

Pre-payment charges

Nil, after 6 EMIs

Loan processing time

Within 3 working days

Collateral

Nil

 

MSME Loans from ICICI Bank

Interest rate

15%

Maximum loan amount

Up to 2 crores

Loan offered to

Public Limited Companies, Partnership Firms, Sole Proprietorship Firms, Private Limited Companies

Cash credit feature

Available

Eligible business segment

Micro Small Enterprise, (Traders excluded)

Loan processing time

Within 3 working days

Collateral

Nil

 

MSME Loans from Bajaj Finserv

Interest rate

15%

Maximum loan amount

Up to 30 lakhs

Processing fee

Up to 3% of the loan amount

Repayment tenure

Up to 60 months

Loan processing time

Within 24 hours

Collateral

Nil

Read More:-  Easy Business Loan for SME-MSME

 

Documents Required for MSME Loan

  • Duly filled application form
  • Identity proof: Passport/ driving license/ trade licence/ PAN card/ Voter ID
  • Address proof: Passport/lease agreement/trade license/ telephone & electricity bills/ ration card and sales tax certificate
  • Age proof: Passport/ Voter Id/ PAN card

Other Financial Documents:

  • Last 12 months’ bank statement
  • Business registration proof
  • Proprietor’s PAN card
  • Partnership deed
  • Company PAN card
  • Profit & Loss account with balance sheet for last 2 years
  • Sales tax documents
  • Municipal tax documents

Various MSME loan schemes

Many banks and NBFCs offer MSME loans to Micro, Small and Medium Enterprises (MSMEs). Besides this, MSME loans are also provided  under various schemes like Mudra Loan, CGTMSE, PMEGP, etc. These schemes ensure that new and existing entrepreneurs get needful financial support to strengthen their businesses.

1. MUDRA Loan (Micro Unit Development and Refinance Agency) 

The MUDRA Yojna is further divided into 3 categories namely as Shishu, Kishore and Tarun. Under the Shishu category, a loan up to Rs 50000 can be availed by a start-up enterprise. In the Kishore category, a loan up to Rs. 5 lakh can be given to an existing small venture. In the Tarun category, a loan up to Rs. 10 lakh can be availed by a company for expansion. The repayment is flexible and allows a borrower to repay the loan in 60 months.

2. CGTMSE (Credit Guarantee Funds Trust for Micro and Small Enterprises)

Under this scheme, the loan is given without any collateral or security.  Here, the MSME loan is provided via Member Lending Institution (MLI), which provides a cover to the large portion of the loan amount. According to the CGTMSE scheme, both fresh and existing, small and micro enterprises including service enterprises can avail up to Rs 2 crore. Besides this, CGTMSE also offer assistance to the units which are on the verge of closing. Under CGTMSE rehabilitation assistance, a company can avail up to Rs 1 crore.

Under CGTMSE scheme MSMEs can get loans from the following banks:

  • Scheduled Commercial Banks
  • Regional Rural Banks (RRBs)
  • National Small Industries Corporation (NSIC)
  • North Eastern Development Finance Corporation (NEDFi)
  • Small Industries Development Bank of India. (SIDBI)

3. PMEGP (Prime Minister’s Employment Generation Programme)

Under this scheme, the applicant has to invest around 5-10% of the project cost to get the subsidy from the government. PMEGP is a credit linked subsidy program which provides employment to the educated youth in the country. According to this scheme, applicants can get a subsidy of 15-35% of the project.

Eligibility criteria to get PMEGP loan

  • The minimum age of the applicant must be 18 years.
  • The applicant should be 8th class passed.
  • The applicant should be a part of self-help group (SHG).
  • Societies registered under the Societies Registration Act, 1860 are eligible.
  • Charitable Trusts.
  • Production Co-operative Societies.

FAQs

Q1Is it compulsory for every business to get registered under MSME?
No, it is not necessary for every business to get registered under MSME but if you want to take advantage of the schemes related to it, you must be registered as a MSME business unit.
Q2What is the role of credit score for getting MSME loan?
A good credit score certainly helps a business owner to get quick MSME loans.
Q3What is the maximum amount that can be taken under MSME scheme?
A business owner can avail maximum up to Rs 2 crore under MSME scheme. But the ultimate loan disbursal depends on the applicant’s credit profile and bank’s terms & conditions.
Q4What is the validity of the MSME registration certificate?
The validity of the MSME registration certificate is 5 years. Once it gets expired, you can renew it for another 5 years.