MSME Loan

MSME loan is a credit option for individuals, businesses, startups, and MSMEs (Micro Small and Medium Enterprises) for setting up a new business, meeting working capital and cash flow requirements, purchasing new equipment and machinery, paying salary of the staff, or for expansion purposes. Various banks and other lenders provide MSME business loans to their customers in India.

MSME Loan Details

Following are the key MSME loan details:

Loan AmountMinimum Rs. 30,000 - Rs. 1 Crore
Rate of InterestBased on the applicant’s profile & business requirements
Repayment TenureMaximum 15 years
Processing Fees0% - 3% of the loan amount
CollateralNot required in case of unsecured business loan
Foreclosure Charges0% - 4% of principal outstanding
SubsidyOffered by some lenders
Types Working Capital Loan, Bill discounting, Overdraft, Cash Credit, Letter of Credit, Bill of Purchase, Merchant Cash Advance, etc.

MSME Loan Interest Rates

MSME loan interest rates vary from one lender to another. For example, SBI SME loan interest rate starts from as low as 8.80% p.a. whereas HDFC MSME business loan interest rate starts from 11.90% p.a. Various factors are considered by lenders when deciding the interest rate on MSME Loan, including the applicant’s profile, credit score, age, income, turnover, business reputation, experience, and so on.   

If borrowers have a good credit score, they can get low MSME interest rates. A credit score is a three digit number generated by credit bureaus that summarize an individual’s credit repayment history. A credit score above 750 is usually considered good for MSME Loans, but that doesn’t mean you cannot get an MSME Loan with a lower credit score. You can still apply for a loan from some lenders even if your CIBIL score is 650 or above.

To get instant approval and an attractive interest rate deal on the MSME loan scheme, maintaining a good credit score is always helpful. 

Top Banks MSME Loan Interest Rates 2022

Lender NameRate of Interest
Axis Bank15% onwards
Fullerton Finance11.99% onwards
HDB Financial Services Ltd.22% onwards
HDFC Bank11.90% onwards
Hero Fincorp18% onwards
ICICI Bank10% onwards
IDFC First Bank20% onwards
IIFL Finance18% onwards
Kotak Mahindra Bank14% onwards
Lendingkart Finance15% onwards
NeoGrowth Finance18% onwards
PNB Business LoanBased on your Business’s Profile
SBI8.80% onwards (SME Loan)
RBL Bank19% onwards
Tata Capital Finance18% onwards
ZipLoan18% onwards

Note: You can avail SBI Business Loan with Mymoneymantra.

Features of MSME Loan / SME Loan

  • Instant approval and loan disbursal. 
  • Affordable interest rates.
  • Loan amount available up to Rs. 1 Crore.
  • No collateral or security required for unsecured business loans.
  • Repayment tenure varies from 1 to 15 years.
  • Flexible repayment options available.
  • Minimal paperwork and hassle-free processing.
  • Multiple types of schemes catering to all business-related needs of the borrowers.

Additional Info: Also, check PSB Loans in 59 Minutes is a quick business loan portal for start ups.

Eligibility Criteria for MSME / SME Loans

Following are the detailed MSME loan eligibility:

  • Eligible entities: Self-employed individuals, self-employed professionals, business owners, SMEs, MSMEs, women entrepreneurs, Private/ Public Limited Companies, Partnership Firm, Sole Proprietorship, and Limited Liability Partnership that are engaged in trading, services & manufacturing sectors.
  • Minimum business vintage requirement to meet MSME loan criteria: 1 year.
  • Minimum business turnover requirement: Varies from bank to bank
  • Credit history: Good credit score and repayment history with financial stability

Documents Required for MSME Loan

  • Identity proof: Aadhaar card, passport, PAN card, Voter’s ID card, etc. 
  • Residence proof: Rental agreement, utility bills, ration card, etc.
  • Business address proof: Lease agreement, utility bills, or rental agreement. 
  • Income proof: P&L account & balance sheet of last 2 years, income tax returns, sales tax return, PAN card, project report, etc.
  • Proof of securities (if provided): Photocopies of title/ lease deeds offered as securities.

Top NBFCs for MSME Loans

Many NBFCs (Non-Banking Financial Companies) in India offer MSME loan for startup business and to other customers at attractive interest rates. Following are some of examples:

Lender NameInterest Rate (p.a.)Loan AmountTenureProcessing Fee 
Fullerton India11.99% - 21% Up to Rs. 50 Lakhs12 months - 60 monthsUp to 3% of loan amount
LendingKart15% - 27%Rs. 50,000 - Rs. 2 Crores1 month - 36 months2% - 3% of loan amount
Mahindra Finance14% onwardsUp to Rs. 40 Crores6 months - 7 yearsCase to case basis
Muthoot Fincorp12% - 24%Rs. 15,000 - Rs. 8 Lakhs6 months - 36 months2% of loan amount + GST

Top Banks for MSME Loans

Listed below are some of the most popular banks in India which offer MSME loans:

Lender NameInterest Rate (p.a.)Loan AmountTenureProcessing Fee 
SBI8.80% - 15.35%Rs. 1 Lakh - Rs. 500 CroresUp to 15 yearsUp to 1% of loan amount
HDFC Bank11.90% - 21.35%Up to Rs. 50 Lakhs12 months - 48 monthsUp to 2.50% of loan amount
ICICI Bank10% p.a. onwardsUp to Rs. 2 CroresUp to 7 yearsUp to 2% of loan amount + taxes
Axis Bank15% onwardsRs. 10 Lakhs - Rs. 20 CroresUp to 10 yearsUp to 2% of loan amount
Kotak Mahindra Bank14% onwardsRs. 3 Lakhs - Rs. 75 LakhsUp to 48 monthsUp to 2% of loan amount + taxes

Note: Apply for HDFC Bank Business Loan with Mymoneymantra.

Calculate an MSME Loan EMI

Calculating MSME Loan EMI is easy and instant with our Business Loan EMI Calculator. All you need to do is follow the steps mentioned below:

  • Visit MyMoneyMantra
  • Click on the “Business Loan EMI Calculator” tab given under the “Financial Tools” section.
  • Enter the required loan amount, interest rate applied by the lending bank, and tenure required to repay the loan.
  • Hit “Enter” button
  • The result will be displayed on screen in an instant.
  • Apart from the prospective EMI for MSME loan for new business, the calculator also provides Total Interest, Total Amount to be paid to the lender and complete amortization schedule for the loan.   

Business Loan Offers

Get Kotak Mahindra Bank Business Loan up to Rs. 2 Crore online at interest rate starting from 16% p.a.

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MSME Loan FAQs

What is the turnaround for MSME loans?

The turnaround for MSME loans varies from one lender to another. It takes a few weeks to complete the entire MSME loan process including application, documents submission, verification, approval and disbursal of the loan. However, nowadays most lenders have reduced the turnaround time by adopting the online methods. PSB Bank offers MSME loan in 59 minutes with its scheme PSB loans in 59minutes.

What are the documents required for an MSME loan?

  • Identity proof: Aadhaar card, passport, PAN card, Voter’s ID card, etc. 
  • Residence proof: Rental agreement, utility bills, ration card, etc.
  • Business address proof: Lease agreement, utility bills, or rental agreement. 
  • Income proof: P&L account & balance sheet of last 2 years, income tax returns, sales tax return, PAN card, project report, etc.
  • Proof of securities (if provided): Photocopies of title/ lease deeds offered as securities.

Is MSME loan interest free?

No. You have to pay an interest (as decided by the lender) on MSME startup loan along with the processing fee as applicable.

How do I get money from MSME?

You can approach a bank, NBFC or financial marketplaces like MyMoneyMantra to get a loan for setting up or expanding your MSME. If you are looking for an instant MSME loan apply online.

What is the maximum limit for MSME loans?

The maximum limit for collateral free loans for MSME varies depending on the lender, type of scheme and borrower’s eligibility. For example, SBI offers MSME loan up to Rs. 500 Crores, HDFC offers up to Rs. 50 Lakhs, ICICI Bank offers loan up to Rs. 2 Crores, and so on.

What are the processing fees and pre-closure charges for MSME loans?

The processing fees for MSME loan without collateral vary from 0% to 3% of the sanctioned loan amount and pre-closure charges range from 0% to 4% of the principal outstanding.

What kind of business comes under MSME?

MSME includes manufacturing and service industries.