MSME Loan for New Business

Trusted by over 5,000 businesses across 20+ cities and towns. Loans worth over 500 crores sanctioned so far.

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Helping Business Owners to get Business Loan from 1 crore & above only

Trusted by over 5,000 businesses across 20+ cities and towns. Loans worth over 500 crores sanctioned so far.

MSME loan for new business in 2023

Micro, Small, and Medium Enterprises (MSMEs) are an essential part of any country’s economy, contributing to job creation, innovation, and economic growth. However, many entrepreneurs may not have the necessary funds to start or grow their MSMEs. That’s where MSME loans come in. 

These loans are designed specifically for MSMEs and can provide the necessary funds for business expansion, working capital, equipment purchase, inventory, and more. MSME loans are available from various lenders, including banks, non-banking financial companies (NBFCs), and government schemes.

What is the Eligibility Criteria for MSME Loan?

  • To avail of an MSME loan, your business should be registered under the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006.
  • All the businesses into Manufacturing, Trading and Services are classified as MSME and are eligible for MSME loans subject to other credit parameters as prescribed by the Financial Institutions
  • Any MSME including a startup is also eligible
  • Applicants should be 21 years and above
  • Applicant with good credit score and repayment history
  • The firm/company must have procured all the relevant statutory permissions and licenses to start with Business

What are the Benefits of MSME Loan?

  • Competitive interest rates : The interest rates may vary based on the lender, loan amount, and repayment tenure. However, in general, MSME loans offer lower interest rates, making it a cost-effective option for small businesses.
  • Flexible repayment options: MSME loans offer flexible repayment options, making it convenient for small businesses to repay their loans based on their cash flow. 
  • No collateral requirement: MSME loans do not require collateral, making it an attractive option for small businesses that do not have assets to pledge as collateral. 
  • Tax benefits: MSME loans offer tax benefits to small businesses. The interest paid on the loan can be claimed as a tax deduction under Section 80C of the Income Tax Act, reducing the tax liability of small businesses.

What is the MSME Loan Interest Rate?

Interest rates offered for MSME Loans may vary depending on business requirements and the financial institution. It may also vary based on the credit facility and the end utilization. However average cost of interest for Loan ranges from 6% to 13% per annum.

What are the types of MSME Loan?

MSME Loan comes in both Unsecured and Secured form. Further It’s been divided into Fund Based Limits and Non Fund Based Limits. 

Fund Based MSME Loan:

  • Cash Credit (CC)
  • Machinery Term Loan (TL)
  • Project Term Loan (TL)
  • Export Packing Credit (EPC)
  • Packing Credit Foreign Currency (PCFC)
  • Bills Discounting (BD)

Non Fund Based MSME Loan:

  • Letter of Credit (LC)
  • Guarantee (BG)

What are the Documents Required for MSME Loan?

  • KYC documents of the applicants along with the firm/company, such as PAN Card, Aadhaar, Udyam, Utility Bills (Water and Electricity Bills)
  • Relevant Business Licenses 
  • Project Report/CMA Data
  • Additional documents, as required by the financial institution

What is MSME Loan Subsidy?

There are multiple Government Subsidy schemes for MSME Loan in India. These Subsidies are given by various state Governments as well as Central Government too. Eligibility for Government Subsidy for Loan depends on which loan the MSME has availed to buy machinery.

What about MSME Loan without Collateral Security? (UNSECURED MSME LOAN)

Under Government sponsored CGTMSE scheme, any MSME Business irrespective of number of years in business is eligible for MSME Loan Without Collateral Security