What is Micro, Small and Medium Enterprise?
Micro, Small and Medium Enterprise are those enterprises which are engaged in manufacturing and enterprises engaged in providing services and meet the following criteria:
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Micro |
Investment in Plant and Machinery or Equipment:
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Small |
Investment in Plant and Machinery or Equipment:
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Medium |
Investment in Plant and Machinery or Equipment:
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What are the eligibility criteria for availing a MSME Loan?
The eligibility criteria for availing the loan is set by the lender and therefore, varies from bank to bank. Not just that, there are different eligibility criteria for the different schemes. Below are the general criteria for availing the MSME Loan:
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Particulars |
Criteria |
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Type of business |
Manufacturing Sector |
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Service Sector |
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Size of business (in terms of investment) - Manufacturing Sector |
Micro - < Rs.25 lakh |
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Small - < Rs.5 crore |
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Medium - < Rs.10 crore |
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Size of business (in terms of investment) - Service Sector |
Micro - < Rs.10 lakh |
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Small - < Rs.2 crore |
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Medium - < Rs.5 crore |
What are documents required to apply for a MSME Loan?
Below are the documents required for applying for an MSME Loan. However, the list is not exhaustible, as different documents may be required by different lenders:
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Particulars |
Document Required |
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Proof of Identity |
PAN card, Aadhaar card, Voter’s ID, passport |
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Proof of Residence |
Rental agreement, ration card, utility bills |
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Proof of Business Address |
Rental agreement, lease agreement, utility bills |
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Proof of Income |
P/L account and balance sheet copies of last 2 years |
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Tax documents |
IT returns, sales tax return, PAN card |
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Proof of securities provided |
Photocopies of title deeds/lease deeds offered as securities |
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Other documents |
Projected balance sheet, project report, etc. |
How to apply for an MSME Loan?
There are two ways of applying for an MSME loan. If the lender has an online facility, you can fill the form with the required details and submit the application via the website.
Alternatively, you can visit the nearest branch and request them for an application form. You can call ahead and ask them what the documentation requirements are.
Collateral for MSME Loan
Most of the lenders in India will offer you an MSME loan without you having to provide any collateral or security. MSME loans are considered unsecured loans for which collateral is not required. However, in case any lender does ask for a collateral, do get in touch with them and ask for the details of the security you may need to provide.
MSME Loan Interest Rates by Top Banks in 2022
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Bank Name |
Interest rate |
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Allahabad Bank |
At the discretion of the bank |
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Oriental Bank of Commerce |
10.70% p.a. onwards |
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Andhra Bank |
At the discretion of the bank |
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Central Bank of India |
11.25% p.a. onwards |
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Indian Bank |
9.75% p.a. onwards |
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Punjab and Sind Bank |
9.95% p.a. onwards |
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Punjab National Bank |
At the discretion of the bank |
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State Bank of India |
7.65% p.a. onwards |
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Syndicate Bank |
At the discretion of the bank |
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UCO Bank |
8.85% p.a. onwards |
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Union Bank of India |
At the discretion of the bank |
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United Bank of India |
10.25% - 16.25% p.a. |
Top NBFCs Offering MSME Loans Interest Rates
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Bank Name |
Interest rate |
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LendingKart |
At the discretion of the lender |
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Fullerton India |
17% p.a. to 21% p.a. |
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Mahindra Finance |
At the discretion of the lender |
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Muthoot Fincorp |
At the discretion of the lender |
Other MSME Loan Schemes
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Name of Scheme |
Sub-Schemes |
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1) MUDRA Loan |
Micro-Credit Scheme |
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Credit for Micro Finance |
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Refinance Scheme for Banks |
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Mahila Uddyami Scheme |
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MUDRA Card |
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Equipment Finance Scheme |
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Credit Guarantee Scheme |
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2) Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) |
N/A |
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3) Prime Minister’s Employment Generation Programme (PMEGP) |
N/A |
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