MSME Loan Scheme 2025

This table summarises the interest rates offered by major banks for MSME loans in 2025, which vary by lender and loan type.   

MSME Loan Interest Rates - NBFCs (2025) 

This table highlights the interest rates offered by major NBFCs for MSME loans, which are generally higher than banks due to risk and loan type.   

What are the Purposes of MSME Loans?

The Government of India has introduced an array of loan schemes and credit assistance programs helpful to MSMEs, with more focus:   

1. On MSME Financial Inclusion  

1. Remove barrier restrictions to formal funding 

1. Lessen dependence on informal lending  

1. Establish a stable MSME sector

1. Develop a robust MSME structure with competitive financial assistance 

1. Affordable credit as the goal to further deliver growth, innovation and new employment sustainability opportunities.
2. Improves financial health by paying off existing debts.  

Key Highlights of MSME Loans

The key highlights of MSME loan schemes are mentioned below: 

Eligibility for MSME Loans 

The key eligibility criteria for MSME loan schemes are given below: 

1. Minimum annual business income should be Rs.2 lakh. 

1. The minimum annual turnover should be Rs.10 lakh. 

1. Must have strong financial stability and good repayment track record. 

1. No history of loan defaults. 

1. A minimum credit score of 750 or above. 

1. Applicants or authorised signatory must be 21 to 65 years old. 

1. The applicant or authorised signatory must have at least three years of work experience in the same enterprise or organisation. 

1. A minimum of 5 years of overall business experience. 

All MSMEs operate in the trading, manufacturing, and service sectors and eligible business types are: 

1. Private Limited Companies 

1. Public Limited Companies 

1. Sole Proprietorships 

1. Partnership Firms 

1. Limited Liability Partnerships (LLPs) 

Documents Required for MSME Loan 

To apply for an MSME loan, applicants must submit valid documents proving business identity, financial health, and repayment capability. The list of documents required are given below: 

Identity Proof 

1. Aadhaar Card 

1. PAN Card 

1. Voter ID 

1. Passport 

1. Driving Licence (of business owner, partners, or directors) 

Address Proof 

1. Utility bills 

1. Agreement of rent or lease 

1. Property documents 

1. Passport showing current business or residential address 

Business Proof 

1. Certificate of GST Registration 

1. Udyam Registration (Udyog Aadhaar) 

1. Deed of partnership 

1. Memorandum of Association (MOA) 

1. Articles of Association (AOA) 

1. Shop Act Licence 

Financial Statements 

1. Bank statements for the last 6 to 12 months 

1. Income Tax Returns (ITR) 

1. Audited Balance Sheet 

1. Profit and Loss Statement 

Purpose of Business Plan or Loan 

1. Details of business expansion 

1. Machinery purchase plan 

1. Working capital requirement 

Photographs 

1. Passport-size photographs of applicant or partners 

Additional Documents (If Applicable) 

1. Quotations of machinery or equipment 

1. Project reports 

1. Security or collateral documents 

Note: Depending on the loan type and applicant’s profile, banks and NBFCs may request extra documents. Accurate documentation helps ensure quick approval and hassle-free disbursal. 

Benefits of MSME Loans 

The key benefits of MSME loans are listed below: 

1. Start a new business or expand an existing one. 

1. Asset purchase, such as machinery, equipment, furniture, lab/testing tools, or electrical appliances. 

1. Infrastructure development by constructing buildings or acquiring land or premises for business operations. 

1. Finance the launch of new product or service launch. 

1. Working capital support helps to maintain inventory, pay salaries, and purchase goods or raw materials. 

1. Fund promotional and branding activities to grow your business. 

1. Prevent delays in business processes and maintain smooth operations. 

Types of MSME Loans 

The various types of MSME loans available are mentioned below: 

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

1. 2nd Loan for up-gradation of the existing PMEGP/ MUDRA units  

1. Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE)  

1. Micro & Small Enterprises Cluster Development Programme (MSE-CDP) Scheme 

1. Entrepreneurship Skill Development Programme (ESDP)  

1. Scheme of Fund for Regeneration of Traditional Industries (SFURTI)  

1. Assistance to Training Institutions (ATI) Scheme 

1. Coir Vikas Yojana 

1. Procurement and Marketing Support (PMS) Scheme  

1. International Cooperation (IC) Scheme 

1. National SC-ST Hub Scheme 

1. A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship (ASPIRE) 

1. Khadi Gramodyog Vikas Yojana 

1. Promotion of MSME in NER and SIKKIM 

Some of the new schemes are: 

1. PM Vishwakarma- Enabling Artisans & Craftspeople to scale-up their Enterprises. 

1. Tool Rooms and Technical Institutions 

1. MSME Champions Scheme 

1. Self Reliant India (SRI) Fund 

1. Raising and Accelerating MSME Performance (RAMP) 

Objectives of MSME Loan Schemes  

The key objectives of MSME Loan Schemes are: 

1. Improving Access to Finance: Help small businesses to connect with formal financial institutions by providing funds at reasonable interest rates and avoid dependence on informal and expensive finance. 

1. Reducing the burden of collateral: Assistance with collateral-free loans through credit guarantee schemes like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Making risk-averse banks and NBFC lend more freely.  Supporting entrepreneurship: Creation of self-employment for first-generation entrepreneurs, youth, women, and members of economically and socially disadvantaged communities through start-up loans and subsidized finance of schemes such as PMEGP.  

1. Supporting new age Technologies and Innovation: Allow enterprises to invest in new machines and innovative green technologies and digital tools to help improve productivity, quality and sustainability.   

1. Providing Policymaker with Regional Development Support: Financing projects that will industrialize rural and semi-urban areas in aspirational districts, creating jobs locally and reducing urban transfer.  

1. Creating jobs: Purposeful expansion of job creation in old and new sectors by supporting labour-intensive industries and nurturing rural entrepreneurship clusters. Providing Synergy to National Programmes: Supporting MSME’s financial readiness to exploit flagship programme initiatives like, Atmanirbhar Bharat, Make in India, and Start up India helps to globally position MSME's financially. 

Prime Minister’s Employment Generation Programme (PMEGP)

The Prime Minister’s Employment Generation Programme (PMEGP) is a government-sponsored flagship credit-linked subsidy programme which aims to create entrepreneurs and jobs in India's non-farm sector. 

Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE)

CGTMSE is a flagship initiative started by the Ministry of MSME and SIDBI to provide micro and small enterprises with collateral-free credit. The primary goal is to improve the access to finance that enables banks and NBFCs to lend to MSMEs without collateral, allowing first-time and small-scale entrepreneurs to access entry to financing. 

Small Industries Development Bank of India (SIDBI) Support

SIDBI is the quintessential financial institution for the promotion, financing, and development of micro, small and medium enterprises (MSMEs) in India. It operates as a direct lender and refinancier to banks and NBFCs with a mission to enhance access to credit, foster modernization, and catalyze sustainable growth among MSMEs. 

Other Relevant MSME Loan Schemes

The table below summarizes the objectives, eligibility, loan details and application process for other MSME Loan Schemes: 

How to Apply for MSME Loan Schemes?  

You can apply for MSME loan schemes through both online and offline mode. Here are the steps to apply for the loan schemes: 

Online Mode 

1. Visit the bank or lender’s official website. 

1. Choose the desired MSME loan scheme. 

1. To start the application, click on the “Apply” button. 

1. Complete and submit the online application form. 

1. A representative from the lender will contact the applicant to discuss and verify loan requirements. 

1. Submit all required documents as requested by the representative. 

1. Before approving the loan, the lender will review and verify the documents. 

1. Once approved, the lender will send an agreement for the applicant to sign. 

The loan amount is typically disbursed to the applicant’s account within 48 hours after the agreement is signed. 

Offline Mode 

1. Visit the nearest branch of the bank or financial institution offering MSME loans. 

1. Fill out the physical loan application form. 

1. Submit the completed form along with the required documents to the branch. 

The bank or financial institution will approve the loan upon successful verification. 

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