Who is eligible for MSME loan?

A person having business proof, residence proof and other documents including PAN Card, Aadhaar Card is eligible for MSME Term Loan.

What are the 3 types of MSME loans?

Term Loans Bill Discounting Line of Credit

Which bank is best for MSME loan?

Axis Bank is providing MSME Term Loan at 14.95%

What is MSME in loan?

Micro, small, and medium enterprises are the full form of MSMEs. These are the companies that help in forming a firm economy of the country. All the startups established up to a certain limit fall in the category of MSME. An MSME Term Loan is an initiative by the government to provide financial assistance to business owners

What is the interest rate for MSME Loan?

The interest rate for the MSME Term Loan varies from Bank to Bank. The interest rate for MSME Term loan starts from 14% and may extends upto 20% R.O.I.

MSME Loan

MSME Loan: Apply Online at Best Interest Rates

Get the funds your business needs with an MSME loan to manage working capital, purchase equipment, or expand operations without disrupting your daily operations.

With My Mudra, compare MSME business loan options from top banks and NBFCs, check eligibility, and apply online in a few quick steps.

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Last Updated: 30-06-2026

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Quick Guide

What is an MSME Business Loan?

Every business requires quick access to funds to carry out day-to-day activities, buy equipment, ramp up production, or enter new markets. An MSME loan can provide the financial assistance that MSMEs rely on to address these needs, maintain healthy cash flow, and support business growth over time.

My Mudra helps you apply for an MSME loan online with updated information, expert guidance, and complete transparency.

MSME Loan at a Glance

Eligible Businesses

Micro, Small & Medium Enterprises (MSMEs)

Loan Purpose

Working capital, expansion, machinery, inventory, business growth

Loan Type

Secured and unsecured

Collateral

Depends on lender and loan type

Loan Tenure

Up to lender norms

Application Mode

Online and offline

Loan Disbursal

Subject to lender approval

Types of MSME Loans

Businesses have different financial needs, from managing daily expenses to expanding operations. Choosing the right MSME business loan depends on your funding requirements and business goals.

Working Capital Loan

Working capital loans help businesses manage day-to-day expenses such as purchasing inventory, paying suppliers, managing salaries, and maintaining cash flow.

Overdraft & Cash Credit Facility

This facility provides flexible access to funds, allowing businesses to withdraw money as needed and pay interest only on the amount utilised.

Equipment Financing

Equipment financing helps businesses purchase or upgrade machinery and equipment without affecting their working capital.

Invoice Financing

Businesses can raise funds against unpaid invoices, improving cash flow while waiting for customer payments.

MSME Term Loan

An MSME term loan is suitable for planned investments such as business expansion, infrastructure development, or purchasing commercial assets. Repayment is made through fixed monthly EMIs.

Secured Term Loan

Such loans help businesses borrow higher loan amounts, often for the long term, by pledging assets such as real estate as collateral

MSME Project Loans

These loans support businesses in funding new projects, expansion plans, and the modernisation of existing units.

MSME Loan Schemes in India (CGTMSE & Government-Backed Options)

To make business finance more accessible, the Government of India has introduced several MSME loan scheme initiatives for micro, small, and medium enterprises.

CGTMSE Loan

The CGTMSE loan is one of the most popular government-backed financing options for MSMEs. Under this scheme, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) provides a credit guarantee to eligible lending institutions, encouraging them to offer loans without asking for traditional collateral from qualifying businesses.

PMEGP (Prime Minister's Employment Generation Programme)

This credit-linked scheme helps eligible entrepreneurs establish new manufacturing and service enterprises by providing financial assistance.

Stand-Up India Scheme

Designed to promote entrepreneurship, this scheme supports eligible women entrepreneurs and SC/ST entrepreneurs who are planning to set up a new business.

Pradhan Mantri Mudra Yojana (PMMY)

PMMY offers business loans to eligible micro and small enterprises through different funding categories, making it suitable for businesses at various stages of growth.

Udyam Loan

Businesses registered under the Udyam portal can access various government support programmes and financing opportunities. Depending on the lender's policies,

Key Highlights of CGTMSE

Objective

Improve access to institutional finance for MSMEs

Collateral

Eligible businesses may receive collateral-free loans

Loan Purpose

Working capital, machinery purchase, expansion and other business needs

Available Through

Participating banks and NBFCs

Approval

Subject to lender eligibility and credit evaluation

Note

Loan approval is subject to the lender's credit assessment and the applicable CGTMSE guidelines.

Features & Benefits of MSME Loans

Choosing the right MSME business loan offers businesses much more than just access to funds. It provides financial flexibility that enables enterprises to manage operations efficiently while pursuing long-term growth opportunities.

Quick & Convenient Application

Apply online with a simple digital process and minimal paperwork, making it easier to access business finance.

Fast Loan Processing

Many lenders offer quicker approvals and disbursals after successful document verification, helping businesses meet urgent funding needs.

Flexible Loan Options

Choose from secured and unsecured loan options based on your business requirements, repayment capacity, and eligibility.

Competitive Repayment Terms

Enjoy flexible repayment tenures and EMI options offered by different banks and NBFCs, allowing you to repay comfortably.

Funding for Multiple Business Needs

Use the loan for working capital, machinery purchase, inventory management, business expansion, or other operational expenses.

Compare Multiple Lenders

With My Mudra, you can compare loan offers from trusted banks and NBFCs to find an MSME business loan that suits your business.

Suitable for Various Industries

Whether you operate in manufacturing, retail, trading, healthcare, logistics, education, hospitality, or other sectors, MSME loans can help support your business goals.

Eligibility

MSME Loan Eligibility Criteria

The MSME loan eligibility requirements differ from one lender to another; most banks and NBFCs evaluate your business profile, financial stability, and repayment capacity before approving an application.

Applicant Age

21 to 65 years

Business Type

Proprietorship, Partnership, LLP, Private Limited Company, OPC or eligible registered entity

Business History

Generally 1-3 years of operations (varies by lender)

Annual Turnover

As per lender's eligibility norms

Credit Score

A good credit score (generally 700 or above preferred)

Business Registration

Valid business registration and applicable licences

Bank Account

Active business bank account

Financial Records

Stable business income and repayment capacity

Documents Required for MSME Loan

Documents

Preparing your documents in advance can significantly reduce MSME loan registration and processing time and improve your chances of approval. Although documentation requirements vary among lenders, the following documents are commonly requested for an MSME loan application.

Identity Proof

Aadhaar Card, PAN Card, Passport, Voter ID

Address Proof

Aadhaar Card, Utility Bill, Rent Agreement, Passport

Business Registration

GST Registration, Shop & Establishment Certificate, Partnership Deed, Certificate of Incorporation

Udyam Registration

Udyam Registration Certificate (where applicable)

Financial Documents

Income Tax Returns, Profit & Loss Statement, Balance Sheet

Bank Statements

Recent business bank statements

Photographs

Recent passport-size photographs

Additional Documents

Any documents requested by the selected lender

MSME Loan Without Collateral — How It Works

Many businesses hesitate to seek funding because they do not have property or other assets to pledge as security. The solution comes with several lenders now offering MSME loan without collateral options to eligible businesses. These loans are typically unsecured, with lenders assessing factors such as business turnover, financial records, credit score, repayment history, and overall business stability. Loan approval and eligibility remain subject to the lender's assessment and the applicable scheme guidelines. Benefits of Collateral-Free MSME Loans:

No need to pledge business assets
Faster approval process
Reduced documentation
Suitable for startups and growing businesses
Easier access to working capital
Fully digital application with many lenders
While unsecured loans provide greater convenience, lenders may apply stricter credit assessment criteria when compared to secured business loans.

MSME Loan Interest Rates and Charges

Instead of choosing the first option available, consider multiple offers to find the best MSME loan interest rate and repayment plan for your business.

MSME Loan Charges

Particulars	Charges
1MSME loan interest rate	Starting from 9.5% per annum
2Loan Amount	Up to ₹2 crore
3Loan Tenure	1 to 7 years
4Processing Fee	0.5% - 3% of loan amount
5Prepayment Charges	Applicable as per lender policy
6Foreclosure Charges	2% - 5% depending on lender
7Late Payment Charges	As per lender terms

Simple Online Process

How to Apply for MSME Business Loan Online

Applying for an MSME loan apply online through My Mudra is designed to be quick and convenient. Instead of approaching multiple lenders separately, you can compare suitable loan options from partner banks and NBFCs through a single platform.

Step 1

On the MSME loan page, click on Apply Now.

Step 2

Type in your mobile number, agree to the privacy policy, click on ‘Proceed,’ and verify the captcha as shown on the screen.

Step 3

Based on your profile, choose from ‘Salaried’, Self-Employed Business’, and ‘Self-Employed Professional.’

Step 4

For salaried individuals, the screen will ask for personal details like monthly income, company name, and loan requirements. For self-employed individuals, company name, type, and director/applicant’s name will be required.Enter all the details and click on ‘Proceed’.Provide further details required on the next page, and click on ‘Proceed’

Step 5

We will evaluate all information provided by you and show you the most suitable loan options. Check, compare, and then you can click on the ‘Instant Apply’ button and complete your application.

Step 6

After successful verification and approval by the lending institution, the loan amount is disbursed directly to your business account.

Note

You can also seek assistance from our financial advisor.

Benefits for Women Entrepreneurs

MSME Loan for Women Entrepreneurs

Women-led enterprises are playing an increasingly important role in India's business landscape, and several banks and government-backed initiatives offer financing to support their growth. Businesses exploring MSME loan for women options may benefit from easier access to credit, flexible repayment options, and schemes such as Stand-Up India, subject to the lender's eligibility criteria and applicable guidelines. Eligible women entrepreneurs can benefit from financing options designed to support business growth. Key benefits include:

Easy Access to Business Finance

Access funds to start, manage, or expand your business.

Support for Multiple Business Needs

Use the loan for working capital, machinery, inventory, or business expansion.

Government-Backed Initiatives

Eligible applicants may benefit from schemes such as Stand-Up India and other government programmes.

Compare Multiple Loan Offers

Compare financing options from trusted banks and NBFCs through My Mudra to find the right loan for your business.

Compare MSME Loans from Top Banks

Choosing the right MSME loan is not just about the loan amount. Comparing lenders based on eligibility criteria, repayment flexibility, processing time, customer support, and available business loan products can help you make a more informed decision.

At My Mudra, you can compare loan offers from multiple banks and NBFCs through a single application, helping you identify the option that best matches your business requirements.

Bank	Suitable For	Maximum Loan Amount	Interest Rate
HDFC MSME Loan	Working capital, business expansion, equipment purchase	Up to ₹1 crore (up to ₹75 lakh generally; ₹1 crore in select locations)	Starts from 10.75% p.a.
SBI MSME Loan	Manufacturing, trading and service businesses	Varies by scheme (up to ₹50 lakh+ under SME products)	Starts from 7.25% p.a.
Axis Bank MSME Loan	Machinery purchase, expansion and working capital	Up to ₹75 lakh (product-dependent)	Starts from 10.50% p.a.
ICICI Bank MSME Loan	Business expansion and operational funding	Up to ₹2 crore	Starts from 10.75% p.a.
Kotak Mahindra Bank MSME Loan	MSME working capital and business growth	Up to ₹1 crore	Starts from 11.00% p.a.
IDFC FIRST Bank MSME Loan	Working capital, business finance and expansion	Up to ₹75 lakh	Starts from 10.99% p.a.

Disclaimer: Interest rates, loan amounts, processing fees, and eligibility criteria are subject to change at the lender’s discretion. Confirm the latest details with the respective lender before applying.

Why Choose My Mudra for MSME Loan?

My Mudra simplifies the entire borrowing journey for MSMEs by bringing multiple lending partners together on a single platform.

Compare Multiple Lenders: Access loan offers from trusted banks and NBFCs without completing separate applications for each lender.
Simple Online Process: Complete your application digitally from anywhere without visiting multiple bank branches.
Transparent Comparison: Review loan features, eligibility criteria, repayment options, and applicable charges before selecting a lending partner.
Wide Network of Lending Partners: Choose from a broad network of reputed financial institutions offering business financing across India.
Guidance Throughout the Process: Receive assistance during the application journey, from checking eligibility to document submission and lender selection.
Suitable for Different Business Needs: Whether you need working capital, equipment financing, business expansion funding, or a specialised MSME loan scheme, My Mudra helps you explore multiple options through one platform.