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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.
Table of Contents: MSME Loan
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
  • The interest rates for Bank of Baroda business loans are linked to the bank’s 1-year Marginal Cost of Funds based Lending Rate (MCLR) or Baroda Repo Linked Lending Rate (BRLLR) or Base Rate (BR), which are as follows:

    • 1-year MCLR w.e.f from 12.11.2021: 7.30%.
    • Baroda Repo Linked Lending Rate (BRLLR) w.e.f.07.10.2021: 6.50%.
    • Base Rate (per annum) w.e.f. 01.07.2020: 8.15%.
    • Some business loans also involve a Strategic Premium (SP) of 0.25%.

    Bank of Baroda interest rate on Business Loans depends on various factors:

    • The amount of loan.
    • The type of scheme availed of.
    • The category of business enterprise such as micro, small, and medium.
    • The internal credit rating.
    • The value of collateral available to the bank.
      • 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 fastmudra.

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 fastmudra
    • 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.   

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