MSME Loan for Business 2021 – Check Eligibility and apply now

msme loan

MSME loans are unprotected loans provided by numerous financial institutions to fulfill numerous business-associated costs on credit. MSME loans are specified by the Indian Government and also RBI as fundings for company enterprises for assistance in regards to money, framework, and also various other locations.

It likewise plays a vital duty in the socio-financial growth of the nation as much of these enterprises run in country India. According to the Federal government’s annual report of 2018-2019, greater than 6 lakh MSMEs operate in the country.

Initially, MSMEs were classified based on two variables – investment in plant/machinery as well as a yearly turnover of the business. Nevertheless, the Ministry of Micro, Small, and Medium Enterprises has lately revised the classification by integrating these 2 variables right into a solitary standard.

The Ministry of Micro, Small, and Medium Enterprises (MSME) is the branch of the Government of India and was established in 2007. Its acronym (SME) stands for Small and Medium Enterprises. Loans are given mainly to small businesses, entrepreneurs, and women.

MSME Classifications 2021

MSME loan Classifications

According to the modified classification reliable because July 2020, MSMEs are categorized as follows.

MicroSmallMedium
Investment does not exceed Rs.1 Crore and Turnover does not exceed Rs.5 CroreInvestment does not exceed Rs.10 Crore and turnover does not exceed Rs.50 CroreInvestment does not exceed Rs.20Crore and Turnover does not exceed Rs.100 Crore

Latest MSME Definition for Loan 2021

Latest Definition of MSME Loan
MSME meaning

The new definition of the MSME has been approved by the Union Cabinet. Based on investment limits and turnover sizes, the MSMEs were redefined. Currently, Medium Units are defined as companies with investments up to 50 crores and a turnover of 250 crores.

In the face of the COVID-19 epidemic, Finance Minister Nirmala Sitharaman announced several economic measures. These are part of the Rs 20 lakh crore Atmanirbhar Bharat Abhiyaan taken by the Government of India. Reforms are included in the package designed to boost businesses, emphasizing Micro, Small, and Medium Enterprises (MSMEs).

  • The government of India increase the investment limit. It means that more firms and enterprises apply for the MSME scheme.
  • The eligibility of the MSME scheme has been changed by the government of India from investment to investment and annual turnover.
  • The interest rates on MSME loans have been started at 7.65% p.a.
  • The MSME loan is started from as low as Rs.50000 and can go up to crores.

Top Banks in 2021 for giving MSME Loan

msme loan
Bank NameInterest rate
Allahabad BankAccording to the bank’s discretion
Oriented Bank of Commerce10.70% p.a. onwards
ICICI Bank13% p.a. onwards
Indian Bank9.75% p.a. onwards
Punjab National BankAccording to the bank’s discretion
Syndicate BankAccording to the bank’s discretion
Union Bank of IndiaAccording to the bank’s discretion
United Bank of India10.25%-16.25% p.a.
UCO Bank8.85% p.a. onwards
State Bank of India7.65% p.a. onwards
Punjab and Sind Bank9.95% p.a. onwards
Central Bank of India11.25% p.a. onwards
Andhra BankAccording to the bank’s discretion

India’s most popular banks for MSME loan

India's most popular banks for MSME loan

Popular Banks offering MSME Loan in India

MSME Loan from SBI
Interest Rate9.65% p.a. onwards
Processing FeeUp to 2% of the loan amount
Loan AmountDepending on the scheme
Loan Repayment TenureUp to 120 months
MSME Loan from HDFC Bank
Interest Rate15.75% p.a. onwards
Processing Fee0.99% of the loan amount
Loan AmountUp to Rs.50 lakh
Loan Repayment TenureUp to 48 months
MSME Loan from ICICI Bank
Interest Rate13% p.a. onwards
Processing FeeDepending on the scheme
Loan AmountUp to Rs.2 crore
Loan Repayment TenureDepending on the scheme

The best MSME loan interest rate offered by NBFCs

The best rates for MSME loan offered by NBFCs
MSME loan interest rate

A non-bank financial company (NBFC) is a company registered under the Companies Act of 1956, which provides services such as lending, advances, and acquisitions of companies or stocks, bonds, and debentures issued by the government or local government authorities., but excludes institutions engaged primarily in any agricultural activity, industrial activity, the purchase or sale of goods (other than securities), and the provision of services and the construction of the real estate.

Non-Banking Financial Companies in India (NBFCs) are offering MSME loans to their customer at medium interest rates. We are given below some NBFCS companies who given MSME Loan:

Bank NameInterest rate
Lendingkart IndiaAccording to the bank’s discretion
Fullerton India17% p.a. to 21% p.a.
Mahindra FinanceAccording to the bank’s discretion
Muthoot FincorpAccording to the bank’s discretion
Fullerton Business Loan
Interest Rate17% p.a. to 21% p.a.
Processing FeeThe maximum loan amount is 6.5%
Loan AmountUp to Rs.50 Lakh
Loan Repayment TenureDepending on the scheme
Lendingkart Business Loan
Interest RateAccording to the bank’s discretion
Processing Fee2% of the loan amount
Loan AmountRs.50000 to Rs.1 crore
Loan Repayment TenureUp to 36 months

How to apply for MSME Loan – Criteria and

What are the eligibility criteria and requirements for the MSME Loan?

The eligibility criteria are required to fulfill depend on the lender to lender to get approved by the MSME Loan. The requirement is varied from bank to bank and changes based on the scheme offered. However, given the general criteria, you will have to check this out.

Apply for a loan here – https://msme.gov.in/

ParticularsCriteria
Types of businessManufacturing Sector Service Sector
Size of business (in terms of investment)-Manufacturing SectorMicro-< Rs.25 lakh Small-< Rs.5 crore Medium-< RS.10 crore
Size of business (in terms of investment)-Service SectorMicro-< Rs.10 lakh Small-< RS.2 crore Medium-< Rs.5 crore

A list of documents needed when applying for an MSME loan

msme loan

Please make sure you keep this document in hand which we have provided in this table at the time of applying for the loan

ParticularsDocument Required
Proof of IdentityAadhaar, PAN Card, voter’s ID, and passport
Proof of Residenceration card, utility bills, rental agreement
Proof of Business Addresslease agreement, rental agreement, utility bills
Proof of IncomeCopies of last two years’ P/L accounts and balance sheets.
Tax DocumentsIT returns, sales tax returns, PAN cards
Proof of Securities providedPhotocopies of the title deeds and lease deeds are offered as security
Other DocumentsPlanned financial statements, project reports, etc.

Note: The document which we are given in this table are normally checked by the Applicant. It might be possible that some other documents are required as nor the requirement of the lender.

Some News About MSME (Micro Small and Medium Enterprises) Loan

Some News About MSME (Micro Small and Medium Enterprises) Loan

The Government is allowing more time to repay the emergency MSME Loan and launch ECLGS.

the government are launch Emergency Credit Line Guarantee Scheme (ECLGS) in 2021 help them to overcome the covid-19 impact on loan, It is a part of Atmanirbhar Bharat. The scheme also extended the 26 more sectors and the healthcare sector.

RBI survey on medium and small businesses to the impact of covid-19.

The RBI is surveyed to the most impacted sectors due to the second wave of covid-19. We have seen that the borrowed money is hard to repay the supplier while people facing trouble and the RBI are not respond to the email comment.

A retailer said that he joins a zoom call to the top officer of the banker more than a week ago. RBI wanted directly check the ground reality for the badly hit companies and industries.

The Union Budget are pumped to the 15,700 crores into MSME Sector

In the announcement of the union budget 2021, The Finance Minister of India Nirmala Sitharaman announced the 15,700 crores are pumped to the MSME sector.

MSME Loan Frequently Asked Questions (FAQs)

MSME Loan Frequently Asked Questions (FAQs)

How to apply for MSME Loan?

There are two ways you sending your application on an MSME loan. If you choose a lender which has an online facility so, you can fill the form as per the requirement of the company and apply to the website.
And, the second way is to sending your application form to the nearest branch and request the application form. You can call and ask them what are the document required

What Happens if I fail to pay the payment of my MSME loan on time?

As per section 15 of the MSME loan Act, the buyer makes payment to the supplier within 45 days from the day they receive the receipt. In Case, If the Buyer is unable to pay the payment beyond 45 days to the supplier so he/she shall pay the compound interest with monthly relief to the supplier

MSME loans are provided by all banks?

All public and Private sector bank in India has targeted by the Reserve bank of India (RBI) most of the financial bank like public sector and Financing Companies (NBFCs), Small Finance Bank Micro Finance Institution (MFI), Regional Rural (RRBs), these banks offer MSME Loans

Is the MSME Loan included in sector lending?

The lending sector is the priority sector, that impacts a large segment of the population and works on weaker sections, and unemployment is known as priority sector lending. The MSME Loan is the priority sector and it provides the benefit for the priority sector lending, and some of the other like housing, the export sector, education, agriculture is also enjoyed the priority sector lending

Do all public sector banks offer MSME loans?

The Reserve Bank of India (RBI) are directed or controlled all public sector branches in India. It open at least one branch in each district for lending to the MSME Loan sector. At present time, there are 2,032 MSME sector branches in India

When can I check my company’s CIBIL (Credit Information Bureau India Limited) score?

Credit Bureau Information India Limited (CIBIL) is the credit bureau or credit information company that works to maintain the records of all credit-related activities of individuals and companies, including loans and credit cards. you can now visit CIBIL’s official website and you can check your credit card report and also you can get up to free 1 credit card rating check every year.

How do I check my business Credit Information Bureau India Limited (CIBIL) score?

Credit Bureau Information India Limited (CIBIL) is the credit bureau or credit information company that works to maintain the records of all credit-related activities of individuals and companies, including loans and credit cards. you can now visit CIBIL’s official website and you can check your credit card report and also you can get up to free 1 credit card rating check every year.
Alternatively, you can also go to the bureau and request your credit report via post. you will receive your report only after the document is required to fulfill and verified.

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