MSME Loan/SME Loan

MSME Loan Scheme 2022

MSME loan stands for The Micro, Small, and Medium Enterprise Loans is a type of loan you can avail of if you own a business or are an entrepreneur. Work capital loans provide you with funds you can use to purchase inventory, acquire new equipment, pay your staff their salary, or expand your business.

The loan duration for MSME / SME loans varies between lenders. To reduce the risk for lenders, lenders have certain eligibility requirements. 

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ZipLoan is the Lender of Choice for Small Businesses.

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Minimal Documentation

No balance sheet needed

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No Prepayment Charges

After first 6 EMIs

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Receive Funds Within 3 Days*

Straight into your account

Top Features of MSME/SME Loan:

  • MSME Finance up to Rs 7.5 lakh – We offer small business loans for MSME ranging from Rs. 1 to 7.5 lakhs. We have a flexible ticket size, so you can pick the amount that you require.
  • Loan in 3 Days* - Online submission procedure of the documents helps us your MSME loan process faster. We disburse the funds within three days* after getting your MSME loan documents.
  • Apply Online - To apply MSME loan scheme fast and comfortably, we have made the entire MSME loan application process online. We also offer same-day approvals with disbursals within three days after the documents are submitted and verified.
  • Best Interest Rates - Our MSME loan interest rates are the best in the industry. No manual intervention but the automated process makes our process and interest rates fair. The interest rates are offered on the basis of your business's repayment ability.
  • Flexible Repayment Tenure - Our repayment tenure starts from 12 months to 36 months. Therefore, you get enough time to repay the loan amount.
  • No Prepayment Charges - We offer MSME finance at no prepayment charges after you have paid the first 6 EMIs (excluding pre-EMI).

What is MSME Loan?

MSME Full Form is a Micro, Small and Medium Enterprise (MSME) loan is a kind of business loan that financial institutions provide to individuals, SMEs, MSMEs, and Startups. MSME loan schemes are designed to meet businesses to their working capital requirements, increase cash flow, buy new types of machinery, etc.

Are you struggling to grow your business and need a quick MSME loan in India? For your financial requirements, Ziploan offers a hassle-free MSME loan of up to 7.5 lakh. After submitting a few documents, you can apply for a small business loan for MSME within 3 days*.

Benefits of MSME Loan Scheme from ZipLoan

The following are the benefits of availing of an MSME business loan from us:

  • Manage Working Capital Efficiently: Our MSME loan will help you accelerate your business growth by purchasing new machinery, office revamping, and streamlining your working capital.
  • Business Expansion: With a quick MSME loan from ZipLoan, you can get ahead with production, product marketing, and expand your supply network as well.
  • Raise Credibility: With our MSME business loan scheme, you can boost your business and deliver the order on time that will increase your credibility in the market.

Eligibility Criteria of MSME Loan

Ziploan's MSME loan eligibility criteria are simple to let more and more business individuals avail of the loan amount.

  • An established MSME with a proven business vintage of more than two years.
  • Minimum annual turnover of Rs. 10 lakhs in the previous year.
  • The business must not have any default history.
  • The income tax filed during the last year should be more than Rs. 1.5 lakhs.
  • The borrower should own either house or a business place.

Documents Required for an MSME Business Loans

Following are the documents need to avail loan for MSME businesses:

 ProprietorshipPartnershipPvt. Ltd. / LLP / One Person Company
Bank statement (12 months)
Business registration proof
PAN Card
Aadhar Card
ITR of the previous two years

MSME Loans Fees & Interest Rates

Customized Interest RatesYes
Loan Tenureup to 36 months
Pre-closure chargesNil** after paid the first 6 EMIs
Eligibility CriteriaAnnual turnover more than Rs.10 lakh
Loan Amount₹ 1 Lakh – ₹ 7.5 Lakh

MSME / SME Loans EMI

Equated Monthly Instalments (EMIs) break down a loan into easily repayable financial units. The EMI option provided by Ziploan helps you repay the loan amount with an easy EMI repayment facility. You can repay your loan amount in 12 to 36 months.

How to Calculate MSME/SME Loan EMI?

Here is the formula to calculate MSME Loan EMI

EMI = P × r × (1 + r) n/ ((1 + r) n – 1)

Above:

P: Loan amount, r: interest rate, n: tenure in number of months

How to Apply for MSME Loan in India

Here are three steps process to MSME loan apply online from ZipLoan:

  1. Submit Application - Simply enter your personal, business, and financial info to receive an MSME / SME Loans offer.
  2. Upload Documents - Upload digital copies of your documents in a single-step process for verification.
  3. Get Sanctioned - Receive your MSME / SME Loans approval and disbursal within 3 working days*.

How to Use MSME/SME Loan 2021-22?

MSME loan scheme 2020-21 is a great way to fund your business when needed. Here is how you can utilize the fund of MSME/SME finance.

  • Inventory Management – MSME business loan is a great way to secure your supply chain. With a fund of MSME finance, you can buy new stocks, and products, etc.
  • Buy New Machinery – You can use an MSME fund to buy new machinery and equipment. Machinery loan up to 7.5 lakhs from Ziploan will help you expand your business without draining your capital fund.
  • Working Capital Management – You can maintain your working capital management with our collateral-free MSME loan.
  • Repay Small Debts – One of the great advantages of availing MSME loan is you can repay small debts.
  • Invest in Marketing – MSME finance can be used to market your product or services to new consumers. Because marketing needs lots of funds that can be fulfil using MSME loans online.

New Definition of MSME

The definition of MSME was altered, and was announced by the Government of India on 13th May 2020. Given below is the new definition of MSME:

  1. The criteria for MSME classification have been changed from Investment to Investment and Annual Turnover.
  2. The Government of India also increased the investment limit for the classification of MSME units. This means, that more firms and enterprises can now avail MSME schemes.
  3. Criteria for the classification of MSMEs is now uniform for Manufacturing and Services Enterprises which is given below in the table below:
ClassificationMicro    Small    Medium
Manufacturing and Services EnterprisesInvestment 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.20 crore and Turnover does not exceed Rs.100 crore

Micro, Small, and Medium Enterprises can avail MSME loans for the expansion of businesses or for setting up new enterprises. The interest rates on MSME loans start at 7.65% p.a. The loan amount sanctioned ranges from as low as Rs.50,000 and can go up to a few crores. On the basis of the sanctioned loan amount, the loan repayment tenure can go up to 15 years.

MSME Loan Interest Rates by Top Banks in 2021-22

Bank Name
Interest rate
Allahabad BankAt the discretion of the bank
Oriental Bank of Commerce10.70% p.a. onwards
Andhra BankAt the discretion of the bank
ICICI Bank13% p.a onwards
Central Bank of India11.25% p.a. onwards
Indian Bank9.75% p.a. onwards
Punjab and Sind Bank9.95% p.a. onwards
Punjab National BankAt the discretion of the bank
State Bank of India7.65% p.a. onwards
Syndicate BankAt the discretion of the bank
UCO Bank8.85% p.a. onwards
Union Bank of IndiaAt the discretion of the bank
United Bank of India10.25% - 16.25% p.a.

Top NBFCs Offering MSME Loans Interest Rates

There are a number of Non-Banking Financial Companies (NBFCs) in India that offer MSME loans to their customers. Listed below are NBFCs that offer MSME loans.

Bank NameInterest Rate
Ziploan1-1.5% per month(Flat)
LendingKartAt the discretion of the lender
Fullerton India17% p.a. to 21% p.a.
Mahindra FinanceAt the discretion of the lender
Muthoot FincorpAt the discretion of the lender

MSME Registration

Given below are the steps you will have to follow to register for MSME as a new user.

  1. If you have already registered as a UAM then you will have to click on the link https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm.
  2. Click on either ‘For those having registration as UAM’ or ‘For those already having registration as UAM through Assisted filing’.
  3. Enter your Aadhaar number. You can choose to receive the OTP either on your registered mobile number or email ID.
  4. Once you have provided the OTP, click on and ‘Validate and Generate OTP’.
  5. Enter the OTP and your registration process will be completed.

Registration For Entrepreneurs Already Having UAM

  1. Those who have already registered as UAMs can click on the link https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm.
  2. Click on either ‘For those having registration as UAM’ or ‘For those already having registration as UAM through Assisted filing’.
  3. Fill in your Aadhaar number. If you prefer, the OTP can be sent to your email ID or mobile number.
  4. Click on and then 'Validate and Generate OTP' after providing the OTP.
  5. Submit the OTP to complete your registration.

What to do and not to do when applying for an MSME loan online

There are some Do's and Don't's you should know when applying for an MSME loan for a new business. Considering them will improve your chances of getting loan approval and reduce the risk of rejection.

Do's

  • Check your credit score before applying for an MSME loan / SME loan because many lenders look for a high credit score for loan approval. However, that's not the case with Ziploan because we have our own rating system Zipcore to approve loan applications.
  • Make sure you have all required MSME loan documents in digital formats as most lenders now let you apply for MSME loan online.
  • Prepare a business plan that how would you use the loan amounts and how soon you will start generating the returns. Having a business plan ready is good for your business.
  • Understand your MSME loan requirements otherwise, you will waste your money and time.

Don't's

  • Avoid applying with multiple lenders, it will reduce your credit score points. Additionally, it will indicate that you are desperate for a loan that creates trust issues in lenders' minds.
  • Make sure you repay the loan amount on a timely basis. Delaying loan amounts will negatively impact your credit score and goodwill.
  • Never trust lenders who ask money to approve MSME loan applications. Instead, choose a trusted lender like Ziploan that never asks for upfront fees.

Relief Package for MSMEs

COVID19 Relief and Atmanirbhar package for MSMEs announced on 13th May 2020

  • Banks and NBFCs to provide Emergency Credit Line to MSMEs to up to 20% of entire outstanding credit as on 29.2.2020
    • Eligible Borrowers: Up to ₹ 25 Cr of the outstanding loan and up to Rs 100 crore of turnover
    • Loan Tenure: 4 years with a 1-year moratorium
    • Guarantee: 100% credit guarantee cover by the government to Banks and NBFCs.
    • Interest: Interest Capped and No Guarantee Fee
    • Validity: Scheme available till 31st Oct 2020
  • Subordinated Debt along with partial guarantee support from government to banks for providing Rs 20000 crore subordinated debt to stressed and NPA MSMEs. Government to take the risk to cover up to the first 20% of the loss.
  • The Prime Minister of India, Shri. Narendra Modi announced a special economic package on 12 May 2020 for the MSMEs to help them overcome the COVID-19 crisis. The PM announced a package of 20 lakh crores which is equivalent to 10% of India's GDP.
  • Fund of Funds with a corpus of ₹ 1,000 Cr to be set up to provide equity funding support to MSMEs with high growth potential
  • The World Bank’s Board of Executive Directors has approved a $500 million program to support the Government of India’s nationwide initiative to revitalize the MSME sector, which has been heavily impacted by the COVID-19 crisis.
  • The Finance Minister on 28th June announced a stimulus package worth Rs 6.29 lakh crore to give relief to the struggling micro, small and medium enterprises (MSMEs) from the second wave of the Covid-19 pandemic.
  • SIDBI Unveils New Term Loan Scheme for MSMEs Hit by Covid-19.
  • As per RBI, Rs 71,431 crore of MSME loans were restructured by public and private banks since 2019 under three schemes, with public banks restructuring almost 80 percent of these.

New Definition of MSMEs announced

  • Global Tenders for any government procurement of up to ₹ 200 Cr are disallowed which means more opportunity for domestic MSMEs
  • All MSME receivables from Gov and CPSEs to be released in the next 45 days.

Government MSME Loan Schemes for SMEs, MSMEs in India

To help small-scale businesses the government of India offers several loan schemes that can be used by SMEs to fund their operations, purchase new equipment, expand their business, and etc.

The small and Medium Enterprises (SME) sector, contributes around 40% to the total GDP of India. In other words, they generate multiple employment opportunities in India but often face fund challenges. 

Here are six government MSME schemes that SMEs can avail:

  1. MSME government business loan scheme – The Government of India launched this scheme as a working capital loan, and an MSME can get a loan sanctioned of Rs. 1 crore in just 59 minutes.
  2. Mudra business loan - The Mudra loan yojana offers an MSME loan without collateral. There are three sub-categories of this scheme – Sishu loan up to Rs. 50, 000, Kishor loan up to Rs. 5, 00, 000, and Tarun loan up to 10, 00, 000.
  3. CGTMSE - Credit Guarantee Funds Trust for Micro and Small Enterprise or CGTMSE is a Government of India's  MSME Loan scheme. Under this scheme, businesses can avail of MSME loans for new businesses as well as the existing ones.
  4. Udyogini - This scheme is launched to provide business loan for women entrepreneurs in India where they can avail funds up to Rs. 15,00,000. An eligible woman entrepreneur must be between the age of 18 years to 55 years.
  5. National Small Industries Corporation Subsidy –  The goal of this government scheme is to help MSMEs grow by offering services including finance, market, technology, and others across the country. They want more businesses to avail small business loans for MSMEs.
  6. PMEGP Loan Scheme - Prime Minister’s Employment Generation Programme or PMEGP is an integrated subsidy scheme linked with Prime Minister Rojgar Yojana. The scheme was launched in 2008 and aims to provide business opportunities for the unemployed youth and a loan for MSME.

Before you get MSME loan make sure you have all the MSME loan required documents that financial institutions and banks ask for sanction loans for MSME businesses.

MSME Business Loan Schemes by Banks in India

MSME ProductsDescription
Working Capital LoanBanks offer these types of loans to fulfill daily cash requirements. Working capital loans example are Cash Credit Loan, Bills Discounting Facility and Letter of Credit (LOC
Term LoanTerm Loan on other hand can be used for capital expansion, capital expenditure, or buying fixed assets. It can be secured and unsecured.

Related Pages

MSME Loan Interest Rates
MSME Registration
How to Apply for MSME Loan

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