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MSME Loan



MSME Loan

MSME Loans also known as Micro, Small, and Medium Enterprise Loans are types of loans which you can avail if you own a business or is an entrepreneur. This type of loan provides you working capital which you can use for various purposes such as purchasing new inventory, buying new equipment, paying your staff their salary, or aid yourself in expanding your business. There are multiple lenders in India who offer MSME loans to their customers. The interest charged also differs from banks to banks.

MSME Loan Details

Interest Rate

7.65% p.a. onwards

Loan Amount

Rs.50,000 onwards

Loan Tenure

Up to 15 years

Processing Fee

Subject to the lender

    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 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:
    Classification Micro Small Medium
    Manufacturing and Services Enterprises Investment does not exceed Rs.1 crore and Turnover does not exceed Rs.5 crore Investment does not exceed Rs.10 crore and Turnover does not exceed Rs.50 crore Investment does not exceed Rs.20 crore and Turnover does not exceed Rs.100 crore
    Classification Manufacturing and Services Enterprises
    Micro Investment does not exceed Rs.1 crore and Turnover does not exceed Rs.5 crore
    Small Investment does not exceed Rs.10 crore and Turnover does not exceed Rs.50 crore
    Medium Investment 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.

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