The MSME or Micro, Small and Medium Enterprises sector has undergone a sea of change in the recent past and has given a great boost to the Indian economy by employing 1.14 crore Indians and contributing to almost 40% of our exports. The sector had been facing issues with inadequate funds and access to banks, but that has now changed with loans specifically available for them. Read on, to know more about MSME loans.

Purpose of the loan

The MSME Loan provides a single line of credit for meeting the borrowing needs of business in the MSME sector. The MSME loans provide for a variety of reasons which include

•    Buying equipment/machinery
•    Expansion of Business
•    Working Capital loans to meet day to day operations
•    Loans exclusive for women entrepreneurs

The loan is approved after carefully evaluating the nature of business, cash flow projections, cyclical trends and peak time requirements.


All Micro Small and Medium Enterprises, including other entities as defined under the MMSMED Act, 2006, with a stipulated sales turnover are eligible for this loan. The turnover requirements vary from lender to lender. Generally, an MSME projecting good sales with a healthy profit is eligible for this loan product.


Security/collateral is usually insisted upon, including hypothecation of assets of the enterprise. Personal Guarantees of all Promoters / Directors / Partners might be required depending on the amount of the loan. Third party guarantee might be insisted upon if the loan amount exceeds a certain amount.

If you apply through private Non-Banking Financial Institutions like Bajaj Finserv or Magma Fincorp, then you do not need to pledge any collateral as a form of security.

Other features of MSME Loans

•    Easy repayment options through Post Dated Cheques or ECS
•    Lenders offer flexible tenure, ranging from 12 months to 48 months
•    Attractive rates of inters, as applicable to the credit worthiness of the borrower
•    Flexible documentation
•    Quick processing

MSME Loan interest rate

It depends on a host of eligibility criteria which might include but is not limited to – your credit history, your company's credit history, current outstanding loans / EMIs, and other factors that reflect your financial capability and behavior.

MSME Loan – How to apply

If you are looking for an MSME Loan and are unsure about how to apply, then CreditMantri can guide you. You can typically apply for a business loan which can be utilized as working capital and long-term capital for your business.

You can check your eligibility and apply for a business loan by signing up with CreditMantri. It is quick, simple and above all, free.

CreditMantri matches your credit and demographic profile to the lender's lending criteria and presents you a shortlist of only those lenders willing to lend to you based on your unique credit profile. In effect, we pre-screen your application to make sure you are likely to qualify as per the lender's credit criteria. Hence, the chances of your business loan application getting approved are higher.

Click here to sign up and apply for loans, the CreditMantri way!