The loans which are covered under the popular government MSME schemes are generally terms loans and working capital loans with an upper limit cap of Rs. 100 lakh per borrowing unit. Such loans are collateral-free loans that are given to new or existing micro and small business entities.

So, how can MSME entities apply for the collateral-free MSME loan?

Steps for applying for collateral-free MSME loan 

  • Avail the MSME / Udyog Aadhar Registration Certificate.
  • The collateral-free loans under the MSME Loan Scheme can then be obtained by MSME registered business entities through the partner banks.
  • Banks would ask for the requisite documents which would need to be submitted to the bank’s representative for proceeding on the loan application process.
  • Eligibility criteria would be decided by the bank on the basis of the criteria set by the Ministry for MSME.
  • Once eligibility approved by the bank, the loan amount gets directly disbursed into the entity’s bank account.

Points to Remember: 

MSME / Udyog Aadhar Registration Certificate is a must before applying for a collateral-free MSME loan.

Term loan or working capital loan is allowed with a maximum limit of Rs. 100 lakh per borrowing unit.

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