In a significant boost to the entrepreneurial ecosystem, the Government of India, along with major public and private financial institutions, has rolled out the updated MSME Loan Scheme 2025, a comprehensive suite of financial products aimed at supporting Micro, Small, and Medium Enterprises (MSMEs) through affordable and accessible credit. Looking to get a loan for small business? Read the full story.
What Is an MSME Loan?
MSME loans are credit facilities offered by banks and NBFCs (Non-Banking Financial Companies) to support the financial needs of small and medium-sized enterprises. These loans often come with limited or no collateral and are structured to enable business expansion, procurement of machinery, working capital management, and even employee salary disbursements.
Loan For Small Business: Who Can Apply?
The 2025 framework mandates the following eligibility criteria:
- The applicant must be a registered MSME in manufacturing, trading, or services.
- Annual income must be at least ₹2 lakh and annual turnover should exceed ₹10 lakh.
- The applicant’s credit score must be 750 or above.
- Applicants should have at least five years of business experience and no history of loan default.
- Age criteria: between 21 and 65 years.
- Entities eligible include sole proprietorships, LLPs, partnerships, and private/public limited companies.
Loan Types Under MSME 2025
- Working Capital Loans: For daily operational needs like payroll and inventory.
- Term Loans: Long-term credit for fixed assets, plant, or infrastructure.
- MUDRA Loans (PMMY): Offered under sub-categories -Shishu (up to ₹50,000), Kishore (₹50,000 to ₹5 lakh), Tarun (₹5 to ₹10 lakh), and Tarun Plus (₹10 to ₹20 lakh).
- PMEGP Loans: Subsidy-based loans for new non-farm sector enterprises with funding up to ₹25 lakh for manufacturing and ₹10 lakh for services.
- CGTMSE Loans: These come with a government-backed credit guarantee covering up to 90% of the sanctioned amount.
- ISEC Scheme Loans: A special 4% interest scheme for registered Khadi institutions.
- SIDBI Loans: High-ticket loans from ₹3 crore to ₹50 crore, supporting large-scale MSME ventures.
- PSB 59-Minute Loans: An initiative for quick loan disbursals up to ₹5 crore through a fully digital process.
Interest Rates: A Competitive Edge
Interest rates under the scheme vary by bank and product, starting from as low as 7.20% per annum. Here are some highlights:
| Bank/Institution | Interest Rate (From) |
|---|---|
| State Bank of India | 8.00% p.a. |
| Indian Bank | 8.80% p.a. |
| Union Bank of India | 10.95% p.a. |
| Lendingkart | 17.00% p.a. |
| Mahindra Finance | 7.20% p.a. |
| Muthoot Fincorp | 18.00% p.a. |
How to Apply
Applicants can choose between online and offline modes:
Online Steps:
- Visit the bank/NBFC’s website and choose the relevant MSME loan product.
- Fill and submit the digital application form.
- Await contact from the bank’s representative for document verification.
- Once approved, sign the agreement digitally.
- Funds are disbursed within 48 hours of completing the process.
Offline:
Visit the nearest bank branch, fill out a physical application, and submit documents directly. Approval and processing follow standard verification protocols.
Why It Matters?
India’s MSME sector contributes nearly 30% to GDP and employs over 110 million people. With the introduction of this enhanced scheme, the government aims to stimulate economic activity in Tier-II and Tier-III cities, boost employment, and integrate small-scale businesses into the formal financial ecosystem.
Beyond ease of access, the scheme provides significant benefits including:
- Low-interest capital
- Collateral-free borrowing options
- Fast-track digital application and disbursal
- Subsidies and credit guarantees from government-backed institutions
Empowering MSMEs Remains Crtical
As India eyes a $5 trillion economy, empowering MSMEs remains critical. The MSME Loan Scheme 2025 is a pivotal step in ensuring small businesses have the credit backing to innovate, hire, and compete on a global stage. With digitized processing and targeted financial products, this initiative represents a modern approach to inclusive economic development.
Also Read: The Rise of Dark Kitchens in India (2025): A Complete Business Guide
