What is MSME Loan?

India is an ever-growing economy. With the rise of entrepreneurship spirit among the youth, this is a good time to talk about MSME Business Loans. MSME or Micro, Small, Medium Enterprises & Companies are responsible for about 40 % of India’s total export and approximately 70 % of the total employment in the country. In the modern-day, MSMEs are the hot cake of Indian economy and various lucrative opportunities are available to promote promising small startups. The Business Loans available for various MSME’s are a little different from conventional business loans.

Read more: Benefits of MSME Registration for Your Business

The Business Loan providers consist of various non-banking finance companies, multiple financial institutions and the government of India tops the list in terms of proving opportunities to such ventures. Some of the popular Business Loan schemes provided by the government of India to MSME’s are:

  1. PMMY (Pradhan Mantri Mudra Yojna)
  2. MSME Business Loans for startups in 15 minutes
  3. CGS (Credit Guarantee Scheme)
  4. Bank Credit Facilitation Scheme 
  5. Coir Udyami Yojna 
  6. Sustainable Finance Scheme 
  7. Credit Linked Capital Subsidy for Technology Upgrades
  8. 42 (End to End Energy Efficiency)
  9. SMILE ( SIDBI Make in India Soft Loan Fund for MSME’s)

Reasons Why You Should Opt For MSME Business Loans Instead of The Traditional Loan Offers

1. Unlike traditional loans provided by the banks, the eligibility criteria to get MSME Business loans is minimal and hassle-free.

MSME Business loans can be availed with no collateral at all. The loan approval duration is considerably less and the documentation is also minimal.

2. MSME loans really help in cutting multiple Taxes!

India observed 2% interest subvention from Government for incremental loans of Rs 1 crores under the MSME Credit scheme, which immensely helps small business in the reduction of taxes. The taxation policies in such loans are minimal as well. These loans provide benefits on certain taxes.

Learn more: MSME Registration: Eligibility, Documents Required, Benefits

3. You know it’s good when the Government of India is betting on it. With a plethora of Government scheme to aid MSME’s, taking Business Loans have never been this easy.

There are multiple loans offer provided by the Government of India to small business startups. These loans are easy to apply for and anyone with a good business model can avail of these Business Loans.

Learn more: How You Can Check Your Personal Loan Eligibility

4. Minimal Interest Rates

These kinds of Business loans provide equal opportunities to all kinds of businesses.

The maximum interest rates that a loan can have in India currently as per the guidelines by SBA (Small Business Administration) ranges from 7.75% to 10.25%. The range depends on the size of the loan that is being borrowed. But the average interest rates in MSME Business loans are generally in-between 4% to 6%.

Read more: Can You Fund Your Business with a Personal Loan?

Below are few Business Loan Interest Rates from the top banks in India

  1. HDFC bank charges an Interest rate of about 11.20% to 16.30% on a loan amount of 50 Lakh Rupees.
  2. Axis bank charges an interest rate of about 15.50% to 24% on a loan amount of 50 Lakh Rupees.

5. Funding for Capital growth is available as well.

MSME Business loans provide growth funds as well. The primary goal for a growth fund is capital appreciation, and it involves very little or in certain cases null dividend payouts.

6. Funds received from MSME Business loans can be used for any business requirements of your choice

You can use MSME Business loans for any type of business based on your choice.

Learn more: Investments – Opportunities And Options

Based on the above facts, it can easily be concluded that MSME Business Loan is the best option for any small business firm in the market. With the government’s support and the burgeoning market, MSME Business Loans plays a cardinal role in the growth of the economy and setup of new income opportunities.