Micro, Small, and Medium Enterprises (MSMEs) play a very important role in the Indian economy. They make up about 30% of India’s GDP and provide jobs to millions of people. But one of the main problems MSMEs face is getting easy and low-cost loans on time.
In this article, we will talk about what Top MSME Loan Schemes in India 2025, best government-backed MSME loan schemes, their key benefits, how to apply and who can apply in simple understandable forms.
What is an MEMS Loan?
An MSME loan is a type of business loan specially designed for micro, small, and medium enterprises. It helps small businesses get the money they need for things like working capital, business expansion, machinery purchase, inventory management, and operational expenses.
Most MSME loans don’t need any security or collateral, which makes them easier to get. They are often supported by government schemes, so small businesses can get funds more easily and grow faster.
Top MSME Loan Schemes in India 2025
Looking to grow your small business? Here are some of the op MSME loan schemes in India offered by the government and banks that you can apply online or offline:
1. Pradhan Mantri MUDRA Yojana (PMMY)
This government scheme is best for small-scale or home-based businesses, especially those who want to start something on a low budget without collateral.
- Loan amount is between ₹50,000 to ₹10 lakh with the interest rate starting from 7–9%
- Loan tenure is up to 5 years
- In this scheme, there are three types of loans: Shishu, which offers up to ₹50,000 for starting a business; Kishore, which provides ₹50,000 to ₹5 lakh for growing an existing business; and Tarun, which gives ₹5 lakh to ₹19 lakh for expanding a business further.
- You can apply for this scheme by visiting your bank’s MUDRA portal or the official MUDRA website.
2. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
This government scheme supports both new and existing businesses by offering loans without collateral.
- Loan amount is up to ₹2 crore
- In this scheme, government gives a guarantee to banks so they can lend easily
- You can apply for this scheme through participating banks and NBFCs
3. Stand-Up India Scheme
This scheme is specially provided for SC/ST and women entrepreneurs to start new businesses.
- Loan amount is between ₹10 lakh to ₹1 crore
- It is mainly used for setting a new business in manufacturing, services, or trading
- You can apply for this scheme by going to standupmitra.in website.
4. Prime Minister’s Employment Generation Programme (PMEGP)
This government backed scheme is great for starting small businesses, especially in rural or small towns.
- Maximum project cost is ₹25 lakh for manufacturing and ₹10 lakh for service businesses.
- This scheme gives a subsidy of 15–35% and you don’t have to repay this part.
- You can easily apply for this scheme through the KVIC (Khadi and Village Industries Commision) portal.
5. SIDBI Make in India Soft Loan Fund for MSME (SMILE)
This scheme mainly supports small businesses that are part of the Make in India campaign. Its purpose is to help in extension or upgrading your businesses.
- Loan amount is between ₹10 lakh to ₹25 lakh and the interest rate is based on business profit which starts from 8.25%
- This scheme is offered by SIDBI (Small Industries Development Bank of India)
- You can apply for this scheme by visiting the official SIDBI website.
These MSME loan schemes are designed to help small businesses grow with easy access to funds. Choose the one that suits your business goals and apply online.
Benefits of MSME Loan Schemes
Applying for an MSME loan online in India has many advantages:
- Collateral-Free Loans: You don’t need to give any property or asset as security. This makes it safer and easier for small businesses.
- Quick Online Application: You can apply for the loan using your smartphone or laptop. You don’t need to go to the bank.
- Low Interest Rates: these loans often come with lower interest rates compared to regular personal loans or other business loans.
- Government Subsidies & Support: You may get help from the government in the form of tax benefits, subsidies, or support for margin money.
- Flexible Repayment: you can repay the loan amount over 1 to 7 years with easy EMI options that suit your budget.
Eligibility Criteria for MSME Loans
To apply for MSME loans, you need to meet some basic conditions. These may vary slightly based on the loan scheme, but the general requirements are:
- Applicant must be an Indian citizen
- Business should fall under Micro, Small, or Medium Enterprise category as per MSME act.
- You need to register your business on the Udyam portal and get a valid Udyam Registration.
- Your business should either be already running or ready to start soon.
- You should have a good credit score, preferably a CIBIL score of 650 or more.
Documents Required for Online MSME Loan Application
To apply for an Online MSME Loan, you will need to upload some important documents. Here’s a list of all those documents:
- Aadhaar Card and PAN Card – To verify your identity.
- Business Registration Certificate or Udyam Registration – For the proof that your business is officially registered.
- GST Registration – Needed if your business comes under GST rules.
- Bank Statement of last 6–12 months – To show your business income and expenses.
- Income Tax Returns to show how much income your business is earning.
- Project Report or Business Plan – A document that explains what your business will do and how it will earn money.
- Partnership Deed or MOA – Legal papers that explain your business type and who owns it.
How to Apply for an MSME Loan Online in India
Step 1:
First, you need to get your Udyam Registration Certificate by visiting udyamregistration.gov.in and fill in your business details to register.
Step 2:
Pick a loan scheme that matches your business needs, whether it is for startup, growing your business, or managing daily expenses.
Step 3:
Go to the official website of the loan scheme you selected. Some common websites are:
- mudra.org.in
- standupmitra.in
- kviconline.gov.in
- Banks or NBFC websites.
Step 4:
Fill out the online application form carefully and mention how much loan you need, then upload scanned copies of the required documents.
Step 5:
Wait for verification and approval. If approved, then the loan amount will be directly credited to your bank account.
Conclusion
MSME loan schemes in India make it easy for small businesses to get funds. With a simple online process, even first-time entrepreneurs can apply online from home. Then it doesn’t matter if you’re starting or growing a business, the right MSME loan scheme can give your business a boost.
Government schemes like MUDRA, CGTMSE, and Stand-Up India are helping more people become successful entrepreneurs.
Don’t let lack of funds stop you from chasing your dreams. Explore these schemes and get started.
FAQs
What is the interest rate for MSME loans?
Interest rates of MSME loans depend on the scheme and lender. But on average it ranges from 7% to 15% per annum.
Can I apply for an MSME loan without collateral?
Yes, most MSME loan schemes like MUDRA and CGTMSE are collateral-free, meaning you don’t need to pledge any asset to avail the loan.
How long does it take for MSME loan approval?
If all documents are in place, online applications are typically approved within 7-15 working days.
Is Udyam Registration mandatory for MSME loans?
Yes, it has become mandatory to avail most government schemes and benefits. It serves as proof of your business category under MSME.
Can startups apply for MSME loan schemes?
Absolutely. Startups registered under MSME can apply for schemes like PMEGP, MUDRA, and Stand-Up India for funding greenfield projects or working capital.