MSME Loan Interest Rates: Compare and Apply Online

Securing an MSME/SME Loan with Lendingkart ensures competitive interest rates and minimal charges, fostering business growth with affordable financing solutions.

MSME Loan / SME Loan Interest Rate in India 2024

Customized Interest Rates	Fair, Transparent – starting from 1.25% per month
Processing Fees	2-5%
Loan Tenure	up to 3 years
Pre-closure Charges	Pre-closure charges are applicable as per the lender’s policy
Eligibility Criteria	> ₹ 90,000 turn over for 3 Months
Loan Amount	₹ 50,000 – ₹ 2 crore
Installments	Flexible Monthly / Bi-weekly

For more details visit Lendingkart MSME/SME interest rates and charges.

What is an MSME Loan / SME Loan Interest Rate?

The interest rate for an MSME/SME Loan represents the cost of borrowing funds to finance your business operations or expansion plans, crucial for budgeting and financial planning.

Calculation of MSME Loan / SME Loan Interest Rate

The interest rate on an MSME/SME Loan is determined based on various factors, including the creditworthiness of the business, the business loan amount, tenure, and market rates. Lenders use financial analytics to offer the best rates tailored to the business’s ability to repay. The calculation involves assessing the business’s financial statements, credit history, and potential for growth, ensuring a fair and competitive interest rate is applied.

Eligibility and Document Requirements for MSME Loan

Eligibility Criteria:
- Business operational for over 6 months.
- Minimum turnover of ₹90,000 in the past 3 months.
- Not listed on the blacklisted/excluded list for SBA finance.
- Business location not in the negative location list.
- Not applicable to Trusts, NGOs, and charitable institutions.
Documents Required:
- Identity and address proof: PAN and Aadhaar Card.
- Proof of business operations and turnover: Bank statements, Registration proof.
- Financial statements for assessment.

Visit Lendingkart MSME/SME Loan eligibility criteria for detailed information.

How to Calculate the MSME Loan Interest Rate?

To calculate the MSME loan interest rate, use the formula:

EMI = P x r x (1+r)^n / [(1+r)^n -1]

where
P=loan amount,
r=monthly interest rate
n=loan tenure in months

This formula helps determine the monthly repayment amount, incorporating both the principal and interest components, offering a clear perspective on the financial commitment involved.

Dos and Don’ts While Applying for an MSME Loan

Do’s When Applying for an MSME Loan	Don’ts When Applying for an MSME Loan
Ensure the enterprise has a solid performance track record for 3 years.	Do not apply for loans from multiple lenders; it can negatively affect your CIBIL score.
Check the MSME’s CIBIL score and clear any outstanding debts before applying.	Avoid securing loans through brokers or agents to prevent unnecessary charges. Direct application is straightforward and recommended.
The business must have filed at least one year’s Income Tax return prior to the loan application.

MSME Registration Process

Visit the Udyam Registration site: Choose the option for new entrepreneurs not yet registered as MSME.
UAM Registration: Useful for those with an existing Udyog Aadhar Memorandum.
OTP Verification: Enter and verify OTP received on the registered mobile.
Submit Details: Provide Aadhaar number, PAN, and organizational details.
Final OTP Verification: A final OTP confirms the registration process, making the MSME eligible for government aid and subsidies.

MSME Loans Overview

MSMEs often require loans for both startup and operational needs. Starting at an interest rate of 1.25% per month, loan terms vary based on the SMEs financial status. NBFCs like Lendingkart streamline the loan processing, ensuring approval within three days, facilitating quick access to needed funds for growth and operational efficiency.

MSME Loan Interest Rate FAQs:

Can an MSME take more than one loan at a time?

An MSME can take more than one loan at a time. It is, however, better to take one larger consolidated loan as the second loan may come at a higher interest charge due to one loan showing up during credit rating and attracting higher interest.

Can an MSME take a loan by providing unpaid invoices?

This is possible, but most lenders of MSME loans do not require collateral.

Are there MSME loans that can be applied online?

Yes, many MSMEs support the application of MSME loans online. They even have facilities to upload the required documents. Many of them are known to clear loans within a day, and the loan amount is credited into the registered bank account of the enterprise.

Are there any eligibility criteria for the location of an MSME?

Yes. The main criterion for the location of the MSME is that it should not be in a restricted zone or negative zone. The lender will verify the location based on the address provided in the loan application.

Do MSMEs need to show any minimum turnover to be eligible for an MSME loan?

Some lending institutions require applying MSMEs to show a three-month turnover of at least Rs 90,000 to be eligible for an MSME loan.

Can an MSME loan be prepaid, and are there any prepayment charges?

Not only do most MSME loan lenders allow frequent prepayment of loans, but they also do not charge for multiple prepayments. This is a benefit as MSMEs prefer to prepay a loan so that a new loan can be applied within a short period of time.

Can MSMEs get loans at lower interest by keeping their credit score high?

Yes. CIBIL credit scores also apply to businesses, and MSMEs are given special interest rates on loans based on their credit scores. Hence, MSMEs are required to pay off past debts and keep their credit rating high to get a lower interest.

Can MSMEs get lower interest by showing an increase in exports?

The interest rate on an MSME loan does not change while the loan is being paid off, but an MSME can take a loan extension and negotiate for lower interest by showing an increase in exports of the company's products.

How much loan amount can I apply for as an MSME?

The loan amount you can apply for as an MSME varies depending on your specific needs and eligibility. Under the Mudra Loan scheme, you can apply online and access loans ranging from as low as Rs. 50,000 to as high as Rs. 10 lakhs. The interest rate for MSME business loans also varies, but it is generally competitive to support small businesses' growth. For specific interest rates, you should check with the lending institution or bank offering the MSME loan.

How can I calculate the EMI for the MSME loan?

To calculate the EMI for an MSME loan, you can use online EMI calculators available on financial websites. Simply enter details like the MSME loan interest rate, loan amount, and tenure. For specific MSME loans like the Mudra Loan, visit the official website and apply online. Interest rates for MSME loans vary, so check the scheme's terms for the applicable rate of interest.