Micro, Small, and Medium Enterprises (MSMEs) are the backbone of India’s economy, creating jobs and driving innovation across manufacturing, trading, and service sectors. To support these businesses with timely and affordable finance, various MSME loan schemes are offered by banks, NBFCs, and the Government of India.
In this detailed guide, you will find everything about MSME Loan Scheme 2026, including interest rates, eligibility conditions, loan types, government schemes, and step-by-step application methods.
⭐ What is an MSME Loan?
An MSME loan is a business credit facility designed specifically for micro, small, and medium enterprises. These loans help businesses meet expenses related to working capital, business expansion, machinery purchase, technology upgrades, and operational needs.
MSME loans are provided by public sector banks, private banks, NBFCs, and under government-backed schemes supported by the Government of India. Many MSME loans are available with low interest rates and without collateral, especially under credit guarantee schemes.
⭐ MSME Loan Scheme 2026 – Key Highlights
- Loan amount: ₹50,000 to ₹5 crore (scheme-based)
- Interest rate: Starting from 7% per annum
- Collateral: Many loans are collateral-free
- Loan tenure: 1 year to 15 years
- Eligible sectors: Manufacturing, trading, services
- Fast processing: Loans approved in as little as 59 minutes under select schemes
⭐ MSME Loan Interest Rates in 2026
MSME loan interest rates vary depending on the lender, business profile, credit score, and loan type.
| Bank / NBFC | Interest Rate (p.a.) |
|---|---|
| State Bank of India | 8.00% onwards |
| Canara Bank | 9.20% onwards |
| Punjab National Bank | 9.60% onwards |
| Indian Bank | 8.80% onwards |
| Union Bank of India | 10.95% onwards |
| Mahindra Finance | 7.20% onwards |
| Fullerton India | 17% onwards |
| Muthoot Fincorp | 18% onwards |
| Lendingkart | 1.25% per month onwards |
📌 Actual interest rates may differ based on borrower eligibility and risk profile.
⭐ How to Apply for an MSME Loan?
🖥️ Online Application Process
- Visit the official website of the bank or NBFC
- Choose the MSME loan product
- Click on Apply Online
- Fill in business and personal details
- Submit the application
- Bank verifies details and documents
- Loan amount is credited after approval, often within 48 hours
🏦 Offline Application Process
- Visit the nearest bank or NBFC branch
- Collect the MSME loan application form
- Fill in details and attach documents
- Submit the form to the branch
- Loan is processed after verification
⭐ Eligibility Criteria for MSME Loans
To qualify for an MSME loan, applicants generally must meet the following conditions:
- Business engaged in manufacturing, trading, or services
- Credit score preferably 750 or above
- Minimum annual income around ₹2 lakh
- Annual turnover of approx. ₹10 lakh or more
- Good repayment and banking history
- No previous loan defaults
- Applicant age: 21 to 65 years
- At least 3 years in the current business
- Minimum 5 years of business experience
Eligible Business Structures
- Sole proprietorship
- Partnership firm
- Private limited company
- Public limited company
- Limited Liability Partnership (LLP)
⭐ Documents Required for MSME Loan
Identity & Address Proof
- Aadhaar card
- PAN card
- Voter ID / Passport / Driving Licence
Business Proof
- GST registration
- Udyam Registration
- Partnership deed / MOA / AOA
- Shop Act licence
Financial Documents
- Bank statements (last 6–12 months)
- Income Tax Returns (ITR)
- Balance sheet and profit & loss statement
Other Documents
- Business plan or loan purpose details
- Machinery or equipment quotation (if applicable)
- Passport-size photographs
⭐ Types of MSME Loans
🔹 Working Capital Loan
Short-term loans to manage daily business expenses like inventory purchase, salaries, and utility bills.
🔹 Term Loan
Long-term loans for expansion, purchasing machinery, construction, or capital investment.
⭐ Popular Government MSME Loan Schemes
⭐ Pradhan Mantri Mudra Yojana (PMMY)
Offers loans up to ₹20 lakh for micro and small businesses under:
- Shishu (up to ₹50,000)
- Kishore (₹50,000–₹5 lakh)
- Tarun (₹5–₹10 lakh)
- Tarun Plus (₹10–₹20 lakh)
⭐ Prime Minister’s Employment Generation Programme (PMEGP)
Provides credit-linked subsidy for new micro-enterprises:
- Manufacturing: up to ₹25 lakh
- Services: up to ₹10 lakh
⭐ Credit Guarantee Scheme (CGTMSE)
Offers collateral-free loans with credit guarantee coverage up to 85–90% for eligible MSMEs.
⭐ Interest Subsidy Eligibility Certificate (ISEC)
Provides working capital loans at 4% interest for khadi institutions, with subsidy paid by the government.
⭐ SIDBI MSME Loans
Loans for machinery, projects, and working capital ranging from ₹3 crore to ₹50 crore.
⭐ MSME Loan in 59 Minutes
Fully digital loan processing for MSMEs with approval in under one hour for loans up to ₹5 crore.
⭐ Benefits of MSME Loans
- Easy access to business finance
- Affordable interest rates
- Minimal or no collateral
- Helps expand and modernise business
- Supports working capital needs
- Encourages entrepreneurship and employment
Conclusion
The MSME Loan Scheme 2026 offers flexible, affordable, and fast financing options for businesses at every stage—from startups to expanding enterprises. With multiple government-backed schemes, low interest rates, and collateral-free options, MSMEs can easily access funds for growth, technology upgrades, and operational stability. For more easy-to-understand guides on business loans, government schemes, and finance-related topics, visit Sarkari Bakery.