Need a Financial Push to Get to the Next Level?
MSME loans may be the right option for you to look at.
Know which MSME Loan works for you and how to make the best use of it.
With a Range of Mind-Boggling Options, it is Important that You Choose Right
MSME Loans are what were known as small business loans until recently. They have now been renamed as MSME loans. This new classification has been done as it is more logical and helps banks and the financial services industry, and the government classify the micro, small and medium business sector into different categories based upon their turnover and other relevant criteria.
MSME Loans are usually very specific loans for select businesses or industries. The goal of these loans is to help the MSME unit grow without too much worries about finance and funding requirements.
Public Sector Banks (Nationalised Banks)
Private Sector Banks
Small Finance Banks
North East Small Finance Bank
Suryoday Small Finance Bank
Equitas Small Finance Bank
Jana Small Finance Bank
Ujjivan Small Finance Bank
Bank of America
United Overseas Bank
A More In-Depth Look at MSME Loans
The Government Initiatives
The government has taken various initiatives to help these businesses in policy, procedures and guidelines as well as in more practical terms. The Ministry of Micro, Small & Medium Enterprises has been specifically mandated with the task of helping these institutions. From departments that have been set up to help these businesses to RBI guidelines that formalize financial support, things are now more concrete and clear cut.
The Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 has classified the Micro, Small and Medium Enterprises in two Classes: Manufacturing Enterprises and Service Enterprises.
Here is how the MSME classification has been done for these two types of enterprises.
- A Micro Business is classified as an entity whose investment in plant & machinery is less than Rs. 25 lakh
- A Small Business is classified as an entity that has an investment in plant & machinery of more than Rs. 25 lakh but less than Rs. 5 crore
- A medium business is classified as an entity whose investment in plant & machinery is over Rs. 5 crore but less than Rs. 10 crore
- A Micro Business is classified as an entity whose investment in equipment is less than Rs. 10 lakh
- A Small Business is classified as an entity whose investment in equipment is over Rs. 10 lakh but less than Rs. 2 crore
- A Medium Business is classified as an entity whose investment in equipment is more than Rs. 2 crore but is less than Rs. 5 crore
This classification helps the government and the banks to provide assistance according to the needs of the business. For example, a business that is classified as micro business is eligible for loans that are smaller in size when compared to what a small business is eligible for. A small business in turn is eligible for a loan amount which is usually smaller in size than what can be given to a “medium” business.
This classification helps also to take care of various other details as the type of financial support and guidance needed, the documentation essential for the bank to check to give a loan, and other details that allow a business to run successfully. For example, a micro business is given freedom from various rules and regulations that a small business or a medium business will have to comply with. Similarly, a small business is given about more leeway than what a medium business would have to meet. In turn, a medium business has more freedom than what is given to a larger enterprise. Because of these specifications businesses now have a clearer understanding of what is allowed in terms of the businesses that can do, the funds they can raise and so on.
The MUDRA Scheme
The government has taken various initiatives to help these businesses in on a financial level. One such initiative is the MUDRA scheme for non-corporate or non-farm micro and small enterprises. The scheme is also known as Pradhan Mantri MUDRA Yojana (PMMY).
The MUDRA loans can be given by commercial banks, Regional Rural Banks (RRBs), Small Finance Banks, Micro Finance Institutions (MFIs) and Non-Banking Financial Companies (NBFCs)
The MUDRA loan scheme divides its financial support for these businesses into three categories: Shishu, Kishore and Tarun. The classification has been done based on the stage of growth and funding needs of the enterprise. The financial limit for these schemes are as below:
- Shishu Stage: The loans under this category are up to Rs. 50,000
- Kishor Stage: These loans range from over Rs. 50,000 to Rs. 5 lakh
- Tarun Stage: These loans are over Rs. 5 lakh and go up to Rs. 10 lakh
The Initiative by Banks
Banks have also come up with various schemes and initiatives to help the MSME sector. Any lending to this sector is classified as priority sector lending. The RBI has formulated directions and guidelines for banks to better serve the sector.
In accordance with this push, all small business loans in banks are now classified as MSME loans. This is in line with what the government has directed banks to do to help the sector including providing specific financial assistance rather than generic loan products. The terms and conditions that apply to every type of business also differ based on the type of business or loan.
We have created a series of pages on different MSME loans from the primary banks in the country.
You will find below a list of these banks. Each bank name is linked to its own specific page that contains an overview of most of the MSME loans the bank offers. In case the bank has more information on these loans, then we have provided this information to you in a separate page for that particular loan.
A Note and A Request for You
We keep updating our pages on a regular basis, usually in a six-month cycle. Sometimes because of this cycle, the information on the pages may not be the latest one as the loan details may have been changed by the bank.
In such a case, we request you to let us know if you find any discrepancy in the information. We will also be grateful for any feedback that can give us to improve the quality of the content we have given you. Please use the email ID: [email protected] to send us an email.
Thank you so much for visiting the page and we hope you find what you’re looking for on this website. In case you have not, do let us know in the same email id.