MSME Loan Scheme 2026 – Interest Rate, How to Apply, Eligibility

MSME loan schemes help micro, small, and medium enterprises access affordable credit for expansion, working capital, and technology upgrades. It provides necessary funds for business expansion among other financial needs.

With MSME loan interest rates starting from 7% p.a., these loans are offered by banks. In this blog post, we will explain to you what an MSME business loan, how to apply in a detailed manner.

What is MSME Loan?

An MSME loan is a credit facility that banks and Non-Banking Financial Companies (NBFCs) provide to small and medium-scale businesses. Many banks and NBFCs offer this loan. These schemes ensure access to affordable credit for working capital, business expansion, and masinary upgrades.

Benefits of MSME Loans

MSME loan schemes provide the following benefits for MSMEs:

• To start a new business or expand the existing business.
• For purchasing machinery and plants, such as lab or testing equipment, furniture, electrical appliances, etc.
• To construct building or acquisition of land/premises.
• For launching a new business products.
• To meet working capital requirements like stocking up inventory, paying salaries, purchase of goods and raw materials, etc.
• For marketing and advertising purposes.
• Helps prevent delays in business activities.

MSME Loan Interest Rate 2026

Interest rates depend on factors like loan amount, repayment tenure, business type, creditworthiness, and repayment ability. The MSME loan interest rates of different banks and NBFCs are provided below:

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	17% onwards
Muthoot Fincorp	18% onwards
Lendingkart	1.25% per month onwards

MSME Certificate

The MSME Certificate is a document that certifies a Business as a Micro, Small, or Medium Enterprise. It is also called Udyam Registration for a simplified and paperless process. It’s provides various benefits to businesses, such as access to credit at lower interest rates and tax exemptions.

E Shram Card Registration: Apply Online, Benefits, Status and Download

Documents Required for MSME Loan

To apply under any MSME loan scheme, applicants must provide valid documents to establish their business identity, financial credibility, and repayment ability. The commonly required documents for MSME loans are:

I. Identity Proof

• Aadhaar card
• PAN card
• Voter ID
• Passport
• Driving Licence of the business owner/partners/directors.

II. Address Proof

• Utility bills
• Rental/lease agreement
• Property documents
• Passport showing the current business or residential address

III. Business Proof

• GST registration certificate
• Udyam Registration (Udyog Aadhaar)
• Partnership deed
• Memorandum of association (MOA)
• Articles of association (AOA)
• Shop act licence

IV. Financial Statements

• Last 6–12 months’ bank account statements
• Income tax returns (ITR)
• Audited balance sheet
• Profit & loss statement

V. Business Plan/Loan Purpose

• Expansion details
• Purchase of machinery
• Working capital requirement

VI. Photographs

Passport-size photographs of the applicant/partners

VII. Additional Documents (if applicable)

• Quotation of machinery/equipment to be purchased
• Project reports
• Security/collateral documents

How to Apply for MSME Loans?

Entrepreneurs can apply for MSME loans in two ways: online and offline. The steps to apply for an MSME loan online are as follows:

Step 1: Visit the website of the bank/lender and select the MSME loan scheme and click on the ‘Apply’ button.

Step 2: Fill out the application form and submit it.

Step 3: A representative of the bank/lender will contact the applicant to verify the loan requirements.

Step 4: The representative will ask to submit the required documents. 

Step 5: The loan request will be approved after document verification. 

Step 6: The lender will send an agreement to the applicant to complete the process. 

Step 7: The loan amount will be credited to the applicant’s account within 48 hours of signing the agreement.

Conclusion

MSMEs are the backbone of India’s economy, generating jobs, innovation, and inclusive growth. The MSME business loans provide financial assistance to micro, small and medium-sized enterprises in India. It provides access to inexpensive loans, tax breaks and government contracts.

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