MSME Loan New Scheme 2020
MSME (Micro, Small and Medium Enterprise), loans are mostly offered to start-ups and small business owners. The MSME loan’s repayment tenure varies from lender to lender and the interest rates offered are majorly based on the loan amount, applicant’s profile and business history.
MSME loans are unsecured loans that are offered by banks and NBFCs only if the applicant meets the certain eligibility criteria. MSME loans are defined by Indian Government and RBI, as the loans for business enterprises need support in terms of finance, infrastructure and other areas.
New MSME Definition
The distinction between the manufacturing and services enterprises has been removed by making the investment amount and annual turnover similar for enterprises engaged in both the sectors.
Key Takeaways of New MSME Definition introduced in ‘Atmanirbhar Bharat Abhiyan‘ or Self-reliant India Scheme 2020 by Government of India.
- Collateral Free Loans to MSMEs
- MSME Loans worth of Rs. 3 lakh crore
- Moratorium period offered is 12 months
- Manufacturing and Service MSMEs shall be considered as same entities
- Repayment Tenure of 48 months
- 100% Credit Guarantee
- To benefit approx. 45 lakh units
MSME Loans from Popular Banks and NBFCs
Apart from the government-backed schemes, there are a number of private sector banks as well that offer MSME loan at competitive interest rates. Below mentioned are some key banks and NBFCs that offer MSME loans with added benefits:
| MSME Loans from Lendingkart Finance 2020 | |
| Interest Rate | 18% onwards |
| Max. Loan Amount | Up to 2 cr |
| Min. Loan Amount | Rs. 50,000 |
| Processing Fee | Up to 2% of the loan amount |
| Repayment Tenure | Up to 36 months |
| Loan Sanctioning Time | Within 3 working days |
| Collateral / Security | Not required |
| Pre-payment Charges | Nil |
Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank and RBI. GST and service tax shall be levied extra on the mentioned charges.
| MUDRA Loan from SBI 2020 | |
| Interest Rate | 10.15% onwards |
| Loan Amount | Max. up to 20 crore, can exceed as per requirements |
| Processing Fee | Upto 2% of the loan amount |
| Business Existence | Min. 5 years in same locality/area |
| Bank Account History | Current account holder for at least 2 years |
| Repayment Period | Up to 120 months |
Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank and RBI. GST and service tax shall be levied extra on the mentioned charges
*Based on the health of your business, revenues and annual turnover
| Business Loans from HDFC Bank 2020 | |
| Rack Interest Rate | 15% onwards* |
| Loan amount | Up to Rs. 50 lakh |
| Processing Fee | Up to 2.50% of the loan amount, Min. of Rs. 2359 & Max. of Rs. 88500 |
| Overdue EMI Interest | 2% per month on EMI / Principal Overdue |
| Pre-payment Charges | Nil, until repayment of 6 EMIs |
| Collateral / Security | Not required |
Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank and RBI. GST and service tax shall be levied extra on the mentioned charges
*Based on the health of your business, revenues and annual turnover
| MSME Loans – ICICI Bank – 2020 | |
| Interest Rate | 15% onwards |
| Loan offered to | Public Limited Companies, Partnership Firms, Sole Proprietorship Firms, Private Limited Companies |
| Loan Amount | Up to 2 crore |
| Cash Credit Feature | Available |
| Collateral / Security | Not required |
| Eligible Business Segment | Micro Small Enterprise, excluding traders |
Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank and RBI. GST and service tax shall be levied extra on the mentioned charges
*Based on the health of your business, revenues and annual turnover
| MSME Loans from Bajaj Finserv 2020 | |
| Interest Rate | 18% onwards |
| Processing Fee | Up to 3% of the loan amount |
| Loan Tenor | Max. up to 60 months |
| Loan Amount | Max. up to Rs. 30 lakh |
| Loan Sanctioning Time | Within 24 hours |
| Collateral / Security | Not required |
Note: The mentioned interest rates, fees and charges are subject to change and depend on the sole discretion of the bank and RBI. GST and service tax shall be levied extra on the mentioned charges
*Based on the health of your business, revenues and annual turnover
As per the Micro, Small, and Medium Enterprises (MSME) Development Act 2006, these businesses are classified in two categories, service enterprises and manufacturing enterprises.
MSME Loan Schemes
MSME loans are offered to Micro, Small and Medium Enterprises (MSMEs) by financial institutions that include banks and NBFCs. MSME loans are also offered by government with the help of various schemes which are further discussed. Government Schemes that come under MSME loans include Mudra Loan, CGTMSE, PMEGP, etc. These schemes ensure that the new and existing entrepreneurs in the country get the necessary financial support and funding for their businesses.
MUDRA Loan
MUDRA (Micro Unit Development and Refinance Agency) was introduced to provide support to the small business owners. Mudra Yojana is further classified between three categories named as Shishu, Kishore and Tarun.
In the Shishu category, an MSME loan is provided up to Rs. 50,000 to a Start-Up enterprise. In the Kishore category, a loan of up to Rs. 5 lakh is provided to the companies that have been running for a while and want to get more established. In the Tarun category, the MSME loan is provided up to Rs. 10 lakh to companies that are established and are looking for expansion. The maximum repayment tenure is of 60 months for all Mudra loan categories.
CGTMSE (Credit Guarantee Funds Trust for Micro and Small Enterprises)
CGTMSE (Credit Guarantee Funds Trust for Micro and Small Enterprises) was introduced to establish a strong credit relief system and promote a better credit flow for the MSME sector. Under the CGTMSE scheme, the loan is backed without any external collateral or third party guarantee.
Here, the MSME loan sanctioned by the Member Lending Institution (MLI) is backed by the scheme which provides the guarantee cover for a large portion of the loan amount. Under CGTMSE scheme, both new and existing medium, small, and micro enterprises, including service enterprises are eligible for a maximum credit cap of Rs. 2 crore.
CGTMSE also offers rehabilitation assistance to the units. Any MSME unit that is in a bad condition due to the factors beyond the control of management is supported by the CGTMSE rehabilitation assistance. The maximum credit cap of Rs. 1 crore is offered to the dilapidated MSME units.
Eligibility of CGTMSE Scheme
CGTMSE scheme is offered to various institutions which are as follows:
- Scheduled Commercial Banks
- Regional Rural Banks (RRBs)
- National Small Industries Corporation (NSIC)
- North Eastern Development Finance Corporatation (NEDFi)
- Small Industries Development Bank Of India (SIDBI)
- CGTMSE scheme aids all new and existing medium, small, and micro enterprise borrowers who fulfil the conditions mentioned below:
- The trust guarantees up to 75% of the defaulted principal amount for all categories and up to 85% of the defaulted principal amount for selected category of borrowers. The maximum guarantee cap is kept at Rs. 62.50 lakh / Rs. 65 lakh for the credit facilities up to Rs. 50 lakh
- Associated charges such as penal interest, commitment charge, and service charge including any other levy / expenses are not covered by the scheme
- Small and micro enterprises owned and / or operated by women are also eligible for a guarantee cover of 80% and all the credit/loans in the North East Region (NER) for credit facilities are eligible for a guarantee of Rs. 40 lakh. Other aspects such as retail trade, educational institutions, agriculture, training institutions, and self-help groups (SHGs) are not eligible for guarantee cover under the scheme
Prime Minister's Employment Generation Programme (PMEGP)
PMEGP is a credit linked subsidy program which was integrated with two other schemes, namely, Prime Minister's Rojgar Yojna (PMRY) and the Rural Employment Generation Programme )REGP), to generate employment among the educated youth of the country. Under PMEGP scheme, the beneficiary has to invest close to 5-10% of the project cost while the government grants a subsidy of 15-35% of the project. The participating banks offer the rest of the funds as term loans to the business owners.
Subsidy and funding under PMEGP
| Beneficiary Categories | Beneficiary’s Share
(of Total Project)
| Subsidy Rate
(from Govt.) – Urban
| Subsidy Rate
(from Govt.) – Rural
|
| General | 10% | 15% | 25% |
| Special | 5% | 25% | 35% |
To avail PMEGP loan, individuals and organizations should meets certain criteria which are listed below:
- Age Criteria: Min. 18 years & Education Qualification: 8th class passed for individuals
- Must be a part of Self-Help Group (SHG)
- Societies that are registered under Societies Registration Act, 1860
- Production Co-operative Societies
- Charitable Trusts
Sub-Schemes offered under Mudra Loan Yojana: Mudra loan or Mudra Yojana comes with sub-schemes designed for specific business needs and requirements. The section includes sub-schemes such as:
- Credit for Micro Enterprises: This sub-scheme focuses on maximizing the involvement of micro enterprises in the economic development. The additional benefits cover a large number of beneficiaries running micro enterprises. The major segments of the population that are involved in land transport, food production, textile, and community services may take advantage of the scheme and set up their own small business unit
- Mahila Uddyami Scheme: This scheme is designed specifically for women entrepreneurs. It has an objective of encouraging women, groups of women, joint liability groups, and self-help groups of women to set up micro business entities. Under this scheme, special interest concessions are also granted
- Refinance Scheme for Banks: Mudra Yojana also refinances MSME loan amounts of up to Rs. 10 lakh extended by the banks to the borrowers. However, only manufacturing and service sector MSME unit owners can obtain the benefits of this refinancing scheme
- Micro-Credit Scheme: Micro-credit schemes focus on Micro Finance Institutions (MFIs) and provide them with the financial support to make their lending operations available for individuals, group of individuals, or micro business entities
- Mudra Card: This is an extraordinary product that makes the funds from the MSME loan easily accessible to the cardholder and also offers significant flexibility. Mudra Card can be used as a credit card for the assigned overdraft limit and it can also be used as a debit card for ATM withdrawals
- Credit Guarantee Fund: The credit guarantee fund is created to reduce the risk for lending institutions. The fund provides loans worth more than Rs. 1 lakh crore to manage the risk faced by lending institutions
- Equipment Finance Scheme: This scheme is designed to help micro enterprises expand their business. Technically advanced equipment can be purchased through finance with the help of this scheme. It can help organizations in increasing their production and expand their horizons of profitability and sustainability
Documents Required for MSME Loan
- Duly filled Application form
- Identity Proof: Passport, driving licence, PAN Card, Voter’s identity card
- Residence Proof: Passport, lease agreement, Trade License, telephone and electricity bills, ration card and sales tax certificate
- Age Proof: Passport, Voter’s identity card, Photo PAN card
Financial Documents:
- Last 12 months’ bank statement
- Business registration proof
- Proprietor(s) PAN Card Copy
- Partnership deed copy
- Company PAN card copy
- P&L and balance sheet copy of last 2 years
- Sales tax documents
- Municipal tax document
MSME Toll Free No: 18001237376
General Enquiries: 011-23063288/011-23063643
Frequently Asked Questions (FAQs)
Ques. Is MSME registration voluntary or compulsory?
Ans. MSME registration is totally voluntary and businesses do it to utilise the benefits offered under it.
Ans. MSME registration is totally voluntary and businesses do it to utilise the benefits offered under it.
Ques. Is credit score important for MSMEs in getting MSME loan?
Ans. Yes, possessing a good credit score is always an added advantage for MSMEs.
Ans. Yes, possessing a good credit score is always an added advantage for MSMEs.
Ques. What is the validity of the Provincial Registration Certificate (PRC)?
Ans. The validation of a Provincial Registration Certificate (PRC) is for 5 years.
Ans. The validation of a Provincial Registration Certificate (PRC) is for 5 years.
Ques. What is the support available for technology upgrades?
Ans. The Government of India and MSME ministry runs a Credit Linked Capital Subsidy scheme (CLCSS) that supports the MSME enterprises in the country for technology upgrades. The schemes provide 15% capital subsidy to the eligible MSME enterprises to improve and upgrade the technology as per the industry standards. The maximum subsidy availed by an enterprise cannot go beyond the limit of Rs. 15 lakh. To avail these services, individuals can approach the nearest nodal agency / financial institution.
Ans. The Government of India and MSME ministry runs a Credit Linked Capital Subsidy scheme (CLCSS) that supports the MSME enterprises in the country for technology upgrades. The schemes provide 15% capital subsidy to the eligible MSME enterprises to improve and upgrade the technology as per the industry standards. The maximum subsidy availed by an enterprise cannot go beyond the limit of Rs. 15 lakh. To avail these services, individuals can approach the nearest nodal agency / financial institution.
Ques. Is there any provision for cluster development under the government schemes?
Ans. Under the Micro Small Enterprises – Cluster Development Programme (MSE-CDP), the support is provided for diagnostic study. The government is also trying to manage soft interventions such as creating general awareness, counselling, motivation, exposure visits, trust building, market development, and participation in seminars, workshops, and training programmes on technology upgrades.
Ans. Under the Micro Small Enterprises – Cluster Development Programme (MSE-CDP), the support is provided for diagnostic study. The government is also trying to manage soft interventions such as creating general awareness, counselling, motivation, exposure visits, trust building, market development, and participation in seminars, workshops, and training programmes on technology upgrades.
Ques. Is there any validity of MSME certificate?
Ans. The validity of MSME certificate is of 5 years.
Ans. The validity of MSME certificate is of 5 years.
Ques. What is the benefit of tool-rooms provided by the ministry?
Ans. The MSME Ministry provides high-tech tool-rooms to the MSME enterprises so that their products and services create a niche for themselves in the market. The tool-room initiative from the MSME ministry also provides skilled manpower to the enterprises for increasing their cap.
MSME Scheme by Govt. Of India - Download PDF
Ans. The MSME Ministry provides high-tech tool-rooms to the MSME enterprises so that their products and services create a niche for themselves in the market. The tool-room initiative from the MSME ministry also provides skilled manpower to the enterprises for increasing their cap.
Click Below links for articles
- 5 Best Saving Plans
- OPC Compliance Requirement
- 101 Excel Shortcuts for Improve your excel knowledge
- What is PPF Account ?
- What is GST?
- Tax Deducted At Source
- Documents Required for GST Registration.
- Closure of Private Company ?
Find Us on Social Media:
Comments
Post a Comment
Thanks for your precious reply, we will look over it and get back to you asap.