How to get a small Business Loan?

MSME Business Loans

The “MSME Business Loans,” which was first revealed in September 2018, is probably the most talked about today on a business lending scheme. The loans under this scheme are provided for financial aid and support for MSME growth in the country. The scheme for financial support up to 1 crore can be used both by new and existing companies. The process itself takes 8-12 days, while approval or disapproval is granted within the first 59 minutes of the application. It is a refinancing scheme in which five authorized banks of the public sector grant the funds. The interest rate depends on the nature and credit rating of your business. No information on the subsidizing of the principal amount or interest subsidy has been provided.

To apply for a business loan in accordance with this scheme, you need GST checks, income tax verifications, bank accounts for the last 6 months, ownership documents and KYC details. For additional information on the application and approvals, visit the SIDBI loan portal.


Microunits Development and Refinance Agency (MUDRA) is a government of India agency that provides corporate financial assistance to micro-enterprises. The loans under the scheme are provided under the pretext of “funding the unfunded.” Because small businesses and start-ups often rely on their own financing devices, the government has developed the concept of low-cost credit for these companies. MUDRA loans are also business loans approved and distributed by public sector banks, private sector banks, cooperative societies, small banks, regular business banks and rural banks. The loans are usually provided to micro and small enterprises in the fields of manufacture, trade and services. The MUDRA loans are organized accordingly,

Loans from Sishu up to Rs. 50,000/-

loans from Kishor to Rs. 5,00,000/-

Loans Tarun up to Rs. 10,00,000/-

Micro and small enterprises Credit Guarantee Fund Scheme

The CGMSE was launched as a monetary support scheme for micro and small companies in the year 2000. It provides guaranteed credit both for new and existing business units which fulfill its eligibility criteria. The scheme provides for working capital loans with no collateral up to 10 lakhs. However, only primary security and land and building mortgage associated with the building is obtained for all credit facilities over the amount of 10 lakhs and up to € 1 crore and those eligible accounts are covered by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). The asset created via the credit facility connected to the business unit is also treated as security when the amount of the loan exceeds 10 lakhs.

The corporate loans under this scheme are funded by both public and private sector banks protected by the scheme.

National Small Industries Corporation subsidy

The NSIC subsidy offers two types of financial benefits to small businesses – raw materials and marketing support. The raw material aid system of NSIC includes both domestic and imported raw materials. Marketing support provides funds to SMEs to improve their competitiveness and the market value of their products and services. The NSIC focuses primarily on financing small and medium-sized enterprises that want to improve / grow their production quality and quantity.

Credit link capital subsidy scheme for technology upgradation

The Scheme aims to promote technological development in MSEs by providing the early capital subsidy of 15% for the induction of well-established and improved technology in the 51 sub-sectors / products that are approved, based on institutional financing of the up to Rs 1 crore they use. This means the main goal is to update their plant and machinery with the most modern or un-extended technology as well as new MSEs with suitable qualifying and tested technology that have been properly accepted under the scheme guidelines.
The scheme is a demand-driven scheme without a maximum limit on total annual subsidy disbursement.

The type of aid

The revised scheme aims at promoting technological improvements by providing MSEs with 15% upwards capital subsidy for institutional financing for the induction of well-established and improved technologies in specific sub sectors / productions approved under the scheme, including small, khadi, village, and coir units.

Types of Banks and financials that providing Small Business Loan

BANK/FINANCE  Rate of Interest Loan Amount Tenure
HDFC Bank 15.65% p.a. – 21.20% p.a Up to Rs.50 lakh 12 months – 48 months
Bajaj Finserv 18% p.a. onwards Up to Rs.30 lakh As per the terms and conditions set by Bajaj Finserv
Capital Float 18% p.a. – 24% p.a. Rs.5 lakh – Rs.50 lakh 12 months – 36 months
Capital First As per the terms and conditions set by Capital First Rs.3 lakh – Rs.75 lakh 12 months – 60 months
RBL Bank As per the terms and conditions set by RBL Bank Up to Rs.20 lakh 12 months – 84 months
IIFL Finance 16% p.a. – 26% p.a. Up to Rs.50 lakh 12 months – 48 months
Bank of Baroda As per the terms and conditions set by Bank of Baroda Rs.1 lakh – Rs.10 lakh As per the terms and conditions set by Bank of Baroda
Axis Bank As per the terms and conditions set by Axis Bank Rs.50,000 – Rs.50 lakh As per the terms and conditions set by Axis Bank

The following are online and offline steps to apply for a Business loan:

Process through Online

If the financial lender has the facility to apply online, visit the website.

Select corporate loans or small business loans under the loans heading.

Download the application form and complete the details requested.

Send application form. Submit application form.

Once the customer service team of the lender has indicated, submit the verification required.

Where appropriate, the loan is accepted and the balance of the loan is paid out within a couple of days.

Process through directly visiting

Visit the financial lender branch and apply for the business loan.

Please complete the details required, certify the form and submit all necessary documents.

The lender would then check the documents submitted.

When deemed compliant, the bank must pay the balance of the loan.


Getting a small business loan can be a daunting task, but with the right tools and advice, it can be relatively easy. This article outlines some of the most important factors to consider when applying for a small business loan, including how much money you need, what your credit score is, and whether or not you have collateral. Armed with this information, you will be in a better position to make an informed decision about which loan option is best for your business. Thanks for reading!

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