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Micro, small, and medium-sized enterprises (MSMEs) form the backbone of India’s economy, owing to their considerable contribution to the country’s GDP, exports, and employment generation. At present, there are approximately 6.3 crore MSMEs in India, contributing to around 30% of India’s GDP and more than 40% of total exports. Moreover, MSMEs are the second-largest employer in India after the agriculture sector. To help these MSMEs grow and flourish without being affected by financial hurdles, Tata Capital offers MSME loans or SME loans at competitive interest rates.
An MSME loan or SME loan is a unique type of business loan provided exclusively to startup owners or small and medium-sized business enterprises in India. That is why an MSME loan/SME loan is also known as a startup business loan or simply a startup loan. An MSME loan/SME loan can be used as working capital or for long-term business requirements, such as buying equipment, upgrading infrastructure, and hiring manpower.
With Tata Capital’s MSME loan/SME loan, you can acquire funding of up to Rs. 90 lakhs and meet your various short-term and long-term business requirements. Our business loans for startups come with features like easy eligibility, minimum documentation, and doorstep services. Moreover, our MSME loan interest rate is highly competitive, starting from just 16% per annum.
Along with the affordable interest rates and easy eligibility, our business loans for startups come with the following product offerings:
As an MSME or SME owner, you can avail of an MSME loan/SME loan from Tata Capital and fulfill all your business's financial requirements. Our MSME business loan is easy to get and offers the following advantages:
Age- To be eligible for our startup business loan, your age must be between 21 and 65 years
Business Profitability - We provide business loans for startups to those businesses which have shown consistent profits for at least the past three years
Business Turnover - Your business turnover must indicate an upward trend if you want to apply for our MSME loan scheme
Balance Sheet - The balance sheet of your business must be audited by a registered Chartered Accountant if you want to avail of our MSME loan for startup business
Please note that our MSME loan process may involve some other eligibility requirements as well.
Just like any other loan, business loans for startups involve certain charges and fees. These charges can be classified into three categories - General Charges, Miscellaneous Charges, and Foreclosure Charges. The details of the charges applicable on Tata Capital’s business startup loan are mentioned below:
General Charges
Below are the general charges applicable on our MSME loan/SME loan:
| Type of Fee | Applicable Charges |
|---|---|
|
Interest Rate |
Starts at 16% p.a.* |
|
Processing Fee |
Upto 4% of the loan amount |
|
Stamp Duty |
As Applicable |
|
Penal/Additional Interest Rate |
3% on Overdue amount per month |
Below are the miscellaneous charges that would apply to your MSME loan/SME loan:
| Type of Fee | Applicable Charges |
|---|---|
|
Prepayment / Foreclosure Charges |
Foreclosure charges on Term Loan Facility: No foreclosure is allowed in first 9 months.6.5% charges if foreclosed within 9 months
Foreclosure charges on Top Up: Foreclosure charges shall be levied only if new rate is lower than existing rate.
**Foreclosure Charges in Dropline Facility: No foreclosure is allowed in first 9 months.6.5%charges if foreclosed within 9 months |
|
Processing Charges |
As Applicable |
|
Payment Instrument swapping
|
Rs. 550/- |
|
Dishonour Charges |
Rs 600 for every Cheque/ Payment Instrument Dishonor |
|
Mandate rejection service charges |
Rs. 450/- (Charges will be levied if new mandate form is not registered within 30 days from the date of rejection of previous mandate form by Borrower’s bank for any reasons whatsoever.) |
|
Annual Maintenance Charges (Dropline facility) |
First Year: 0.75% or 1000 whichever is higher per year will be deducted from the limit and shall be payable at the end of the 13th month
|
|
Document processing charges |
Rs. 1999/- |
|
Cancellation charges |
2% of the Facility amount OR Rs. 5750/- Whichever is higher |
|
Duplicate Repayment Schedule |
Rs. 550/- |
|
Duplicate NOC |
Rs. 550/- |
|
Statement of Account (SOA) |
Customer portal – Nil Branch walk in – Rs. 250 /- |
|
Foreclosure Letter Charge |
Customer portal – Nil Branch walk in - Rs 199/- |
|
Post Dated Cheque Charges Rs |
Charges Rs 850 |
|
section 138 and section 25 filing |
At Actual |
|
Arbitration Filing |
At Actual |
|
Receiver Order |
At Actual |
|
Notice |
At Actual |
|
Legal Notice |
At Actual |
|
Lawyer fees |
At Actual |
|
Execution of award |
At Actual |
Note:
Below are the foreclosure charges applicable on our MSME loan/SME loan:
| Type of Fee | Applicable Charges |
|---|---|
|
Part-Prepayment/ Prepayment/Foreclosure Charges |
Foreclosure charges on Term Loan Facility:
Part-Prepayment/ Prepayment/ Foreclosure Charges in Dropline Facility:
|
Tata Capital offers a hassle-free online application process with minimal documentation. While the exact documents required can vary from case to case, here is the standard list of documents you need to submit when applying for an MSME loan-
Please note that this business loan documents list is indicative. The exact documents required for business loan may vary from case to case based on our assessment program. However, the KYC documents and six-month bank statements are common business loan documents required in each case.
Several lenders provide loan for SME in India. With Tata Capital, the MSME loan apply process is simple and hassle-free. You can do it in any of the following ways:
Several lenders provide loan for SME in India. With Tata Capital, the MSME loan apply process is simple and hassle-free. You can do it in any of the following ways:
While Tata Capital offers simple eligibility criteria and an easy online application process to obtain an MSME loan, borrowers must consider a few steps to ensure quick loan approval without any hassles.
| Do's | Don'ts |
|---|---|
|
Assess the Loan Amount: Determine your loan requirements based on the business plan, growth potential, and the timeline for revenue generation. This will help you ensure no overestimation of the loan amount when applying. |
Multiple Applications: Avoid applying for an MSME loan with multiple lenders, as it can seriously impact your credit score. A poor credit score can further affect your chances of loan approval or fetch higher interest rates, which can be damaging to your business growth. |
|
Keep Documentation Handy: Make a list of documents required for the loan process and keep them handy when applying to ensure smooth and hassle-free loan approval. |
Fine Print: While Tata Capital offers favourable and transparent loan terms, it is important for the borrower to read the fine print carefully to understand the terms, especially those related to interest rates and additional charges. |
|
Check Credit Score: Most lenders have set credit score criteria to verify your eligibility for the loan. Make sure to check the lender's credit score requirements before applying. |
Repayment Schedule: Not adhering to the repayment schedule can severely affect your credit score and add to your financial burden with outstanding EMIs and penalty charges. |
|
Business Plan: Make sure to keep handy the details of how you plan to use the funds during the MSME loan application to ensure seamless approval. |
If your business desperately needs money to fund operations, it can certainly benefit from an MSME loan. There are various options available with MSME loans that make them attractive for enterprises of all levels.
If your business qualifies for the requirements set by the Government of India, then you can avail of an MSME loan. Micro, small and medium enterprises have different criteria, so if you come under the investment and annual turnover set by the Government, then you qualify.
No, there is interest on the MSME loans, but they are available at lower interest rates. These interest rates are subject to the lender issuing the MSME loan.
MSME offering schemes are diverse, making them attractive to people in different areas to improve their prospects. For example, the PMEGP/MUDRA scheme provides financial assistance for businesses to expand their operations. Depending on your needs, you can pick a relevant MSME scheme.
The interest rate on MSME loans is variable, depending on the lender. They can start as low as around 7.5% - 17%.
A small business might not have the funds necessary to expand its business operations. When it is in need of money, an MSME loan can offer them the desired space and flexibility to pay back their loans on time without compensating for growth.
MSME loans typically require the following:
An MSME loan can be useful for various reasons, from expanding your business, purchasing new equipment, paying employee salaries and more. Regardless of the need, an MSME loan can be perfect if you need immediate cash at hand.
You can obtain an MSME loan directly from the lenders or institutions offering the loan. You need to ensure you meet the specific eligibility requirements set by the lender to avail of the loan.
Yes, if you have a new company, you can make use of MSME loans to fund your business operations. However, depending on the lender, your business must be running for two or three years at the time of application.
Micro, Small, and Medium Enterprises (MSMEs) and Small and Medium Enterprises (SMEs) that meet specific eligibility criteria set by the lender can avail of MSME loans to fulfil the financial needs of their business.
Yes, Tata Capital offers a collateral-free MSME loan to allow you to get access to the funds without the hassle of pledging security.
You can apply for a collateral-free MSME loan with Tata Capital. Check your eligibility criteria and apply now online.
The minimum CIBIL score requirement for an MSME loan can vary from one lender to another.
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