Starting or growing a business requires capital — and that’s where a business loan or MSME loan can help. Whether you’re running a small business, startup, or established enterprise, the Indian government and financial institutions offer various loan schemes to support business owners like you.
Here’s a step-by-step guide on how to apply, along with details on documents, business vintage, and interest rates (ROI).
📑 Documents Needed for a Business / MSME Loan
Lenders require some basic and financial documents to evaluate your eligibility. The list may slightly vary depending on whether you’re applying as an individual, proprietorship, partnership, or private limited company.
Basic Documents:
- PAN Card of the business owner and business entity
- Aadhaar Card of the applicant
- Passport-size photographs
Business Proof:
- GST Registration Certificate
- Udyam Registration (for MSME classification)
- Business Address Proof (Utility bill, rent agreement, or property papers)
- Shop and Establishment License (if applicable)
Financial Documents:
- Bank Statements (usually last 6–12 months)
- Income Tax Returns (ITR) (last 1–2 years)
- Balance Sheet & P&L Statement (audited if applicable)
- Existing Loan Statements (if any)
Tip: Some lenders offer loans with minimal documentation under schemes like MUDRA, SIDBI, or NBFC business loans.
🕰️ Vintage: How Old Should the Business Be?
Lenders typically look for a minimum business vintage of 6 months to 2 years.
Common Scenarios:
- 0–6 Months: Difficult to get a loan unless it’s a government scheme or collateral-based.
- 6–12 Months: Micro loans or working capital loans may be available.
- 1–2 Years: Easier to qualify for term loans, overdrafts, or MSME credit lines.
- 2+ Years: Good track record increases chances for higher loan amounts and better interest rates.
💰 ROI (Rate of Interest) for MSME / Business Loans
Interest rates vary based on your credit profile, lender, and business health. Here’s a general overview:
| Lender Type | Interest Rate (Approx.) | Notes |
|---|---|---|
| Public Banks (e.g., SBI, PNB) | 7.50% – 11% | Lower ROI, strict eligibility |
| Private Banks (e.g., HDFC, ICICI) | 10% – 18% | Quicker process, digital |
| NBFCs (e.g., LendingKart, FlexiLoans) | 12% – 24% | Easy documentation, higher rates |
| Government Schemes (MUDRA, PMEGP, CGTMSE) | 6% – 9% | Subsidized or interest-free in some cases |
Pro Tip: Always check for processing fees, prepayment charges, and hidden costs before signing.
✅ Final Checklist Before You Apply
- ✔ Business plan or use-case ready?
- ✔ All documents organized?
- ✔ Credit score above 650?
- ✔ Bank statement showing regular income?
- ✔ Chosen the right lender?
🚀 Conclusion
Getting a business or MSME loan in India is easier today than ever before, thanks to digital platforms and government support. Whether you’re applying through a bank, NBFC, or a fintech app, being prepared with the right documents and understanding the eligibility terms can significantly improve your chances.
If you’re just starting out, look for government-backed schemes like MUDRA or collateral-free loans through Udyam-registered MSME portals.
