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What is the interest rate on MSME loans?
MSME Interest Rates Explained
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Bajaj Finance offers low-interest rates and nominal fees and charges on its MSME loans. This collateral-free loan comes with an attractive interest rate starting at 14% - 23% p.a. and a nominal processing fee of up to 4.72% of the Loan Amount (Inclusive of Applicable Taxes). Here is the list of fees and charges:
Type of fee Applicable charges Rate of interest 14% to 23% per annum
For Emergency Credit Line Guarantee Scheme (ECLGS) 5.0: 8.50% p.a. to 13% p.a.
Processing fees Up to 4.72% of the loan amount (inclusive of applicable taxes) Bounce charges Rs. 1500/- per bounce.
“Bounce charges” shall mean charges for (i) dishonour of any payment instrument; or (ii) non-payment of instalment (s) on their respective due dates due to dishonour of payment mandate or non-registration of the payment mandate or any other reason.
Flexi Facility Charge Term Loan – Not applicable
Flexi Loan – Up to Rs 999/- to Rs 16,999/- (Inclusive of applicable taxes)
will be deducted upfront from loan amount.
Penal Charge Delay in payment of instalment(s) shall attract Penal Charge at the rate of 36% per annum per instalment from the respective due date until the date of receipt of the full instalment(s) amount. Prepayment charges Full Pre-Payment
• Term Loan: Up To 4.72% (Inclusive Of Applicable Taxes) On The Outstanding Loan Amount As On The Date Of Full Pre-Payment.
• Flexi Term (Dropline) Loan: Up To 4.72% (Inclusive Of Applicable Taxes) on the outstanding loan amount, As On The Date Of Full Pre-Payment.
• Flexi Hybrid Term Loan: Up To 4.72% (Inclusive Of Applicable Taxes) on the outstanding loan amount, As On The Date Of Full Pre-Payment.
Part Pre-Payment:
• Term Loan: Up To 4.72% (Inclusive Of Applicable Taxes) Of Principal Loan Amount Prepaid On The Date Of Such Part Pre-Payment.
• Not Applicable For Flexi Term (Dropline) Loan And Flexi Hybrid Term Loan
Stamp duty (as per respective state) Payable as per state laws and deducted upfront from loan amount Annual maintenance charges Term Loan: Not applicable
Flexi Term (Dropline) Loan: Up To 0.59% (Inclusive Of Applicable Taxes) Of The Dropline Limit (As Per The Repayment Schedule) On The Date Of Levy Of Such Charges.
Flexi Hybrid Term Loan: Up To 1.18% (Inclusive Of Applicable Taxes) Of The Dropline Limit During Initial Loan Tenor. Up To 0.59% (Inclusive Of Applicable Taxes) Of Dropline Limit During Subsequent Loan Tenor.
Credit Guarantee Scheme Fee Credit Guarantee Fund for Micro Units (CGFMU): Credit Guarantee Scheme fee - Up to 1.18% p.a. (pro rated daily till 31st March) (inclusive of all applicable taxes) of loan amount.
Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE): Credit Guarantee Scheme fee – Up to 0.885% (inclusive of all applicable taxes) of loan amount (for first 12 months).Credit Guarantee Scheme Renewal Fee Credit Guarantee Fund for Micro Units (CGFMU):
Credit Guarantee Scheme Renewal fee – Up to 1.18% p.a. (inclusive of all applicable taxes) on the outstanding loan amount/Dropline limit as on April 01 of the subsequent Financial Year.
*Renewal Fee to be collected only for 3 subsequent financial years.
**If the Remaining Tenure is less than 12 months, the CG Fee in subsequent years shall be charged prorated.
Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE):
Credit Guarantee Scheme Renewal fee – Up to 0.885% (inclusive of all applicable taxes) annually on the outstanding loan amount/Dropline limit as on the last day of the month preceding the anniversary date of pool submission
*If the Remaining Tenure is less than 12 months, the CG Fee in subsequent years shall be charged prorated.Note: For loans under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, only Stamp Duty charge is applicable.
Increased investment limits: The thresholds for MSME investment and turnover will be raised by 2.5 times and 2 times, respectively
Types of enterprises and revised limits
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The MSME classification was revised in Budget 2025, raising investment and turnover limits for all three categories. Effective from 1 April 2025, an enterprise must remain within both the prescribed investment and annual turnover thresholds for its applicable category.
MSME category Investment limit Annual turnover limit Micro enterprise Up to Rs. 2.5 crore Up to Rs. 10 crore Small enterprise Up to Rs. 25 crore Up to Rs. 100 crore Medium enterprise Up to Rs. 125 crore Up to Rs. 500 crore Your enterprise classification determines eligibility for credit guarantee schemes such as CGFMU and CGTMSE, which can affect the applicable MSME loan interest rate and fees.
Additional measures for MSMEs in budget 2025
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Union Budget 2026–27 introduced three major MSME measures: a dedicated SME Growth Fund, additional equity support, and stronger TReDS-based liquidity mechanisms.
- SME Growth Fund: A new Rs. 10,000 crore fund will support scalable MSMEs and help create future business champions.
- Equity support: The Self-Reliant India Fund received an additional Rs. 2,000 crore to support micro enterprises.
- TReDS reforms: Four measures cover mandatory CPSE settlements, CGTMSE-backed invoice discounting, GeM integration, and asset-backed securities for receivables.
These measures can improve MSME access to growth capital and working-capital liquidity; eligible businesses may also explore a Bajaj Finance MSME Loan.
MSME loan EMI calculation
An MSME loan EMI is the fixed monthly repayment calculated using the principal, monthly MSME interest rate, and tenure through the formula: EMI = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ−1].
For example, at a 14% p.a. MSME loan interest rate on a Rs. 10 lakh loan over 60 months, the approximate monthly EMI is Rs. 23,268. The payment includes both principal and interest and generally remains fixed throughout the chosen tenure. A higher interest rate or shorter tenure increases the EMI, while a longer tenure, such as 96 months, reduces the monthly payment but increases the total interest payable.
For Flexi loans, the monthly payment may vary based on the amount withdrawn and the applicable repayment structure. You can use the Bajaj Finance Business Loan EMI calculator to compare loan amounts, interest rates, and tenures before applying.
Does credit score impact the MSME loan interest rate?
Yes, credit score impacts the MSME loan interest rate because it helps lenders assess repayment behaviour and the risk of default. A higher score generally indicates stronger creditworthiness and may support a more favourable rate within the applicable range.
| Factor | How it affects the rate |
|---|---|
| Credit score | A CIBIL score of 685 or higher meets the stated benchmark, but a stronger profile may support better terms |
| Loan amount | Larger loans may require closer assessment of repayment capacity and financial records |
| Business vintage | Businesses operating for at least three years with stable cash flows are generally viewed more favourably |
| Credit guarantee | Eligible ECLGS 5.0 borrowers may receive rates ranging from 8.50% to 13% p.a. |
Bajaj Finance MSME interest rates generally range from 14% to 23% p.a.; check your eligibility and personalised offer before applying.
How can you get the lowest MSME loan interest rate?
The strongest way to secure a lower MSME loan interest rate is to maintain a healthy credit profile and demonstrate reliable business cash flow.
- Strengthen your credit score: A score above the minimum benchmark of 685 may help you secure a rate closer to 14% p.a. than 23% p.a.
- Show business stability: Maintain consistent turnover and at least three years of business operations.
- Check ECLGS eligibility: Eligible ECLGS 5.0 borrowers may qualify for an MSME loan rate of 8.50%-13% p.a.
- Compare loan variants: A Flexi Hybrid Loan may reduce early cash outflow through interest-only instalments.
- Review fees: The processing fee is up to 4.72%, but the applicable charge may vary.
- Check pre-approved offers: Review personalised terms on the Bajaj Finserv website before applying.
Compare your Bajaj Finance offer, tenure, rate, and total borrowing cost before proceeding.
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Frequently Asked Questions
Overview
What is the impact of MSME loan interest rate on your EMI?
The interest rate on MSME (Micro, Small, and Medium Enterprises) loans directly impacts the Equated Monthly Installment (EMI) amount paid by borrowers. A lower interest rate reduces the EMI, making the loan more affordable and reducing the overall cost of borrowing. Conversely, a higher interest rate increases the EMI, potentially straining the borrower's finances and increasing the total repayment amount. Therefore, borrowers often seek competitive interest rates when availing of MSME loans to minimize the financial burden and manage their cash flow effectively, ultimately impacting the sustainability and growth potential of their businesses.
Do MSME loan interest rates vary based on the type of business or industry?
Yes, MSME loan interest rates can vary depending on factors such as the borrower's creditworthiness, the loan amount, and prevailing market conditions.
What is the current MSME loan interest rate?
The current MSME loan interest rate varies depending on the lender, prevailing market conditions, and the borrower's credit profile.
What factors influence the interest rates on MSME loans?
Factors influencing MSME loan interest rates include the borrower's creditworthiness, loan amount, loan tenure, prevailing market conditions, and the lender's policies.
What is the interest rate for MSME business loan?
The interest rate for an MSME business loan typically ranges from 14%–23% p.a. for standard loans, while eligible ECLGS 5.0 loans may have rates between 8.50%–13% p.a. Bajaj Finance business loan interest rates depend on factors such as credit profile, business vintage, loan amount and repayment capacity.
What is the processing fee on a Bajaj Finance MSME loan?
In addition to the MSME loan interest rate, Bajaj Finance charges a processing fee of up to 4.72% of the loan amount, inclusive of applicable taxes. Borrowers comparing the processing fee with the MSME loan interest rate should also account for bounce charges of Rs. 1,500 per bounce. Overdue instalments attract a penal charge of 36% p.a. until payment.
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Bajaj Finance Limited has the sole and absolute discretion, without assigning any reason to accept or reject any application. Terms and conditions apply*.