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In summary
The MSME loan interest rate at Bajaj Finance ranges from 14% to 23.50% p.a., with loan amounts from Rs. 2 lakh to Rs. 80 lakh. Eligible borrowers can choose a tenure of up to 96 months, subject to applicable fees and charges.
- MSME loan rate of interest: The standard rate is fixed at 14%–23.50% p.a. and depends on the borrower's credit profile.
- ECLGS 5.0 interest rate: Eligible existing borrowers can access rates ranging from 8.50% to 13% p.a., subject to scheme conditions.
- Loan amount and tenure: Bajaj Finance offers MSME loans from Rs. 2 lakh to Rs. 80 lakh, with repayment tenure of up to 96 months.
- Processing fee: The processing fee can be up to 4.72% of the loan amount, inclusive of applicable taxes.
Use the Bajaj Finance Business Loan EMI calculator to estimate your instalments and compare your MSME loan rate of interest across different loan amounts and tenures.
What is the interest rate on MSME loans?
MSME Interest Rates Explained
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Bajaj Finance offers MSME loans at a fixed interest rate ranging from 14% to 23.50% p.a., depending on the applicant's credit profile and other eligibility factors. The processing fee is up to 4.72% of the loan amount, inclusive of applicable taxes. The following table outlines the applicable fees and charges.
Type of fee Applicable charges Rate of interest 14% to 23.50% p.a. For eligible existing borrowers under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0: 8.50% p.a. to 13% p.a. Processing fee Up to 4.72% of the loan amount (inclusive of applicable taxes) Bounce charges Rs. 1,500 per bounce. Bounce charges apply for dishonour of a payment instrument or non-payment of instalments on their respective due dates due to dishonour 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), deducted upfront from the loan amount. Penal charge Delay in payment of instalments attracts a penal charge of 36% p.a. per overdue instalment, from its due date until the full instalment amount is received. Prepayment charges Full prepayment: Term Loan, Flexi Term (Dropline) Loan and Flexi Hybrid Term Loan: up to 4.72% (inclusive of applicable taxes) on the outstanding loan amount on the date of full prepayment. Part-prepayment: Term Loan: up to 4.72% (inclusive of applicable taxes) of the principal amount prepaid. No part-prepayment charge applies to Flexi Term (Dropline) Loan and Flexi Hybrid Term Loan. Stamp duty Payable as per the respective state laws and deducted upfront from the 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. Flexi Hybrid Term Loan: up to 1.18% (inclusive of applicable taxes) of the Dropline Limit during the initial loan tenure and up to 0.59% during the subsequent loan tenure. Credit Guarantee Scheme Fee Credit Guarantee Fund for Micro Units (CGFMU): Up to 1.18% p.a. (inclusive of applicable taxes) of the loan amount, calculated daily on a pro-rata basis until 31 March. Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE): Up to 0.885% (inclusive of applicable taxes) of the loan amount for the first 12 months. Credit Guarantee Scheme Renewal Fee CGFMU: Up to 1.18% p.a. (inclusive of applicable taxes) on the outstanding loan amount or Dropline Limit as on 1 April of the subsequent financial year. The renewal fee is collected for up to 3 subsequent financial years. If the remaining tenure is less than 12 months, the fee is charged on a pro-rata basis. CGTMSE: Up to 0.885% (inclusive of applicable taxes) annually on the outstanding loan amount or 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 fee is charged on a pro-rata basis. Note: For loans under ECLGS 5.0, only stamp duty is applicable. The investment and turnover thresholds for MSME classification were revised with effect from 1 April 2025. The next section explains the updated limits.
What is the ECLGS 5.0 interest rate cap?
The ECLGS 5.0 interest rate for loans offered by NBFCs is capped at 13% p.a., while eligible MSME loans from banks linked to an external benchmark have an interest rate ceiling of 9% p.a. The government-backed scheme is supported by the National Credit Guarantee Trustee Company (NCGTC), which provides 100% guarantee cover for eligible MSMEs. Additional credit is capped at Rs. 100 crore per borrower, subject to scheme conditions.
| Point | Condition |
| Who can use it | An existing borrower whose credit facilities were standard, excluding SMA-2, on 31 March 2026. New borrowers are not covered. |
| Additional credit | Up to 20% of the peak fund-based working capital outstanding in Q4 of FY 2025–26, capped at Rs. 100 crore per borrower. |
| Guarantee cover | 100% for MSMEs. |
| Interest rate ceiling | For MSME loans linked to the external benchmark lending rate, up to 0.75% above the benchmark, subject to a ceiling of 9% p.a. For an NBFC loan, the rate cannot exceed 13% p.a. Rates are floating, within the applicable ceiling. |
| Tenure | 5 years, with a 1-year moratorium, for MSMEs. |
| Guarantee fee | NCGTC charges no guarantee fee under the scheme. |
| Last date | Sanctions run until 31 March 2027, or until guarantees reach Rs. 2.55 lakh crore, whichever comes first. |
The ECLGS 5.0 rate is separate from the standard MSME loan interest rate offered by lenders. Check the applicable rate and your eligibility with your lender before applying.
What are the revised MSME classification limits from April 2025?
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The Government of India revised MSME classification thresholds with effect from 1 April 2025, increasing the investment and annual turnover limits for micro, small and medium enterprises. An enterprise must meet both the prescribed investment and turnover criteria to qualify under its respective 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 MSME classification can determine eligibility for credit guarantee schemes such as CGFMU and CGTMSE, which may influence the applicable loan terms and fees.
What new MSME measures were announced in the Union Budget 2026–27?
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The Union Budget 2026–27 announced three key measures to support MSME growth: a dedicated SME Growth Fund, additional equity support and reforms to improve liquidity through the Trade Receivables Discounting System (TReDS).
- 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 aim to improve access to growth capital and working-capital liquidity. Eligible businesses can also explore an MSME Loan from Bajaj Finance to meet their financing requirements.
How is MSME loan EMI calculated?
Your MSME loan rate directly determines your monthly EMI through the reducing balance formula, which considers the principal, monthly interest rate and repayment tenure.
The formula is: EMI = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ−1], where P is the principal, r is the monthly interest rate and n is the number of monthly instalments.
For example, at an MSME loan interest rate of 14% p.a., a Rs. 10 lakh loan over 60 months has an approximate monthly EMI of Rs. 23,268. Each instalment covers both principal and interest. For Flexi loans, the monthly payment may vary based on the amount withdrawn and the applicable repayment structure.
Use the Bajaj Finance Business Loan EMI calculator to compare loan amounts, rates and tenures. A 96-month tenure reduces the EMI to Rs. 17,372 but increases total interest from Rs. 3,96,080 to Rs. 6,67,712 compared with a 60-month tenure. Choose a tenure your cash flow can support.
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How does the interest rate and tenure affect your total repayment?
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A higher MSME loan rate of interest and a longer repayment tenure both increase the total amount you repay, although a longer tenure reduces the monthly EMI. For a Rs. 10 lakh loan over 60 months, the EMI rises from Rs. 23,268 at 14% p.a. to Rs. 25,393 at 18% p.a. and Rs. 28,478 at 23.50% p.a. The corresponding total interest increases from Rs. 3,96,080 to Rs. 7,08,680. The following examples illustrate how the interest rate and tenure affect repayment.
Illustrative loan of Rs. 10 lakh at three interest rates
Item At 14% p.a. At 18% p.a. At 23.50% p.a. Tenure 60 months 60 months 60 months Monthly EMI Rs. 23,268 Rs. 25,393 Rs. 28,478 Total repayment Rs. 13,96,080 Rs. 15,23,580 Rs. 17,08,680 Total interest Rs. 3,96,080 Rs. 5,23,580 Rs. 7,08,680 The same loan at 14% p.a. over three tenures
Item 36 months 60 months 96 months Monthly EMI Rs. 34,178 Rs. 23,268 Rs. 17,372 Total repayment Rs. 12,30,408 Rs. 13,96,080 Rs. 16,67,712 Total interest Rs. 2,30,408 Rs. 3,96,080 Rs. 6,67,712 Try your own figures in the Business Loan EMI Calculator. The actual rate depends on the lender and your credit profile, and applicable charges are extra.
Flat rate vs reducing balance rate: what is the difference?
A flat rate calculates interest on the original loan amount throughout the tenure, while a reducing balance rate calculates interest on the outstanding principal after each repayment. As a result, a loan at the same stated annual rate can cost considerably more under the flat rate method. For an illustrative Rs. 10 lakh loan over 60 months, the difference in EMI and total interest is shown below.
| Item | 14% flat rate | 14% reducing balance rate |
| Interest is charged on | The full Rs. 10,00,000 for 5 years | The outstanding balance each month |
| Monthly EMI | Rs. 28,333 (rounded) | Rs. 23,268 |
| Total interest | Rs. 7,00,000 | Rs. 3,96,080 |
A 14% flat rate loan costs approximately the same as a reducing balance rate of 23.25% p.a. When comparing offers, ask the lender which calculation method applies. The EMI formula used in this article is based on the reducing balance method.
What are the charges on a Rs. 10 lakh MSME loan?
The following illustration shows how an MSME loan processing fee and other applicable charges can affect the cost of a Rs. 10 lakh loan. Amounts marked “up to” represent the maximum charges based on the stated rates; the actual amount may be lower. Guarantee fees depend on the applicable scheme, while stamp duty varies by state.
| Charge | What the applicable terms say | On Rs. 10,00,000 |
| Processing fee | Up to 4.72% of the loan amount, inclusive of applicable taxes | Up to Rs. 47,200 |
| Credit guarantee fee, CGTMSE | Up to 0.885% of the loan amount for the first 12 months, inclusive of applicable taxes | Up to Rs. 8,850 |
| Credit guarantee fee, CGFMU | Up to 1.18% p.a. of the loan amount, inclusive of applicable taxes | Up to Rs. 11,800 a year |
| Penal charge | 36% p.a. on the overdue instalment | About Rs. 688 on one EMI of Rs. 23,268 paid 30 days late, assuming a 365-day year |
| Bounce charge | Rs. 1,500 per bounce | Rs. 1,500 |
| Stamp duty | As per state law; deducted upfront from the loan amount | Varies by state |
These charges are over and above the interest payable. Check your sanction letter and Key Facts Statement (KFS) for the charges applicable to your loan and compare the overall borrowing cost, not just the MSME loan interest rate.
Hidden charges on an MSME loan that raise your effective borrowing cost
The stated interest rate is not the full cost of an MSME loan. Hidden charges on an MSME loan, including the processing fee, credit guarantee fee, Flexi facility charge, penal charge, bounce charge and stamp duty, can increase the total amount payable to Bajaj Finance.
| Charge | What triggers it | Illustration on Rs. 10 lakh |
| MSME loan processing fee | Deducted at disbursement | Up to Rs. 47,200 |
| CGTMSE guarantee fee | Applicable for the first 12 months | Up to Rs. 8,850 |
| CGFMU guarantee fee | Annual charge, where applicable | Up to Rs. 11,800 a year |
| Flexi facility charge | Deducted upfront for applicable Flexi loans | Rs. 999–Rs. 16,999 |
| Penal charge | Late payment of an instalment at 36% p.a. | About Rs. 688 on one EMI of Rs. 23,268 paid 30 days late |
| Bounce charge | Dishonoured payment | Rs. 1,500 per bounce |
| Stamp duty | Deducted upfront as per state law | Varies by state |
Add all applicable charges to the interest cost and compare offers using the Annual Percentage Rate (APR) in the Key Facts Statement. The APR gives a more complete view of the borrowing cost than the MSME loan interest rate alone.
What factors decide the MSME loan interest rate?
Five key MSME loan interest rate factors influence the offer: credit score, business vintage, loan amount and tenure, loan variant, and eligibility for government-backed schemes. At Bajaj Finance, the standard rate ranges from 14% to 23.50% p.a.; a CIBIL score of 685 is the stated benchmark, and the business generally needs at least 3 years of operations. The following table explains how these factors may affect the rate and what applicants can do.
| Factor | How it affects the rate | What you can do | Impact level |
| Credit score | A CIBIL score of 685 is the benchmark; a stronger score may support a rate closer to 14% p.a. | Maintain a good repayment record and review your credit report. | High |
| Business vintage | A minimum business vintage of 3 years is generally required for the stated product criteria. | Maintain business records and demonstrate stable cash flows. | High |
| Loan amount and tenure | Larger amounts and longer tenures may require closer assessment of repayment capacity. | Borrow only what your business needs and select a suitable tenure. | Medium |
| Loan variant | A Flexi Hybrid Loan has an interest-only initial phase, while a Term Loan has regular principal-and-interest EMIs from the start. | Choose the variant that matches your cash flow and repayment needs. | Medium |
| Government scheme eligibility | Eligible ECLGS 5.0 borrowers may access rates of 8.50%–13% p.a. | Check scheme eligibility and lender participation before applying. | High, if eligible |
Your MSME loan rate of interest will depend on your overall profile and the applicable product or scheme terms, so check the personalised offer from Bajaj Finance before proceeding.
Does credit score impact the MSME loan interest rate?
Yes, your credit score can affect the MSME loan interest rate because lenders use it to assess your repayment history and credit risk. A CIBIL score of 685 is the stated benchmark for the relevant Bajaj Finance MSME loan criteria. A stronger credit profile may support an offer closer to 14% p.a., while the standard rate can go up to 23.50% p.a. Other MSME loan interest rate factors, such as business vintage, loan amount and scheme eligibility, may also influence the offer.
| Factor | How it affects the rate |
| Credit score | A CIBIL score of 685 or higher meets the stated benchmark; 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 3 years with stable cash flows may be viewed more favourably. |
| Credit guarantee | Eligible ECLGS 5.0 borrowers may receive rates ranging from 8.50% to 13% p.a., subject to scheme conditions. |
Illustrative example: How a stronger credit profile may affect the offer
Rajan, a 41-year-old owner of a small auto-component manufacturing unit in Pune, applies for a hypothetical Rs. 20 lakh MSME loan from Bajaj Finance. He has a CIBIL score of 730 and has operated his business for 6 years. If offered an illustrative rate of 14% p.a., his EMI would be approximately Rs. 46,536 over 60 months. This example explains how a strong profile may support a rate at the lower end of the Bajaj Finance MSME loan interest rate range; it is not a guaranteed offer or an actual customer case.
Do unsecured MSME loans carry a higher interest rate?
Yes, an unsecured MSME loan may carry a higher MSME loan interest rate because the lender does not have collateral to reduce its credit risk. The Bajaj Finance MSME business loan interest rate ranges from 14% to 23.50% p.a. Secured loans from banks may offer lower rates depending on the collateral and borrower's profile.
| Feature | Unsecured MSME loan | Secured MSME loan |
| Collateral required | No collateral; Bajaj Finance MSME loans are collateral-free. | Immovable property or other lender-approved assets may be required. |
| Interest rate range | 14%–23.50% p.a. at Bajaj Finance. | Typically lower, depending on collateral cover, credit profile and lender. |
| Credit guarantee | CGTMSE or CGFMU cover may be available, subject to eligibility and scheme terms. | A credit guarantee may not apply, depending on the loan. |
| Processing fee | Up to 4.72% of the loan amount, inclusive of applicable taxes. | Varies by lender and loan type. |
| Suitable for | Businesses that do not have assets to pledge. | Businesses with eligible property or equipment to offer as collateral. |
The Bajaj Finance MSME loan interest rate depends on your credit profile and applicable loan terms, so compare the overall borrowing cost before choosing a facility.
Our loan variants
How does the RBI repo rate affect MSME loan interest rates?
The Reserve Bank of India (RBI) repo rate is its policy rate and stood at 5.50% from 7 October 2026, but it is not the MSME loan interest rate charged by your lender. Its impact on borrowing costs depends on whether a loan has a fixed or floating rate and, for floating-rate loans, whether it is linked to an external benchmark such as the Repo Linked Lending Rate (RLLR).
| If you want | Then look at | What happens after a repo rate change |
| The same EMI for the whole tenure | A fixed-rate loan, such as the Bajaj Finance unsecured business loan. | Your EMI stays the same for the tenure, subject to the loan terms. |
| A rate that follows the market | A floating-rate loan. | RBI requires banks to link floating-rate loans to micro and small enterprises to an external benchmark, such as the repo rate, and reset the rate at least once every three months. The credit risk premium changes only when the borrower's credit assessment changes substantially. |
| A rate with a ceiling | A loan under ECLGS 5.0, if eligible. | The rate is floating within the applicable ceiling: 9% p.a. for MSME loans linked to an external benchmark and 13% p.a. for an NBFC loan. |
Bajaj Finance offers its standard unsecured MSME loans at fixed rates ranging from 14% to 23.50% p.a.; your MSME loan rate of interest does not automatically change when the RBI revises the repo rate.
How can you get the lowest MSME loan interest rate?
To get the lowest possible MSME loan interest rate, maintain a CIBIL score of at least 685, build a clean repayment record and demonstrate stable business cash flow. These steps can strengthen your application, although the final rate depends on the lender's assessment.
- Strengthen your credit score: A score above the 650 benchmark may support an offer closer to 14% p.a. rather than 23.50% p.a.
- Show business stability: Maintain consistent turnover, organised financial records and at least 3 years of business operations.
- Check ECLGS eligibility: Eligible existing borrowers may qualify for ECLGS 5.0 rates of 8.50%–13% p.a., subject to scheme conditions.
- Compare loan variants: A Flexi Hybrid Loan may reduce initial cash outflow through interest-only instalments during the applicable period.
- Review the MSME loan processing fee: The fee can be up to 4.72% of the loan amount, inclusive of applicable taxes. Check other charges too.
- Check pre-approved offers: Review your personalised loan terms on the Bajaj Finance website before applying.
Compare the interest rate, tenure, processing fee and total borrowing cost before accepting an offer. Note: Prepaying a Term Loan early attracts a charge of up to 4.72% of the outstanding amount. Calculate whether the interest you save over the remaining tenure exceeds this charge before deciding to prepay.
Myths and facts about MSME loan interest rates
Understanding the difference between the MSME loan interest rate, the RBI repo rate, and other borrowing costs can help you make informed financing decisions. The following table addresses common misconceptions about interest rates, processing fees, ECLGS 5.0 eligibility and government credit guarantee schemes.
| Myth | Fact |
| The MSME loan interest rate is the same as the RBI repo rate. | The repo rate is the RBI policy rate and has stood at 5.50% since 7 October 2026. The standard Bajaj Finance MSME loan interest rate ranges from 14% to 23.50% p.a. |
| Every borrower gets the starting rate of 14%. | 14% p.a. is the lower end of the applicable rate range, which extends to 23.50% p.a. Your rate depends on factors such as your credit score, business vintage, financials, loan amount, tenure and loan variant. |
| The processing fee is part of the interest rate. | The processing fee is a separate charge of up to 4.72% of the loan amount, inclusive of applicable taxes. |
| Every MSME can use ECLGS 5.0. | ECLGS 5.0 covers eligible existing borrowers whose credit facilities were standard on 31 March 2026. New borrowers are not covered. |
| A government guarantee scheme gives you the loan. | ECLGS 5.0 and CGTMSE provide guarantee cover to eligible lending institutions against specified credit losses. You apply to a participating lender for the loan; the guarantee is not a direct loan to the business. |
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Frequently Asked Questions
Overview
What is the current MSME loan interest rate?
The MSME loan interest rate at Bajaj Finance ranges from 14% to 23.50% per annum, and it is fixed for the loan tenure. Eligible ECLGS 5.0 loans have a separate interest rate range of 8.50% to 13% p.a. For context, the RBI repo rate stood at 5.50% as of 7 October 2026. Your Bajaj Finance MSME loan interest rate depends on your individual profile.
What is the interest rate for an MSME business loan?
The MSME loan rate of interest for standard loans at Bajaj Finance ranges from 14% to 23.50% p.a. Eligible ECLGS 5.0 loans have a separate MSME business loan interest rate range of 8.50% to 13% p.a. Your final rate depends on six factors: credit score, business vintage, business income and financials, loan amount, tenure, and loan variant and repayment record.
What factors influence the interest rate on an MSME loan?
The MSME loan interest rate factors include your credit score, business vintage, business income and financials, loan amount, tenure, loan variant and repayment record. The MSME loan interest rate at Bajaj Finance ranges from 14% to 23.50% p.a. A CIBIL score of 685 or higher is a useful benchmark for applicants, while your overall financial profile helps determine the rate offered within the applicable range.
How does the MSME loan interest rate affect your EMI?
A higher MSME loan interest rate increases both your EMI and total repayment. For example, on a Rs. 10 lakh loan over 60 months, the EMI at 14% p.a. is Rs. 23,268; at a 15% MSME loan rate, it becomes Rs. 23,790. That is Rs. 522 more per month and Rs. 31,320 over the tenure. Check your personalised offer using the Business Loan EMI calculator after entering your mobile number and OTP.
Do MSME loan interest rates vary by industry type?
No, Bajaj Finance does not list industry as a separate pricing factor; its MSME loan rate of interest ranges from 14% to 23.50% p.a. for eligible applicants. However, some lenders publish sector-specific rates under different schemes or enterprise categories. Compare the scheme, enterprise category and annual percentage rate (APR) before evaluating offers from different lenders.
Is the MSME loan interest rate lower than a regular business loan?
No. At Bajaj Finance, the MSME loan interest rate and regular Business Loan rate range are both 14% to 23.50% p.a. Both products also have a processing fee of up to 4.72%. Eligible borrowers may access a lower rate through ECLGS 5.0, which has a separate range of 8.50% to 13% p.a., subject to scheme eligibility and applicable conditions.
Are MSME loan interest rates negotiable in India?
You can ask for a better MSME loan interest rate, but the rate offered by Bajaj Finance depends on your credit profile and other eligibility factors. A CIBIL score of at least 685 can support your application, while rates start at 14% p.a. for eligible borrowers. To compare your MSME loan rate of interest, check the APR in each lender's Key Facts Statement rather than comparing the stated rate alone.
Can a startup get an MSME loan at a lower interest rate?
A startup with less than 3 years of business vintage does not meet the minimum vintage requirement for a Bajaj Finance Business Loan, which also uses a CIBIL score benchmark of 650 or higher. The MSME loan interest rate range of 14% to 23.50% p.a. applies to eligible applicants, rather than offering a separate startup rate. You can even explore start-up business loans to review other financing options.
Is the interest rate on an MSME loan fixed or floating?
Bajaj Finance offers unsecured business loans at a fixed rate of 14% to 23.50% p.a., so your EMI remains unchanged during the tenure, subject to the loan terms. A floating rate can change with its benchmark. RBI requires banks, not NBFCs, to link floating-rate loans to micro and small enterprises to an external benchmark and reset them at least once every three months. ECLGS 5.0 loans follow a floating-rate structure within the scheme's applicable ceiling.
Do government MSME schemes offer a lower interest rate?
Some government schemes provide interest-rate limits. Under ECLGS 5.0, eligible benchmark-linked bank loans are subject to a ceiling of 9% p.a., while eligible NBFC loans are capped at 13% p.a. The scheme also provides 100% guarantee cover without a guarantee fee, subject to its conditions. CGTMSE guarantee cover protects eligible lenders against specified credit risks; it does not provide a loan or guarantee directly to the borrower. Compare the applicable MSME loan interest rate and scheme conditions before applying.
Does Udyam registration lower your MSME loan interest rate?
No, Udyam registration does not by itself lower your MSME loan interest rate at Bajaj Finance, as it is not listed as a pricing factor. Registration on the official Udyam portal is free and based on self-declaration. Your rate depends on your credit profile and other applicable factors. Check your personalised loan offer to understand the rate available to you.
How is monthly interest on an MSME loan calculated?
Interest on an MSME loan rate is calculated using the reducing balance method, based on the outstanding principal each month. For a Rs. 10 lakh loan at an MSME loan interest rate of 14% p.a. over 60 months, the first month's interest is Rs. 11,667. From the EMI of Rs. 23,268, Rs. 11,601 goes towards principal repayment. As the outstanding balance reduces, the interest component also decreases.
Does a longer loan tenure lower the cost of an MSME loan?
No. A longer tenure lowers your EMI but increases the total interest you pay, even when the MSME loan interest rate remains unchanged. For a Rs. 10 lakh loan at 14% p.a., the figures are: 36 months - EMI Rs. 34,178 and total interest Rs. 2,30,408; 60 months - EMI Rs. 23,268 and interest Rs. 3,96,080; 96 months - EMI Rs. 17,372 and interest Rs. 6,67,712. Choose a tenure your cash flow can comfortably support.
Can I prepay an MSME loan to save interest?
Yes, you can prepay an MSME loan, but check the applicable charges first, just as you would review the MSME loan processing fee. For a Bajaj Finance Term Loan, full prepayment charges can be up to 4.72% of the outstanding amount; Flexi Term (Dropline) and Flexi Hybrid Term Loans have no part-prepayment charge. RBI directions restrict prepayment charges on specified floating-rate business loans sanctioned or renewed from 1 January 2026. Check your loan terms and personalised offer through the OTP-based process.
What does a late EMI cost on an MSME loan?
A late EMI attracts a penal charge of 36% p.a. on the overdue instalment, calculated from the due date until payment. For an EMI of Rs. 23,268 paid 30 days late, the penal charge is approximately Rs. 688. If the payment instrument is also dishonoured, a bounce charge of Rs. 1,500 applies, taking the combined cost to approximately Rs. 2,188. Pay on time to avoid these charges.
Is stamp duty deducted from an MSME loan amount?
Yes. Stamp duty is generally deducted upfront from the sanctioned MSME loan amount, as required by the applicable state law. The amount varies by state, so the net amount credited to your account may be lower than the sanctioned amount. Check the disbursal details in your sanction letter and confirm the applicable stamp duty with your lender before planning your expenses.
Is the interest on an MSME loan tax deductible?
Generally, yes. Interest paid on an MSME loan may be deductible as a business expense if the borrowed funds are used wholly for business purposes and proper records are maintained. The principal repayment is not deductible as a business expense, while eligible processing fees and other loan charges may also qualify. Tax treatment depends on your circumstances, so confirm the applicable deductions with a chartered accountant and review the relevant Bajaj Finance loan documents.
What is the Key Facts Statement for an MSME loan?
A Key Facts Statement (KFS) is a summary of loan terms that includes the annual percentage rate (APR) computation and applicable charges. The RBI requires lenders to provide it for retail and MSME term loans sanctioned on or after 1 October 2024. When comparing an MSME loan interest rate across lenders, use the APR in the KFS because it reflects the interest rate and other applicable charges.
How is interest charged on a Flexi MSME loan?
On a Flexi loan, interest runs on the amount you withdraw and not on the full limit. A Flexi Hybrid Term Loan charges interest-only EMIs on the amount used during the initial tenure. A Flexi Term (Dropline) Loan charges fixed EMIs on the withdrawn amount. A Term Loan pays out once, with fixed EMIs on the full amount. Flexi loans carry a Flexi facility charge, so compare the cost with a Term Loan.
Does Udyam registration lower my MSME loan interest rate?
Not by itself. Our rates page lists the factors that set your rate, such as your credit score and business vintage, and Udyam registration is not among them. Our eligibility page does not mention it either. The official Udyam portal states that registration is free and works on self-declaration, so you should not pay anyone a fee for it. Check your offer to see the rate for your profile.
Is the interest on an MSME loan tax deductible?
Generally yes, if you use the loan only for business and keep proper records. Our page on tax benefits of business loans treats the interest as a business expense, while the principal you repay is not deductible. Processing fees and other loan charges may also be deductible when you incur them wholly for business. Rules differ by case, so confirm the treatment with a chartered accountant.
What is the Key Facts Statement for an MSME loan?
A Key Facts Statement (KFS) is a summary of loan terms that includes the annual percentage rate (APR) computation and applicable charges. The RBI requires lenders to provide it for retail and MSME term loans sanctioned on or after 1 October 2024. When comparing an MSME loan interest rate across lenders, use the APR in the KFS because it reflects the interest rate and other applicable charges.
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