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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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Type of enterprise Revised investment limit Revised turnover limit Micro enterprises From Rs. 1 crore to Rs. 2.5 crore From Rs. 5 crore to Rs. 10 crore Small enterprises From Rs. 10 crore to Rs. 25 crore From Rs. 50 crore to Rs. 100 crore Medium enterprises From Rs. 50 crore to Rs. 125 crore From Rs. 250 crore to Rs. 500 crore Note: For loans under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, only Stamp Duty charge is applicable.
Additional measures for MSMEs in budget 2025
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- Micro enterprise credit cards: Customised credit cards with a Rs. 5 lakh limit will be offered to micro enterprises registered on the Udyam portal, with 10 lakh cards planned for issuance in the first year
- Fund of funds for startups: The Alternate Investment Funds (AIFs), with a Rs. 91,000 crore commitment, will be supplemented with a new Rs. 10,000 crore Fund of Funds to further expand its reach
- Support for first-time entrepreneurs: A new scheme will provide term loans of up to Rs. 2 crore over the next five years to 5 lakh first-time entrepreneurs, particularly women, SCs, and STs
MSME loan EMI calculation
EMI stands for equated monthly instalment. It is a fixed monthly payment made by the borrower towards repayment of the loan. Monthly instalments comprise the principal amount and the accrued interest.
Bajaj Finance offers a flexible repayment tenor of up to 96 months on MSME loans to ease the process of repayment. This long tenor lets you spread out your EMIs and make the credit facility affordable. You can also use the online EMI calculator to know the exact amount of your monthly EMIs and total payable interest in just a few minutes.
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How to calculate MSME loan EMI
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Manual calculation of monthly instalments can be time-consuming and might give you an erroneous result. In such a situation, the Business Loan EMI Calculator can help you as it is simple to use and provides accurate results in a few minutes.
You can calculate your EMI by giving the following information:
- Principal
- Rate of interest
- Tenor
This online calculator uses the following formula:
EMI=P*r* (1+r) ^n/ [ (1+r) ^ n-1)
Here, P stands for the principal or loan amount
R stands for the rate of interest
N stands for the tenor
With this online tool, you can also try different combinations of loan amount and tenor to arrive at an EMI that fits your repayment capacity.
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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.
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Disclaimer
Bajaj Finance Limited has the sole and absolute discretion, without assigning any reason to accept or reject any application. Terms and conditions apply*.