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MSME Loan – An Ideal Choice for Start-up Businesses


The start-up businesses or mico, small and medium-sized enterprises (MSMEs) are vital for India's economic development. As per the Government's data, there are 6.33 crore MSMEs in India, out of which 99.4% are micro-enterprises or start-ups. These start-ups are responsible for 45% of the total manufacturing output and 40% of the total exports of our country.

However, most of these start-ups struggle to flourish owing to the lack of working capital and under-developed business infrastructure. To help them overcome these challenges and actively contribute to India's economic growth, the Central Government, along with the help of some private financial institutions, are providing easy financing through MSME loans for start-up businesses.

Read on to know more about the MSME loans for start-ups and how they form an ideal choice for your business.

All About MSME Loans

Easy eligibility criteria

The first thing that makes the MSME start-up loan an ideal choice for your business is its easy eligibility criteria. All you need to do to qualify for this loan is fulfil some basic eligibility requirements of the lender, such as having a business set-up, well-structured business plan, and satisfactory credit score.

It means that you can get an MSME loan regardless of having a well-established business or a new start-up. Additionally, lenders ask for very minimal paperwork for providing this loan to small business owners like you.

Quick disbursement

Since MSME loans for start-up businesses include easy eligibility criteria and minimal paperwork, they are disbursed quickly by lenders. Hence, they ensure that you do not have to wait for long to access working capital in the hour of need. Most lending institutions allow you to apply for an MSME loan online and get instant approval based on their eligibility criteria.

Moreover, you can also track the progress of your loan application through your smartphone and know the exact status of fund disbursal.

Collateral-free credit

Another benefit of availing of an MSME loan for your start-up business is that it allows you to get access to the working capital without pledging any security or collateral. It means that you are not required to put your personal or business assets on the line to qualify for financing.

Also, with Government schemes such as the Credit Guarantee Trust Fund for Micro and Small Enterprises (CGTMSE), you can get guarantee coverage on your sanctioned loan amount. It means that if you're unable to repay your loans in the future, the Government will settle them as per the guarantee coverage.

Government-sponsored loans and subsidies

To help micro and small enterprises grow and flourish, the Government of India has launched several loan schemes for start-ups. Through these schemes, you can get quick and hassle-free financing with the support of the Government. Additionally, you can get subsidies on interest rates, which will make your borrowing experience easier and affordable.

Some of the most effective Government schemes for MSME start-up loans include MSME loan in 59 minutes, Pradhan Mantri Mudra Yojana (PMMY), Credit Linked Capital Subsidy Scheme (CLCSS), and the Prime Minister's Employment Generation Programme (PMEGP).

Additional Read: Different Types Of Business Loans

Greater flexibility

Most lenders offer great flexibility on MSME loans for start-up businesses in terms of the loan amount, interest rate, and repayment tenure. It means that you can choose a suitable loan amount and the repayment tenure according to your financial requirements at the given time.

Additionally, some lenders offer flexible interest rates on MSME loans, which means that you are required to pay interest for only the amount you use from a pre-determined loan limit. You can even choose to foreclose your loan without paying any additional charges.

Additional Read: What Are The Tax Benefits On Personal Loans?


The features of the MSME loans make them an ideal choice for start-up business owners like you. You can avail of these loans and use them to meet your various business requirements, such as expanding your office space, buying inventory and raw materials, upgrading your business equipment or infrastructure, etc.

However, make sure to conduct thorough research and online comparison while choosing your lender to avoid any hassles in the future.

Disclaimer – ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. Please note, loans related services are not Exchange traded products and I-Sec is acting as a distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing.

ICICI Securities Ltd. acts as a referral agent to ICICI Bank Ltd. for loan related services & the loan facility is subjective to fulfilment of eligibility criteria, terms and conditions etc.

The contents herein mentioned are solely for informational and educational purpose.

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