Introduction

Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s economy, contributing significantly to GDP and employment. However, financial constraints often hinder their growth. To address this, the Indian government and financial institutions offer various low-interest loan schemes to help MSMEs expand, invest in technology, and improve operational efficiency. In this article, we will explore the top low-interest loan schemes available for MSMEs in 2025, their benefits, eligibility criteria, and application processes.

Importance of Low-Interest Loans for MSMEs

Access to affordable credit is crucial for MSMEs to sustain and scale their businesses. Low-interest loans offer several advantages:

• Reduced Financial Burden: Lower interest rates mean lower repayment amounts, easing financial stress.
• Business Expansion: Funds can be used for new ventures, infrastructure, and workforce expansion.
• Technology Upgradation: Helps in adopting advanced machinery and digital tools.
• Working Capital Management: Ensures smooth business operations without liquidity issues.
• Improved Creditworthiness: Regular repayments enhance credit scores, increasing future loan prospects.

Top Low-Interest Loan Schemes for MSMEs in 2025

1. MUDRA Loan Scheme (Pradhan Mantri MUDRA Yojana – PMMY)

The Micro Units Development and Refinance Agency (MUDRA) loan is one of the most popular government-backed schemes offering collateral-free loans to MSMEs.

• Loan Amount: Up to INR 10 lakh
• Interest Rate: Starts from 7-12% (varies by lender)
• Types of MUDRA Loans:
  • Shishu (Up to INR 50,000)
  • Kishor (INR 50,000 to INR 5 lakh)
  • Tarun (INR 5 lakh to INR 10 lakh)
• Eligibility: Small businesses, startups, and MSMEs engaged in manufacturing, trade, or services.
• Application Process: Apply through banks, NBFCs, or online via the Udyami portal.

2. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

This scheme provides collateral-free credit to MSMEs, reducing their financial risk while securing loans.

• Loan Amount: Up to INR 2 crore
• Interest Rate: Varies between 8-12% based on bank policies
• Eligibility: New and existing MSMEs engaged in manufacturing or service activities.
• Application Process: Apply through participating banks and financial institutions.

3. SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)

Offered by the Small Industries Development Bank of India (SIDBI), this scheme supports MSMEs aligned with the ‘Make in India’ initiative.

• Loan Amount: INR 10 lakh to INR 25 crore
• Interest Rate: Starts at 8% (depends on creditworthiness)
• Eligibility: Manufacturing and service sector MSMEs.
• Application Process: Directly through SIDBI.

4. Stand-Up India Scheme

This scheme promotes entrepreneurship among women and SC/ST entrepreneurs by providing loans for business ventures.

• Loan Amount: INR 10 lakh to INR 1 crore
• Interest Rate: Around 7-9%
• Eligibility: SC/ST and women entrepreneurs setting up a greenfield enterprise.
• Application Process: Apply via the Stand-Up India portal or participating banks.

5. PSB Loans in 59 Minutes

A digital lending platform that enables quick approval of MSME loans within 59 minutes.

• Loan Amount: INR 1 lakh to INR 5 crore
• Interest Rate: Starts from 8.5%
• Eligibility: MSMEs with a good credit history and GST-compliant businesses.
• Application Process: Online application via the PSB Loans in 59 Minutes portal.

6. National Small Industries Corporation (NSIC) Subsidized Loan Scheme

NSIC offers financial support to MSMEs through credit facilitation and subsidies.

• Loan Amount: Varies based on requirements
• Interest Rate: Subsidized rates, usually lower than commercial banks
• Eligibility: Registered MSMEs involved in manufacturing and services.
• Application Process: Through NSIC branches or the online portal.

7. Bank Credit Facilitation Scheme (NSIC & Banks Collaboration)

Under this scheme, NSIC collaborates with banks to facilitate credit to MSMEs at lower interest rates.

• Loan Amount: As per business requirements
• Interest Rate: Lower than standard commercial loan rates
• Eligibility: MSMEs with a valid Udyam Registration Certificate.
• Application Process: Apply through NSIC.

8. Udyogini Scheme (For Women Entrepreneurs)

Designed to empower women entrepreneurs, this scheme offers loans at subsidized interest rates.

• Loan Amount: Up to INR 3 lakh
• Interest Rate: 5-6% (lower for women from weaker sections)
• Eligibility: Women entrepreneurs in the MSME sector.
• Application Process: Apply through designated banks.

9. Technology and Quality Upgradation Support to MSMEs

This government scheme offers financial aid for technological advancements and quality improvements.

• Loan Amount: Based on the project cost
• Interest Rate: Varies
• Eligibility: MSMEs looking for technology upgrades.
• Application Process: Apply via MSME Development Centers.

10. CIBIL MSME Rank (CMR)-Linked Loans

Many banks now offer loans based on CIBIL MSME Rank (CMR), which helps MSMEs secure loans at lower rates based on their financial health.

• Loan Amount: Varies
• Interest Rate: Preferential rates for businesses with high CMR scores.
• Eligibility: MSMEs with a good credit history.
• Application Process: Apply through banks offering CMR-based loans.

How to Choose the Right Loan Scheme for Your MSME

With so many options available, choosing the right loan scheme depends on:

• Business Requirements: Determine whether you need a loan for working capital, expansion, or technology upgradation.
• Interest Rates & Repayment Terms: Compare interest rates and repayment flexibility.
• Eligibility & Documentation: Ensure you meet the eligibility criteria and have the necessary documents.
• Processing Time: Opt for schemes with faster disbursement timelines if urgent funding is needed.

Conclusion

Low-interest loan schemes have made it easier for MSMEs to access financial assistance and grow their businesses. Whether it’s the MUDRA Loan, CGTMSE, SIDBI SMILE, or Stand-Up India Scheme, entrepreneurs can leverage these options to expand their businesses efficiently. By staying informed and choosing the right loan scheme, MSMEs can drive sustainable growth and contribute to India’s economic progress in 2025 and beyond.

For more updates on MSME schemes and financial assistance, keep following government portals and financial institutions offering tailored solutions for small businesses.