Loans for MSME in India by SIDBI

loans for msme

The MSME sector plays a major role in the growth of developing countries like as ours- India. However, the biggest challenge in this sector is getting loans for MSME. SMEs account for majority of businesses worldwide and contributes markedly in the job creation. Formal MSMEs contribute 40% in the GDP of the country and this number is higher when the informal units are included. According to the World Bank, 600 million jobs will be needed by 2030 to absorb the growing global workforce which makes MSME development a high-priority sector. Also, the lack of awareness and the MSME owners being ignorant about the schemes available to them by institutions like SIDBI (Small Industries Development Bank of India) is hampering the expected growth of MSMEs.

The MSME sector faces challenges in putting up their idea into a concrete form due to lack of resources, financial support, lack of knowledge, innovation, productivity, technical knowledge, etc.


There are various direct loans provided by SIDBI to MSMEs in India and some of them are Arise for brownfield industries, Sangam term loan for working capital and capex requirements, Ubharte Sitaare loans for expansion, research and development, investment in land and building and modernization, Sthapan  for Greenfield units to set up new units, Speed plus loan for financing high end machineries, Star loan for reduction of power bills, etc loans are available. For detailed reference of the loans available please visit SIDBI 


Loans are provided to the existing and new MSME owners with different limits of 100 Lacs, 350 Lacs, term loans upto 2000 Lacs subject to project costs, need based financial assistance, etc are provided depending upon the scheme opted for. One of the major concerns is the interest rates to be paid by the loan seekers. The MSME loans availed from the banks have higher interest rates than the schemes by SIDBI. Interest rates under these schemes vary from 2% to 6%, depending upon the scheme and majorly the rates are MCLR (Marginal Cost of Funds based Lending Rate) – a basic lending rate below which financial institutions cannot lend. These schemes provide good ‘Moratorium’ period i.e., a period when the borrower’s EMI payments are frozen for sometime. These schemes are supported with some unique selling propositions like quicker sanction of loans within 7 days and fast disbursement of loans, no immovable property required for collateral with simple application method for loans, lower contribution by promoters, etc.

-Manjot Kaur

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