What Are The Ways To Secure An MSME Loan Without Collateral?

The Ministry of Small and Medium Enterprises (M/o MSME) has stated that there are approximately $6.3 billion of MSMEs in the country, accounting for 29% of India’s GDP. Therefore, experts suggest that economic revitalization and improvement depend on the MSME sector. For this reason, with the support of the Indian government, there is now a wide range of loans available to msme loan without collateral to drive growth in this sector. 

What is meant by MSME without collateral?

MSME without collateral means that business loans are offered to businesses belonging to small and medium-sized enterprises where the business does not need to place collateral. It is also known as an unsecured business loan.

What are the merits of MSME without collateral?

  • The biggest benefit is that MSMEs can get collateral-free credit without providing collateral.
  • Easy eligibility with minimal documentation makes it a convenient way to start or grow your business.
  • With minimal paperwork and no collateral requirements, it’s quick and easy to disburse MSME loans without security.
  • The unsecured MSME loan offers great flexibility in terms of repayment terms, interest rate and loan amount.
  • The paperless and convenient loan application process allows you to apply for a loan online and track your application online.
  • It helps build a valuable credit history for applicants if they pay your EMI on time.

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How will you secure the MSME loan without collateral?

You can secure an MSME loan without collateral by applying to a financial institution under the following loans or schemes:

  • The Credit Guarantee Fund for Micro Projects and Small Enterprises (CGTMSE) provides unsecured MSME loans up to Rs. 10 lakh without collateral.
  • You can secure with Pradhan Mantri MUDRA Yojana which offers unsecured business loans to MSMEs, individuals and professionals up to Rs. 10 lakh.
  • The Stand-Up India Scheme facilitates bank lending to at least one woman and at least one Scheduled Tribe (ST) or Scheduled Caste (SC) borrower to the bank for a Greenfield Enterprise.
  • MSME Loans in 59 Minutes is a scheme where MSMEs can apply for unsecured business loans up to Rs.50 crore through an online portal called PSB Loans in 59 Minutes.
  • Non-banking financial companies (NBFCs) offer loans for MSMEs without collateral based on competitive terms and conditions and possibly the fastest turnaround times.

This scheme offers contingency loans to MSMEs, allowing MSMEs to apply for loans in minutes under a portal. Unsecured loans are available under the CGTMSE scheme. The quoted interest rate starts at 8.5%. The loan amount, in principle, ranges from Rs 10 lakh to Rs 5 crore. The term loan can buy machines, infrastructure development, Business distribution, etc. The repayment period ranges from 1 year to 15 years.

MSME loans without collateral have many benefits for both startup and established MSMEs. So, if you need an MSME loan, don’t worry about providing any collateral. You can build your startup or grow your business without pledging your assets. If you want a fast and convenient business loan, you can take an unsecured MSME loan from Tata Capital.

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