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Business Loan

Business Loan in India

MSME loans, Mudra Yojana, working capital, and loan against property — all in plain English. SIDBI, CGTMSE, and bank schemes for Indian enterprises. No jargon.

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MSME Loans

CGTMSE · SIDBI · Bank MSME schemes

Micro, small, and medium enterprise loan options — Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), SIDBI, and bank MSME schemes.

Mudra Loans

Shishu · Kishore · Tarun · PMMY

Shishu, Kishore, and Tarun categories under the Mudra Yojana — who qualifies, how to apply, and what documents are needed.

Working Capital

OD · Cash credit · WC demand loan

Overdraft facilities, cash credit, and working capital loans — how to finance day-to-day business operations without long-term debt.

Loan Against Property

LAP · Commercial property · Interest rates

Using commercial or residential property as collateral for a business loan — LAP eligibility, interest rates, and when it makes sense.

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Frequently asked questions

What is the Mudra loan scheme and how does it work?
PMMY (Pradhan Mantri Mudra Yojana) offers three tiers: Shishu (up to ₹50,000), Kishore (₹50,000–₹5 lakh), and Tarun (₹5 lakh–₹10 lakh). Banks, MFIs, and NBFCs all lend under the Mudra brand. No collateral is required for any tier. Applications can be made at any bank branch or online via the Mudra portal.

What documents are needed for an MSME loan?
Typically: PAN and Aadhaar of the proprietor, business registration proof (GST, Shop Act, Udyam registration), last 2 years' ITR with financial statements, bank statements for 12 months, and property documents if collateral is offered. Requirements vary by lender and loan size.

What is the difference between a working capital loan and a term loan?
A term loan finances long-term assets — machinery, real estate — and is repaid over 3–10 years. A working capital loan finances day-to-day operations — inventory, receivables — and is typically revolving, repaid from incoming cash flow. Interest rates on working capital are usually higher.

Can a new business get a loan without collateral?
Yes — Mudra (Shishu/Kishore) and CGTMSE-backed loans do not require collateral. Banks may also offer unsecured business loans to new businesses with a good credit profile, though interest rates will be higher than secured options. SIDBI's Startup Siddhi scheme covers newer enterprises.

Sources

Sources: SIDBI (sidbi.in) · Mudra Yojana guidelines (mudra.org.in) · RBI MSME guidelines (rbi.org.in) · CGTMSE (cgtmise.in) · Income Tax Act 2025. Schemes verified 2026-10-07. Last reviewed by FinWiz24 Research Desk.