Building BusinessServices

Section 11

Banking & Finance

बैंकिंग और लोन

14 credit programmes and 12 institutions — loans, guarantees, credit without collateral, and money against your invoices. Interest rates are only those printed on the official page.

credit and guarantee programmes
14
banks and institutions
12
MSE loan with no collateral (RBI, from 1 Apr 2026)
₹20 lakh

RBI rules

Know these before you talk to the bank

  1. Collateral-free MSE loans

    Banks are mandated not to accept collateral security for loans up to Rs 20 lakh to MSE units (RBI MD para 4.1).

    Read the rule
  2. PSL micro target

    Sub-target: 7.5% of ANBC or CEOBSE (whichever is higher) for micro enterprises, for domestic commercial banks, foreign banks with 20+ branches, RRBs…

    Read the rule
  3. PSB MSME credit assessment model

    Loan appraisal uses digitally fetched, verifiable data (for example GST, bank statements) with automated journeys and objective decisions, instead of…

    Read the rule

Programmes

Loans, guarantees and credit

A guarantee scheme means the government gives the bank a guarantee, so the bank asks you for less collateral. You still have to repay the loan.

Institutions

Who gives the money

  • Development bankSmall Industries Development Bank of India (SIDBI)

    Gives direct loans to MSMEs: machinery loans, project funding and working capital are listed on its site, with an online application portal.

    What it does for you

    • Refinances banks, NBFCs and MFIs so they can lend more to MSMEs. Most small units get SIDBI money indirectly through their own bank or NBFC.
    • Runs Udyamimitra, the portal for MUDRA, Stand-Up India, PM SVANidhi, PM Vishwakarma and other government-scheme loans.
    • Is the parent of MUDRA, set up CGTMSE with the MSME Ministry, and is a joint-venture partner in RXIL (a TReDS platform).
    • Is the implementation agency for the Startup India Fund of Funds (FFS 1.0 since 2016; FoF 2.0 notified 13 Apr 2026). It invests in SEBI-registered AIFs, which then invest in startups. It does not give equity to startups directly under this scheme.

    What you get

    • Direct MSME loans: machinery, project funding, working capital, green finance (as listed on sidbi.in).
    • PRAYAAS: loans to informal micro-entrepreneurs through partner institutions. SIDBI says more than 2,94,000 beneficiaries were assisted as of Dec 2023, in 30 States/UTs, and more than 85% are women.
    • Refinance to scheduled banks and assistance to NBFCs and MFIs. SIDBI says its micro lending has cumulative sanctions of Rs 30,090 crore.
    • Fund of Funds for Startups: under FFS 1.0, the full Rs 10,000 crore corpus was committed to 145 AIFs (PIB, Feb 2026). FoF 2.0 has another Rs 10,000 crore corpus.
    • Cluster branches: 39 branches were opened in MSME clusters in calendar 2025. SIDBI plans to cover all major MSME clusters by 31 Mar 2027 (DFS Year Ender).
    • Certified Credit Counsellors (CCC) scheme, launched by SIDBI in July 2017. Registered counsellors help MSMEs prepare project reports (RBI MSME FAQ).
    • Knowledge products: MSME Pulse (with TransUnion CIBIL) and FIT Rank, which are useful to understand how lenders see small-business credit.

    Merits

    • Direct lender to MSMEs and refinancer to banks, so it reaches units both ways (sidbi.in).
    • Physical reach in MSME clusters is growing: 39 new cluster branches in 2025 (DFS Year Ender, PIB 10 Jan 2026).
    • One portal (Udyamimitra) for several government-scheme loans, with 463 lenders onboarded as shown on the portal.

    Demerits

    • Interest rates for its direct loans are not printed on the product pages, so you cannot compare cost before applying.
    • Branch network is limited to selected clusters, so most small units still deal with their local bank and see SIDBI only as refinancer.
    Portal
    sidbi.in
    Helpline
    Toll-free 180-022-6753; +91 86930 33333 (both printed on sidbi.in)

    Source: SIDBI home page · SIDBI: Subsidiary Network / Ecosystem page · SIDBI: Institutional Finance (refinance to banks, NBFCs, MFIs)

  • Development bankNational Bank for Agriculture and Rural Development (NABARD)

    Mostly a wholesale lender. It refinances banks (commercial banks, SFBs, RRBs, co-operative banks), its subsidiaries and NBFC/NBFC-MFIs, which then lend to farmers and rural enterprises.

    What it does for you

    • Long-term refinance covers investment credit in the farm sector and the off-farm sector. Off-farm rural enterprises reach NABARD money through their bank.
    • Under the Automatic Refinance Facility, banks appraise and lend first, then claim refinance from NABARD (NABARD long-term loans page).
    • Sponsors AgriSURE, a Rs 750 crore Category-II AIF for agri and rural startups, managed by NABVENTURES Ltd.

    What you get

    • Refinance to banks for farm and off-farm investment loans. NABARD says refinance is up to 90/95% of eligible bank loans, depending on purpose, location and agency.
    • AgriSURE: total corpus Rs 750 crore (Rs 250 crore each from GoI and NABARD, Rs 250 crore to be raised from others). It invests in sector-specific, sector-agnostic and debt AIFs and directly in startups, with ticket sizes up to Rs 25 crore. It aims to support about 85 startups.
    • Model bankable projects, unit costs and state-wise scale of finance are published on nabard.org. Banks use these to size agri loans.

    Merits

    • Its unit-cost and model-project data are what many banks use to size agri and allied loans, so they are useful when you prepare a project (nabard.org menus).
    • AgriSURE gives agri and rural startups an equity route through AIFs, sponsored by GoI and NABARD (nabard.org).

    Demerits

    • An individual cannot borrow from NABARD directly for a business. You go through a bank, and the bank decides.
    • The refinance details on nabard.org are spread over many pages, and some pages are old.

    Source: NABARD: Department of Refinance · NABARD: Long Term Loans (refinance) · NABARD: Eligible schemes for refinance under Off-Farm Sector

  • Development bankMicro Units Development & Refinance Agency Ltd (MUDRA)

    MUDRA is a refinancing institution. It does not lend to individuals. You get a MUDRA (PMMY) loan from a bank, RRB, SFB, NBFC or MFI branch, or apply online on Udyamimitra.

    What it does for you

    • Refinances banks, MFIs and NBFCs for loans to non-farm micro units in manufacturing, trading, services and agri-allied activities.
    • Runs the PMMY data portal and monitors PMMY with DFS (national) and SLBCs (state).

    What you get

    • PMMY loan categories: Shishu (up to Rs 50,000), Kishor (above Rs 50,000 to Rs 5 lakh), Tarun (above Rs 5 lakh to Rs 10 lakh), Tarun Plus (above Rs 10 lakh to Rs 20 lakh).
    • Refinance to lenders. Cumulative refinance disbursed was Rs 1,00,404 crore till 31 Mar 2025 (SIDBI ecosystem page).
    • MUDRA Card: a RuPay debit card working-capital (CC/OD) facility (MUDRA FAQ).

    Merits

    • MUDRA says it has no agents or middlemen, so you never need to pay a facilitator.
    • A one-page application format exists for Shishu loans (MUDRA FAQ).

    Demerits

    • MUDRA cannot force a bank to sanction a loan. The FAQ only says to escalate to the bank's regional or zonal office, or try another lender.
    • Interest rates are deregulated. MUDRA prints no rate.
    Helpline
    Email help[at]mudra[dot]org[dot]in (printed on mudra.org.in)

    Source: MUDRA official website (home page) · MUDRA: FAQ · SIDBI: Subsidiary Network / Ecosystem page

  • BoardNational Credit Guarantee Trustee Company Ltd (NCGTC)

    A wholly owned company of the Department of Financial Services, Ministry of Finance (PIB, Mar 2025). It runs credit guarantee funds.

    What it does for you

    • It guarantees your lender, not you. If you default, the lender claims from NCGTC, and you still owe the money.
    • Schemes it runs that matter to founders: Mutual Credit Guarantee Scheme for MSMEs (machinery loans), Credit Guarantee Scheme for Startups (CGSS), Credit Guarantee Fund for Micro Units (CGFMU, which covers PMMY loans up to Rs 20 lakh), and the Credit Guarantee Scheme for Exporters (CGSE).

    What you get

    • MCGS-MSME: 60% guarantee on machinery and equipment loans up to Rs 100 crore.
    • CGSS: guarantee up to Rs 20 crore per DPIIT-recognised startup.
    • CGFMU: guarantee cover for MUDRA loans, including Tarun Plus (PIB backgrounder, 29 Oct 2024).
    • CGSE: 100% cover for up to Rs 20,000 crore of extra collateral-free working capital to exporters. Validity was till 31 Mar 2026 or until Rs 20,000 crore of guarantees were issued (DFS Year Ender).

    Merits

    • Guarantee cover lets banks lend without collateral for the covered part (CGSS FAQ; MCGS PIB releases).
    • Lenders register and apply on the NCGTC portal, so the borrower files no separate guarantee form.

    Demerits

    • Guarantee fees are often passed to the borrower, which adds to the real cost of the loan.
    • The ncgtc.in site loads by script, and scheme guidelines are hard to find. Most terms are easier to read in PIB releases.
    Portal
    ncgtc.in
    Helpline
    startup@ncgtc.in for CGSS queries (printed in NCGTC CGSS FAQ)

    Source: PIB, 18 Mar 2025: MCGS-MSME provides 60% guarantee up to Rs.100 crore (Rajya Sabha reply) · PIB, 21 Mar 2026: Government modifies Mutual Credit Guarantee Scheme for MSME manufacturers and exporters · NCGTC: FAQ on Credit Guarantee Scheme for Startups (amended as on 8 May 2025)

  • BoardCredit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

    Set up by SIDBI and the Ministry of MSME in July 2000. It guarantees collateral-free loans that banks give to micro and small enterprises.

    What it does for you

    • If your bank says 'we will cover it under CGTMSE', it means no collateral and no third-party guarantee for that loan, and the bank pays (or passes on) an annual guarantee fee.
    • Guarantee ceiling is Rs 10 crore per borrower, including trading units.

    What you get

    • Credit Guarantee Scheme CGS-I: covers 75% to 90% of the amount in default (see the programme record 'cgtmse-cgs-i').
    • Hybrid security: the lender can take collateral for part of the loan and cover the unsecured part (up to Rs 10 crore) under CGTMSE.
    • Guarantee cover for the micro-enterprise credit cards issued under the Budget 2025 scheme (Indian Bank product page; Lok Sabha reply as reported).

    Merits

    • Large scale: 1.15 crore guarantees worth Rs 9.35 lakh crore approved till 31 Mar 2025 (SIDBI ecosystem page).
    • Fee was cut from a peak of 2% p.a. to 0.37% p.a. at the lowest slab, from 1 Apr 2023 (SIDBI ecosystem page).

    Demerits

    • Only the lender can apply. A borrower cannot go to CGTMSE directly.
    • Some lenders pass the guarantee fee to the borrower (Indian Bank's micro credit card page says the premium is borne by the borrower).
    Portal
    cgtmse.in
    Membership
    not applicable (only lenders register as Member Lending Institutions)

    Source: SIDBI: Subsidiary Network / Ecosystem page · CGTMSE Scheme Document CGS-I (updated as on 1 Apr 2025) · CGTMSE: Annual Guarantee Fee page

  • Development bankExport-Import Bank of India (India Exim Bank)

    Finances exporters and importers: pre-shipment and post-shipment credit, buyer's credit, lines of credit, term loans, guarantees and LCs (eximbankindia.in).

    What it does for you

    • Has an MSME export section: the Ubharte Sitaare Programme, Trade Assistance Programme and Export Factoring.
    • Brief entry only. The export research file covers it in depth.

    What you get

    • Export credit (pre and post shipment)
    • Ubharte Sitaare Programme for export-potential MSMEs
    • Export factoring
    • Marketing Advisory Services

    Merits

    • Has a dedicated MSME export product set listed on its home page.
    • Is a registered lender under CGSS (NCGTC list).

    Demerits

    • Most products suit established exporters. Rates and minimum sizes are not printed on the home page.

    Source: India Exim Bank home page · NCGTC: FAQ on Credit Guarantee Scheme for Startups (amended as on 8 May 2025)

  • BoardECGC Ltd (formerly Export Credit Guarantee Corporation of India)

    A Government of India enterprise under the Ministry of Commerce & Industry. It sells export credit insurance, so if a foreign buyer does not pay, the policy pays part of the loss.

    What it does for you

    • It also offers exporter factoring and has a premium calculator on its site.
    • Brief entry only. The export research file covers it in depth.

    What you get

    • Export credit insurance policies for exporters
    • Cover for banks' export credit
    • Exporter factoring

    Merits

    • Buyer-default insurance makes banks more willing to give export credit.

    Demerits

    • Premium is an extra cost. We did not verify rates, and none are printed on the home page.
    Portal
    ecgc.in
    Membership
    paid (insurance premium; rates via the calculator on ecgc.in)

    Source: ECGC Ltd home page

  • Development bankState Financial Corporations (SFCs)

    State-level development lenders set up under the State Financial Corporations Act, 1951, to give term loans to small and medium units in that state.

    What it does for you

    • Under the SFC Act they can borrow from RBI, the state government, banks, insurers and others approved by their Board (Rajya Sabha reply, 22 Jul 2024).
    • CGTMSE lists State Financial Corporations among lenders that can register with it, with a ceiling of Rs 200 lakh per borrower for that group (CGS-I document).

    What you get

    • Term loans to MSMEs in their state (where still active)
    • Can cover loans under CGTMSE after registration, up to Rs 200 lakh per borrower

    Merits

    • Local focus. Some state schemes route interest subsidies through them.

    Demerits

    • We could not find an official list of which SFCs are still actively lending in 2026. Several have been weak for years, so check your state's SFC directly before planning around it.
    • Lower CGTMSE ceiling than commercial banks: Rs 200 lakh against Rs 10 crore.

    Source: Rajya Sabha Unstarred Q 115, 22 Jul 2024 (State Financial Corporations borrowing) · CGTMSE Scheme Document CGS-I (updated as on 1 Apr 2025)

  • BankSmall Finance Banks (SFBs)

    Banks licensed by RBI to serve small borrowers. At least 50% of their loan portfolio must be loans and advances of up to Rs 25 lakh (RBI licensing guidelines, 2014).

    What it does for you

    • They are full banks: they take deposits, are PMMY lenders, and can register with CGTMSE (ceiling Rs 200 lakh per borrower for SFBs).
    • Eight of the first 10 SFB licensees were earlier partner MFIs of SIDBI (SIDBI Institutional Finance page).

    What you get

    • Micro and small business loans
    • MUDRA loans
    • Loans covered by CGTMSE (up to Rs 200 lakh)

    Merits

    • They are required by licence to focus on small-ticket loans, so a small unit is their core customer.
    • As banks, they follow RBI rules on collateral-free MSE loans up to Rs 20 lakh.

    Demerits

    • Honest cost of credit: RBI does not cap their interest rates, and we found no official average rate to print. Ask for the Key Facts Statement and compare the annual percentage rate before signing.
    • CGTMSE ceiling for SFBs is Rs 200 lakh, against Rs 10 crore for public and private sector banks.

    Source: RBI Guidelines for Licensing of Small Finance Banks in the Private Sector (27 Nov 2014) · CGTMSE Scheme Document CGS-I (updated as on 1 Apr 2025) · SIDBI: Institutional Finance (refinance to banks, NBFCs, MFIs)

  • BankNBFC-MFIs and microfinance lenders

    Lend small collateral-free loans to low-income households, usually women in groups.

    What it does for you

    • RBI definition: a microfinance loan is a collateral-free loan to a household with annual income up to Rs 3,00,000.
    • Repayment of all loans of the household (microfinance and other) must not exceed 50% of monthly household income (RBI FAQ Q5).

    What you get

    • Small working-capital loans for petty trade, livestock and home businesses
    • MUDRA Shishu-size loans through MFIs

    Merits

    • No deposit, margin, collateral or primary security can be asked for at any stage (RBI FAQ Q14).
    • No pre-payment penalty, and the late-payment penalty applies only on the overdue amount (RBI FAQ Q15).
    • You must get a loan card with a simple pricing factsheet, in a language you understand (RBI FAQ Q14).

    Demerits

    • Honest cost of credit: RBI does not fix the rate. Lenders set it under board policy, so microfinance is usually costlier than a bank loan. Check the printed minimum, maximum and average rates before borrowing.
    • Small ticket sizes. They suit a household business, not a factory.

    Source: RBI FAQs - Regulatory Framework for Microfinance Loans (updated 30 Jan 2025)

  • InstitutionCredit bureaus: CIBIL score and CIBIL MSME Rank (CMR)

    Banks check the promoter's personal credit score and the firm's commercial bureau rank before lending.

    What it does for you

    • CMR (CIBIL MSME Rank) is TransUnion CIBIL's rank for MSMEs from CMR-1 to CMR-10. CMR-1 to 3 is low risk, CMR-4 to 6 medium risk and CMR-7 to 10 high risk (SIDBI-TransUnion CIBIL MSME Pulse).
    • Real use: Indian Bank's micro credit card asks for CMR 1-5, or if CMR is not available, a promoter score of 730+ from a credit information company, and no more than 30 days past due across lenders.

    What you get

    • Personal credit report and score of the promoter
    • Company credit report and CMR for MSMEs with bureau history

    Merits

    • A good CMR or score can get you faster or collateral-free sanction under bank scoring models, as the Indian Bank card criteria show.

    Demerits

    • A new firm with no loan history may have no CMR. The bank then falls back on the promoter's personal score.
    • Any late EMI on a personal loan or card shows up and can block a business loan.

    Source: SIDBI - TransUnion CIBIL MSME Pulse, August 2022 · Indian Bank: IND SUVIDHA - Micro Credit Card (product page)

  • PortalUdyamimitra and JanSamarth loan portals

    Udyamimitra (SIDBI) lets you apply online for MUDRA, Stand-Up India, PM SVANidhi, PM Vishwakarma and other scheme loans. The portal shows 463 lenders onboarded, 1,61,357 branches connected and 12 schemes onboarded.

    What it does for you

    • The flow on the portal is: check eligibility, apply online, get offers and digital approval from a chosen bank, then track your application.
    • JanSamarth is a one-stop portal linking fifteen government-sponsored loan and subsidy schemes (PIB, Mar 2025).

    What you get

    • Online loan applications for government schemes
    • Status tracking
    • Handholding support (Udyamimitra)

    Merits

    • No agent needed. The application goes straight to the bank branch you choose.
    • Pulls data through UIDAI, CBDT, NSDL and LGD integrations, so less paperwork (Udyamimitra home page).

    Demerits

    • An online application does not oblige the branch to sanction. You still have to follow up with the branch.
    Helpline
    Udyamimitra shows +91 2267221526 on its home page
    Membership
    free

    Source: Udyamimitra portal (SIDBI) · PIB, 25 Mar 2025: credit schemes for entrepreneurs, farmers, small businesses (Rajya Sabha reply)

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