How to Apply for an MSME Loan

Want to apply for a business loan in India? Whether you’re starting out or looking to expand, government-backed MSME loans and Udyam loans make it easier for small businesses to access funding with flexible terms and minimal paperwork.

This guide will help you understand how to apply, what documents are needed, who is eligible, and how to get started.

What Is an MSME Loan?

An MSME loan is a credit facility provided to Micro, Small, and Medium Enterprises to help them grow, manage cash flow, or invest in infrastructure, equipment, or staff.

These loans are often collateral-free, come with lower interest rates, and may be backed by government schemes like CGTMSE, PMEGP, or MUDRA.

What Is Udyam Registration?

Udyam Registration is an online government certification that officially classifies your business as an MSME. This registration is mandatory to avail the benefits of MSME loan schemes and subsidies

Eligibility Criteria for MSME or Udyam Loans

To qualify for an MSME or Udyam loan, your business must:

1. Business Classification (as per MSME norms):

•  Micro: Investment ≤ ₹1 Cr, Turnover ≤ ₹5 Cr

•  Small: Investment ≤ ₹10 Cr, Turnover ≤ ₹50 Cr

•  Medium: Investment ≤ ₹50 Cr, Turnover ≤ ₹250 Cr

2. Udyam Registration:

•  Must have valid Udyam Registration

3. Eligible Business Types:

•  Proprietorships, Partnerships, LLPs, Pvt. Ltd./Public Ltd. Companies, Co-ops, SHGs

4. Business Age:

•  Preferably 1–3 years in operation (Startups may qualify under special schemes)

5. Credit Score:

•  Generally 650+ is preferred (not mandatory under some govt. schemes)

6. Loan Purpose:

Business-related use only (working capital, equipment, expansion, etc.)

7. Documents Needed:

•  Udyam Certificate, PAN, Aadhaar, bank statements, ITRs, business proof

Documents Required for Business / MSME / Udyam Loan Application

Applying for a business or MSME loan involves more than just filling out a form, having the right documents ready is essential for quick approval and smoother processing. Here's a clear breakdown of the key documents typically required:

Identity & Address Proof (for Owners/Partners/Directors)

•  PAN Card – Mandatory for all applicants

•  Aadhaar Card / Passport / Voter ID / Driving License

•  Address Proof – Utility bills, rental agreement, or passport

Business Registration & Proof

•  Udyam Registration Certificate (for MSMEs)

•  GST Registration

•  Shop & Establishment License

•  Partnership Deed / Certificate of Incorporation / MOA & AOA

•  Trade License or other applicable licenses

Financial Documents

These help lenders assess your business’s financial health:

•  Bank Statements – Last 6 to 12 months

•  Income Tax Returns (ITR) – Usually last 2 to 3 years

•  Balance Sheet and Profit & Loss Statement – Audited or certifie

•  Projected Financials / Business Plan – For startups or larger loan amounts

Business Address Proof

•  Rent agreement, property tax receipt, electricity bill, or NOC from landlord

•  KYC of the Business Entity

•  PAN Card of the Business

•  CIN (for companies)

•  Board Resolution / Authorization Letter – If the loan is taken in the company’s name

Loan-Specific Documents

•  Duly filled Loan Application Form

•  Quotation or Proforma Invoice – If the loan is for machinery, vehicle, or equipment purchase

How to Apply for an MSME or Udyam Loan – Step-by-Step

Step 1: Get Udyam Registered

Register your business on the Udyam portal using Aadhaar and PAN. You’ll receive a certificate instantly.

Step 2: Choose a Lender

Decide whether you want to apply through a:

Government bank (e.g., SBI, PNB)

Private bank (e.g., HDFC, ICICI)

NBFC or fintech platform (e.g., Lendingkart, FlexiLoans)

Step 3: Fill the Loan Application

Complete the online/offline form with your loan amount, purpose, tenure, and business details.

Step 4: Upload Documents

Submit all required documents for verification.

Step 5: Wait for Approval and Disbursal

If approved, funds are typically disbursed within 3 to 10 working days.

How to Check MSME/Udyam Loan Status

Once you’ve applied for a business or MSME loan, it’s important to track your application to stay updated on approvals, document requests, or disbursements. Here’s how you can check your loan status

Check via Lender’s Website or Mobile App.

Contact Customer Care.

Visit the Bank/NBFC Branch.

For Government Loan Schemes (e.g., MUDRA, CGTMSE).

If you applied through a government scheme, check status via:

•  The official portal of the scheme (e.g., mudra.org.in)

•  The partnered bank or NBFC where you submitted the application

Track via Email or SMS Updates

Most lenders send regular updates via SMS or email regarding:

•  Application received

•  Document verification

•  Approval or rejection

•  Disbursement status

Key Benefits of MSME Loans