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MSME Loans/SME Loans

Introduction

Small and medium-sized enterprises play a key role in the Indian economy. They are sources of not only innovation and technical skills but also of employment opportunities. As much as 65% of the Indian population still dwells in rural and semi-urban areas where small businesses form a major income source. Moreover, the small business in India is the second-largest employer in human resources after agriculture. And this market is set to expand further as purchasing power and consumerism increases.

What is an MSME/SME Loan?

An MSME/SME loan is a type of business loan specifically used as a single line of credit for funding the needs of small and medium-sized business enterprises. An MSME/SME loan can either be used as working capital or for long-term business requirements. 

Be it for investment in new business infrastructure or the need for maintaining a healthy cash flow to fulfil everyday business-related expenses, such business loans are specifically designed to meet the unique needs and requirements of small and medium-sized enterprises. 

 

Product Offerings 

The following are the key features of Tata Capital’s MSME/SME loans –

  • Loan Amount – Tata Capital offers a wide range of customised loan options ranging from Rs. 5 lakhs to Rs. 75 lakhs to small and medium-size enterprises to cover from their smallest to their greatest needs

  • Loan Tenure – Our MSME/SME loans can be issued for a tenure ranging from 12 months (one year) to 36 months (three years)

  • Interest Rates – Our MSME/SME loans are charged at competitive interest rates, starting at 19%

  • Multiple Product Offering – Tata Capital’s MSME/SME loans can be customised to meet specific business needs of each MSME and SME.

  • No Collateral Needed – No collateral obligations are needed to get an MSME/SME loan with Tata Capital 

  • Structured EMI Options – We allow businesses to even structure their monthly repayment EMIs around their business’ cash flow for a convenient repayment.

  • High Eligibility – We say yes when others may say no. We will work with you closely to design an MSME/SME loan that fits into your budget.

     

Features and Advantages 

An MSME/SME business loan offers the following advantages –

  • Working Capital – An MSME/SME loan can help businesses cover their short-term operational expenses by being used as working capital 

  • Infrastructure Creation – Businesses today need to provide an efficient infrastructure to deliver seamless services to customers such as delivery channels and payment gateways. An MSME/SME loan helps in the creation of such infrastructure 

  • Hire Competent Personnel – Competent and professional staff is especially useful in increasing sales turnover and timely customer deliveries. An MSME/SME loan helps enterprises hire talent experts who can take it to new heights 

  • Means for Expansion – Technology and manpower are the basic needs of a growing business. And the two require adequate finances. An MSME/SME loan provides the critical cash flow needed by small and medium-sized enterprises for their expansion

What is the Eligibility for MSME/SME Loan?

If you wish to take a small medium enterprise loan with Tata Capital, you must meet the following eligibility criteria –

  • Your age must be within 25 to 65 years 

  • Your business must show consistent profitability for the last three consecutive years 

  • There must be an upward trend in your business turnover 

  • A registered Chartered Accountant must have audited your balance sheet

  • To know more, visit our business loan eligibility page

What are the Documents Required for an MSME/SME Loan?

The following documents have to be submitted along with your duly filled loan application form to avail an MSME/SME business loan with Tata Capital –

  • Photo Identity Proof – copy of Voter ID/Passport/Driving License/Aadhaar Card

  • A copy of certified bank statements of the last six months 

  • Business Proof documents – Trade License/Sales Tax Certificate/Sole Proprietorship Declaration/ Partnership Deed/Income Tax Returns along with computation for the last two years/Profit and Loss Statement and Balance Sheet for the last two years 

Additionally, you will also be required to prepare and submit a report detailing how you plan on using the business loan. To know about the list of documents required to apply for a MSME/SME Loan, visit our Business Loan Documents Page

What are the Interest Rates and Charges for MSME/SME Loan?

An MSME/SME business loan involves essentially charges that can be divided into three categories, namely general charges, miscellaneous charges, and foreclosure charges.

 

General Charges

The table below shows the general charges levied by Tata Capital on our MSME/SME loans 

 

Type of Fees 

Applicable Charges

Interest Rate 

Starts at 19%

Processing Fee 

Upto 2.75% of the loan amount + GST

Penal/Additional Interest Rate 

3% on Overdue amount per month + GST

 

  • Interest Rate - The rate at which you are needed to pay the monthly EMIs on your MSME/SME loan, inclusive of the principal amount and the interest amount is known as the interest rate. 
  • Processing Fee - At the time of loan application processing, the one-time, non-refundable fee charged is known as processing fee.
  • Penal Interest/Additional Interest - Delayed monthly instalments accompany a penalty in the form of an additional interest rate charged over and above the existing rate. This additional interest that the borrower now needs to pay over and above the existing interest amount on the delayed EMI is known as penal interest.

 

Miscellaneous Charges 

 The following table will let you know the miscellaneous charges involved in Tata Capital SME and MSME loans -

 

Type of Fees 

Applicable Charges

Bounce Charges 

Rs. 2,000 for every cheque/Payment Instrument Dishonour + GST

Mandate Rejection Service Charge

Rs. 450 + GST

CCOD Annual Maintenance Charges 

0.25% on Dropline amount or Rs. 1,000, whichever is higher per year


Document Processing Fees 

Rs. 999 + GST

Outstation Collection Charges 

Rs. 100 + GST per repayment tenure

Statement of Accounts 

Soft Copy – Nil.

Branch Walk-in – Rs. 250 + GST

Loan Cancellation Charges 

2% of loan amount or Rs. 5,750, whichever is higher + GST

Instrument Swap Charges 

Rs. 550 + GST

Duplicate Repayment Schedule 

Soft Copy – Nil

Branch Walk-In – Rs. 550 + GST

Duplicate NOC 

Rs. 550 + GST

Post-dated Cheque Charges

Rs. 850 + GST

 

  • Bounce Charges - The charges levied on a bounce EMI payment are known as bounce charges. In other words, these charges are levied when you miss an Emi payment due to inadequate funds in your bank account.
  • Mandate Rejection Service Charge - Rejecting any of the services offered by your lender will accompany a charge known as the mandate rejection service charge.
  • CCOD Annual Maintenance Charges - For those who have chosen a flexible funding option for their MSME/SME loan such as Cash Credit or Overdraft, the services rendered in maintaining the Overdraft account will be charged annually with CCOD Annual Maintenance charges.
  • Document Processing Charges - The process of document verification involves various stages such as loan agreement, indexing, etc. Certain charges are levied on the processing of such documents known as document processing fees .
  • Outstation Collection Charges - The charges levied on cheques issued to a non-local branch of the lender will be accompanied by outstation collection charges.
  • Statement of Accounts - At the time of issuing your Statement of Accounts – a bank statement that has the list of all transactions made from your bank account during a specified period, your lender will charge  certain fee for a hard copy, while a soft is issued free of charge.
  • Loan Cancellation Charges - If you wish to have your business loan cancelled after loan disbursal has already taken place, you can do so but you will be charged what is known as loan cancellation charges
  • Instrument Swap Charges - Swapping or exchanging your women entrepreneurs’ loan liability or cash flow with a different financial instrument will accompany charges known as instrument swap charges.
  • Duplicate Repayment Schedule - If, for any reason, you are required to have your loan amortisation schedule re-issued, your lender will charge a fee for it provided the request is made for a hard copy. No charges are levied for a soft copy.
  • Duplicate NOC - If, for any reason, you are required to apply for a duplicate of your No Objection Certificate, your lender will charge a certain fee for its issuance. 
  • Post-Dated Cheque Charges - The charges levied on post-dated cheques used for making EMI payments are known as post-dated cheque charges. A post-dated cheque is one in which the date mentioned on the cheque is that of a later date than the date on which the cheque is drawn. 

 

Foreclosure Charges 

The following are the different foreclosure charges involved under SME and MSME loans

 

 

Type of Fees 

Applicable Charges 

Foreclosure Charges 

4.5% on the future Principal outstanding on existing loan + GST 

No foreclosure allowed for the first nine months 

Foreclosure Charges for Top-up 

2.25% on the future Principal outstanding on existing loan + GST

Foreclosure charges shall be levied only if new rate is lower than the existing rate 

Foreclosure Charges in CCOD Cases 

4.5% on the Dropped Down limit amount + GST

No foreclosure is allowed for the first nine months 

Foreclosure Letter Charge 

Soft Copy – Nil

Branch Walk-In – Rs. 199 + GST

 

  • Foreclosure Charges - The charges levied at the time of partial or full pre-payment of a business loan for women are known as foreclosure charges. Such charges are not levied on loans taken with floating interest rates.
  • Foreclosure Charges for Top-Up - The charges levied at the pre-payment, either in part or in full, of a top-up taken over and above the existing business loan come accompanied with charges known as foreclosure charges for top-up. Foreclosure charges for top-up are levied subject to the condition that the new interest rate is lower than the old one.
  • Foreclosure Charges on CCOD Cases - The charges levied at the pre-payment, whether in part or in full of a business loan taken under flexible funding options such as Cash Credit or Overdraft are known as foreclosure charges on CCOD cases.
  • Foreclosure Letter Charge - The charges levied when a lender issues a foreclosure notice or letter reminding you of missed EMI payments are known as foreclosure letter charges. Such charges are levied only for a hard copy, not for a soft copy.

How to Apply for MSME/SME Loan?

We at Tata Capital offer four different ways in which you can apply for an MSME/SME loan –

  • You can get an MSME/SME loan online by applying via our website 

  • You can apply by contacting our customer care number at 1860 267 6060, open from 9am to 8pm Monday to Saturday. You can even request for a call back

  • You can even apply via our 24/7 virtual assistant TIA 

You can physically visit any of our nearby branches and talk to one of our Tata Capital representatives.

FAQ

MSME or SME loans are short-term business loans aimed at providing financial assistance to start-up owners, helping them move smoothly up the growth curve. Tailor-made to suit the needs of small and medium-sized enterprises, these loans can be used for investing in factory infrastructure, maintaining a healthy cash flow, hiring skilled workforce, etc.

You can apply for an MSME/SME loan in the following ways –

  • Online – A quick and hassle-free way to apply for an MSME/SME loan through the lender’s website

  • Phone – Give a call to your lender’s customer care team

  • Email – Send a mail regarding your interest in applying for an MSME/SME loan to the lender’s customer support mail address

  • Virtual Assistant – Use your lender’s online 24x7 virtual assistant feature

  • Offline – Visit your lender’s nearby branch and talk to their lending experts in person

To opt for an MSME or SME loan, you must meet the following minimum eligibility criteria -

  • Your age should fall within the range of 25 to 65 years.

  • You should own a business that has been profitable for three consecutive financial years.

  • Your CIBIL or credit score should be 700 or above.

  • Your business turnover must show an upward trend.

  • Your company’s balance sheet and Profit and Loss accounts must be audited by a registered Chartered Accountant.

Learn more about MSME loan Eligibility

The following documents are required to avail an MSME/SME loan –

  • Duly filled business loan application form with two passport-sized photographs

  • Copy of Photo Identity Proof documents – Voter ID/Driving License/Passport/Aadhaar Card

  • Copy of certified bank statements for the last six months

  • Documents of Business Proof – Trade License/Establishment/Sales Tax Certificate, Sole Proprietorship Declaration or certified copy of the Partnership Deed, ownership documents, Income Tax Returns (ITR) for the last two years, P/L Profit/Loss statements and balance sheet for the past two years

If you still have doubts read more about the documents required for SME loan

To apply for an MSME/SME loan, the following fees and charges are involved –

  • Processing fee levied for the processing of your business loan application

  • Foreclosure charges levied on the early repayment or foreclosure of your business loan

  • Document processing charges

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