MSME Loan for Manufacturing Units
MSME (Micro, Small, and Medium Enterprises) loans are financial products designed to support the growth and development of small and medium-sized businesses.
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Loan Purpose for Manufacturing Units
- Purchase of new or upgraded machinery/equipment
- Working capital needs
- Infrastructure expansion (factory premises, utility upgrades)
- Raw material procurement
- Technology upgrades
- Export-related expenses
Eligibility Criteria
While criteria vary by lender, common requirements include:
- Must be registered as an MSME (Udyam Registration)
- Valid business PAN and GST registration
- Minimum operational history of 6 months – 1 year (for some loans)
- Satisfactory credit history (CIBIL score generally > 650)
- Business should be engaged in manufacturing or allied activities
Types of MSME Loans Available
- Term Loan
- For purchase of plant & machinery or fixed assets
- Working Capital Loan
- For daily operational needs
- Mudra Loan (Shishu, Kishor, Tarun)
- Offered under PMMY for micro/small manufacturing startups
- Stand-Up India Loan
- Loans for SC/ST or women entrepreneurs (₹10 lakh – ₹1 crore)
- Credit Guarantee Fund Scheme (CGTMSE)
- Collateral-free loans up to ₹2 crore
- Technology Upgradation Fund (TUFS)
- For upgrading manufacturing tech in textile units
Loan Amount & Interest Rate
| Feature | Details |
|---|---|
| Loan Amount | ₹50,000 to ₹5 crore (varies by lender) |
| Interest Rate | 7.5% – 16% (depending on lender, credit score, etc.) |
| Tenure | 1 – 10 years |
| Collateral | May or may not be required (CGTMSE allows no-collateral loans) |
Required Documents
- Udyam Registration Certificate
- PAN Card, Aadhaar Card (of owner/proprietor)
- GST Registration Certificate
- Business address proof
- Bank statements (last 6–12 months)
- Income Tax Returns
- Balance Sheet & Profit & Loss Account
- Business plan/project report (for term loans)
- Machinery invoice/quotation
Best Banks/NBFCs Offering MSME Loans for Manufacturing
- SIDBI – Specialised bank for MSMEs
- State Bank of India – SME Smart Score, SME Loan products
- Punjab National Bank
- HDFC Bank – SmartUp Loans
- ICICI Bank – Collateral-free Business Loans
- Axis Bank – MSME Term Loans, Working Capital
- Tata Capital, Bajaj Finserv, Lendingkart, Indifi – NBFCs with quick disbursal
Government Schemes Supporting MSME Manufacturing Units
| Scheme Name | Benefit to Manufacturer |
|---|---|
| PMEGP (Prime Minister's Employment Generation Programme) | Subsidy on loans for new micro manufacturing units |
| CGTMSE | No collateral loan facility up to ₹2 crore |
| MSME Champions Scheme | Handholding & support services |
| CLCSS (Credit Linked Capital Subsidy Scheme) | For tech upgradation in small manufacturing units |
| PMSME | Credit support for micro and small manufacturing |
How to Apply
Option 1: Via Banks/NBFC Portals
- Visit the official bank/NBFC website
- Select “Business/MSME Loan” and fill in the details
- Upload documents
- Await approval/disbursal
Option 2: Via Government Portals
Tips to Improve Approval Chances
- Maintain a good CIBIL score (preferably above 700)
- Keep business financials well-documented
- Apply under CGTMSE if you lack collateral
- Register your MSME under Udyam portal
- Prepare a clear project report or manufacturing plan
Common Use Cases for Manufacturing
- Setting up textile/weaving units
- CNC/metal fabrication businesses
- Food processing and packaging
- Garment manufacturing
- Plastic or injection molding units
- Furniture production
- Electrical/electronic goods assembly
