MSME Loan Interest Rate

You can get an MSME loan at attractive interest rates starting from 14% p.a.. Here is an overview of rates set by some leading financial institutions that offer business loans to MSMEs on Bajaj Markets:

Identifying the right business loan depends on understanding how lenders set their rates. Here are the key factors that influence the interest rates for your MSME Loan:

Credit Score and Financial History

Your creditworthiness is a primary factor in determining the interest rate offered by banks or NBFCs. A high credit score and a clean repayment history demonstrate financial discipline, helping you secure lower interest rates.

• Type of Business and Industry Risk

Lenders assess the risk profile of your specific industry before deciding on the final loan terms. Businesses in stable sectors with consistent demand often qualify for more competitive rates compared to those in volatile markets.

• Loan Amount and Repayment Tenure

The total amount you borrow and the time you take to repay it directly impact your interest cost. While longer tenures may offer lower monthly EMIs, they might carry different interest structures depending on the lender’s policy.

• Business Vintage and Operational Stability 

Established businesses with a long-standing presence and proven profitability are viewed as lower-risk borrowers. Companies with a solid track record and automated operations often negotiate better rates than newly formed startups.

• Collateral and Type of Loan

Opting for an unsecured business loan might result in higher rates due to the lack of security for the lender. Conversely, leveraging government schemes like CGTMSE can help you access funding with different risk-based pricing

Calculating your loan interest helps you plan your business finances and manage monthly cash flow effectively. Most lenders use the Reducing Balance method, where interest is calculated on the remaining principal amount after every EMI payment, rather than the initial loan amount.

To calculate your monthly interest, you can use the standard EMI formula:

EMI = [P x R x (1+R)^N] / [(1+R)^N-1]

• P: Principal loan amount.

• R: Monthly interest rate (Annual rate divided by 12).

• N: Number of monthly instalments (Tenure).

Example of MSME Loan Calculation

Suppose you take a business loan for the maximum amount of ₹80 Lakhs for an extended tenure of 8 years (96 months) at a minimum interest rate of 14% p.a., here is the calculation:

• Principal (P): ₹80,00,000

• Annual Rate (R): 14%

• Tenure (N): 96 months

Using the formula, your monthly EMI would be approximately ₹1,39,715. Over the eight-year period, the total interest payable would be ₹54,12,657, making the total repayment amount ₹1,34,12,657. Checking these figures on digital marketplaces like Bajaj Markets helps you compare high-value lender offers to find the most affordable and sustainable option for your enterprise’s scale.

Reference of all T&C necessarily refers to the terms of the Partners as regards to pre-approved offers and loan processing time amongst other conditions.