The Micro, Small, and Medium Enterprises (MSME) sector plays a vital role in the economic growth of a country, particularly in driving innovation, generating employment, and fostering inclusive growth. However, accessing adequate finance often remains a major challenge for MSMEs, especially when it comes to availing low-interest loans. Fortunately, the Indian government has recognized this challenge and introduced several schemes designed to support MSMEs with affordable financing options.
In 2025, the landscape of MSME loans is set to evolve, with more accessible options to help businesses grow. Here’s a breakdown of the top MSME schemes available to entrepreneurs seeking low-interest loans in 2025.
1. PMEGP (Prime Minister’s Employment Generation Programme)
Overview: The PMEGP is a government-backed scheme that provides financial assistance to MSMEs and entrepreneurs in the manufacturing and service sectors. It is designed to generate employment by promoting new ventures and small businesses.
Loan Features:
- The scheme offers loans with low-interest rates, typically ranging between 4% and 12%.
- The loan amount can range from ₹10 lakhs for service enterprises to ₹25 lakhs for manufacturing enterprises.
- It covers both urban and rural areas and is administered through financial institutions like banks and NABARD.
Eligibility:
- Both new and existing MSMEs can apply.
- The applicant must be an Indian citizen.
- The applicant should be at least 18 years old.
How it Helps: PMEGP provides financial support with subsidies, ensuring that MSMEs can access low-interest loans without heavy repayment burdens.
2. MUDRA Scheme (Micro Units Development and Refinance Agency)
Overview: Launched in 2015, the MUDRA scheme aims to provide financial assistance to small and micro enterprises in India. It focuses on offering loans to non-corporate, non-farm small/micro businesses, including street vendors, artisans, and small traders.
Loan Features:
- Loans under MUDRA are classified into three categories: Shishu (up to ₹50,000), Kishore (₹50,000 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh).
- The interest rates typically range from 8% to 15%, depending on the loan type and the financial institution.
- MUDRA loans are unsecured, making them easier to access for businesses that do not have collateral.
Eligibility:
- Any non-corporate, non-farm business can apply for MUDRA loans.
- The applicant must have a viable business idea or existing business with a demonstrated track record.
How it Helps: MUDRA loans are highly accessible, and they aim to boost the financial inclusion of small businesses that may have otherwise been excluded from traditional banking services.
3. CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises)
Overview: The CGTMSE scheme, launched by the Ministry of Micro, Small, and Medium Enterprises, provides credit guarantees to banks and financial institutions to encourage them to lend to MSMEs. This helps reduce the risk for lenders, allowing them to offer loans to MSMEs with minimal collateral requirements.
Loan Features:
- The scheme covers loans ranging from ₹10 lakh to ₹2 crore.
- The interest rates are competitive, typically ranging between 7% to 12%, depending on the risk profile and the lender’s policy.
- CGTMSE guarantees loans up to 85% of the loan amount.
Eligibility:
- The scheme is available to all micro and small enterprises.
- Both new and existing businesses are eligible to apply.
How it Helps: The scheme facilitates access to unsecured loans, significantly easing the borrowing process for businesses that may not have adequate assets for collateral.
4. SIDBI Make in India Soft Loan Fund for Micro, Small & Medium Enterprises (SMILE)
Overview: SMILE is a scheme introduced by the Small Industries Development Bank of India (SIDBI) to provide financial assistance to MSMEs engaged in the manufacturing sector. The focus is on promoting “Make in India” by supporting small enterprises involved in innovation and technology-driven production processes.
Loan Features:
- Loans under SMILE are available at attractive interest rates, typically ranging from 7% to 9%.
- The loan amount can vary from ₹10 lakh to ₹1 crore.
- It offers flexible repayment options with a moratorium period on the principal amount.
Eligibility:
- The applicant must be a micro or small enterprise in the manufacturing sector.
- Businesses engaged in innovative and technology-driven manufacturing are given preference.
How it Helps: This scheme helps MSMEs that focus on innovation or technology by offering low-interest loans, encouraging growth, and improving global competitiveness.
5. Stand-Up India Scheme
Overview: The Stand-Up India Scheme is aimed at promoting entrepreneurship among women and Scheduled Caste (SC)/Scheduled Tribe (ST) entrepreneurs. It provides financial assistance to these groups for setting up greenfield projects, particularly in the manufacturing, services, and trading sectors.
Loan Features:
- Loans under this scheme range between ₹10 lakh and ₹1 crore.
- Interest rates are competitive and are often linked to the base rate set by the banks (typically around 8% to 13%).
- The scheme encourages businesses to access loans for setting up new projects or ventures in the above-mentioned sectors.
Eligibility:
- The applicant must be a woman entrepreneur or belong to the SC/ST category.
- The business must be a greenfield project.
How it Helps: By offering low-interest loans with lenient eligibility criteria, this scheme supports the entrepreneurial aspirations of women and marginalized communities, helping them build businesses from the ground up.
6. Technology Upgradation Fund Scheme (TUFS)
Overview: The TUFS scheme is designed to support MSMEs in the textile and garment sectors by offering financial assistance for upgrading technology. The goal is to make MSMEs more competitive by encouraging the adoption of modern technologies and improving the overall productivity of the industry.
Loan Features:
- The scheme offers loans at low interest rates, typically between 5% and 8%.
- It covers expenses related to machinery purchase, installation, and other technology-driven upgrades.
Eligibility:
- Businesses in the textile and garment sectors, including MSMEs engaged in processing, weaving, spinning, and knitting, are eligible.
- The enterprise must show a commitment to adopting advanced technologies.
How it Helps: By enabling MSMEs in the textile industry to access low-interest loans for technology upgradation, the scheme helps improve the efficiency and quality of production, leading to increased competitiveness in global markets.
7. Credit Linked Capital Subsidy Scheme (CLCSS)
Overview: The CLCSS is designed to assist small and medium manufacturing units in upgrading their technology. Under this scheme, MSMEs can avail of a subsidy on the capital investment made towards modernizing their equipment and improving production processes.
Loan Features:
- The subsidy covers up to 15% of the investment, subject to a limit of ₹1 crore.
- The scheme also provides low-interest loans through various lending institutions.
Eligibility:
- The scheme is available to small and medium enterprises in the manufacturing sector.
How it Helps: The CLCSS makes it easier for MSMEs to modernize their infrastructure and adopt cutting-edge technology with the benefit of subsidies and low-interest loans, which can lead to higher productivity and profitability.
Conclusion
In 2025, MSMEs will have access to an array of schemes offering low-interest loans to support their growth and sustainability. These schemes are designed to cater to various needs, from technology upgrades to supporting women and SC/ST entrepreneurs. By leveraging these schemes, MSMEs can access the financial resources they need to scale their businesses and compete on a global stage.
If you’re an MSME owner looking for financial assistance, exploring these top schemes can help you find the right fit for your business needs and set you on the path to success. Always ensure that you check eligibility criteria and carefully evaluate the loan terms before proceeding with an application.