MSME Loan Without Collateral

Discover how MSMEs can access collateral-free loans. Explore eligibility, benefits, and application process. Empower your business growth today!

Posted On:
February 26, 2024
Written By:

Tap Capital

Understanding MSME Loans Without Collateral | Tap Capital

The backbone of India’s economy lies in its Micro, Small, & Medium Enterprises (MSMEs), which contribute a significant 29% to the country’s GDP. With approximately 6.3 crore MSMEs driving economic growth, it’s evident that the revival and improvement of the economy heavily rely on this sector. Recognising this, the Indian government has been actively encouraging the growth of MSMEs by offering various loans without collateral. Here’s everything you need to know about securing an MSME loan without collateral.

An MSME loan without collateral is essentially an unsecured business loan offered to businesses within the MSME sector. Unlike traditional loans that require businesses to pledge collateral, these loans provide much-needed financial assistance without the burden of putting assets at risk. At its core, a collateral-free MSME loan represents a vote of confidence, an unsecured lifeline extended to businesses within this dynamic sector. Unlike traditional loans that bind you with the chains of pledged assets, these loans offer liberation. They fuel your vision without jeopardising your ownership or flexibility, allowing you to channel your resources toward growth.

The advantages of opting for an MSME loan without collateral are manifold:

Collateral-Free Credit: MSMEs can access credit without the need to provide any security or collateral.

Easy Eligibility: Minimal documentation and straightforward eligibility criteria make these loans accessible to a wide range of businesses, whether they are startups or established enterprises.

Quick Disbursement: With streamlined processes, the disbursement of collateral-free MSME loans is swift, ensuring timely access to funds.

Flexible Terms: These loans offer flexibility in terms of repayment tenures, interest rates, and loan amounts, allowing businesses to choose options that best suit their needs.

Convenient Application: The paperless application process allows businesses to apply for loans online and track their applications with ease.

Credit History Building: Timely repayment of EMIs helps in building a positive credit history, which can be beneficial for future financial endeavors.

Securing an MSME Loan Without Collateral:

To secure an MSME loan without collateral, businesses can explore various government schemes and financial institutions:

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Scheme:

Offers collateral-free term loans and working capital loans up to Rs 10 lakh with a guarantee cover of up to 75% of the sanctioned loan amount.

Pradhan Mantri MUDRA Yojana: Provides unsecured business loans up to Rs 10 lakh to MSMEs, individuals, and professionals.

Stand-Up India Scheme: Facilitates bank loans between Rs 10 lakh and Rs 1 crore to women and borrowers from Scheduled Caste (SC) or Scheduled Tribe (ST) communities for setting up greenfield enterprises.

MSME Loans in 59 Minutes: Allows MSMEs to apply for collateral-free loans up to Rs 5 crore through an online portal called PSB Loans in 59 minutes.

Non-Banking Financial Companies (NBFCs): NBFCs offer loans for MSMEs without collateral at competitive terms and conditions, with quick processing times and minimal documentation requirements.


MSMEs play a crucial role in driving India’s economic growth, and access to timely funding is essential for their success and expansion. Collateral-free MSME loans offer a convenient and hassle-free way for businesses to obtain the necessary financial assistance without the burden of pledging assets. By leveraging government schemes and partnering with financial institutions, MSMEs can unlock growth opportunities and contribute further to the nation’s prosperity.