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Composite Loan for MSMEs


Composite Loan for MSMEs

The composite loan scheme was initiated by the Ministry of Micro, Small & Medium Enterprises. This scheme was introduced to assist the Micro Small & Medium Enterprises units financially. The Single Financial Corporation provides the term loan and working capital loan to the MSME units to reduce the difficulties in starting production.

Eligibility Criteria

The scheme applies to the following:

  • The small enterprises of the manufacturing sector which includes cottage and village industrial units and artisans.
  • The micro-enterprises in the small enterprises of the manufacturing sector.
  • Micro or small enterprises of the service sector that take part in industrial activities only.

Documents Required

The required documents to avail the composite loan are:

  • The ownership details, educational details, personal details of the Owner or the Director.
  • Bank statement of the last 6 months.
  • GST number.
  • Udyog Aadhaar.
  • The statement of the Tax returns in an XML format.

Approved Banks for Loan

The following are the banks that can sanction the Composite loans to the Micro, Small & Medium Enterprises:

  • Bank of Baroda
  • Bank of Maharastra
  • Bank of India
  • Indian Bank
  • State Bank of India
  • Indian Overseas Bank
  • United Bank of India
  • Allahabad Bank
  • Andhra Bank
  • Punjab National Bank
  • Punjab & Sind Bank
  • Oriental Bank of Commerce
  • Vijaya Bank
  • Canara Bank
  • IDBI Bank
  • Corporation Bank
  • UCO Bank
  • Syndicate Bank
  • Union Bank

Debt Equity Ratio

The debt-equity ratio is 3:1 in the total venture of the money spent. The total venture will include the project cost and also the requirement of the working capital. This is fixed after checking about the amount of subsidy, investment or incentive that are given for the project.

Contribution of the Promoter

The contribution of the promoter under the composite loan scheme will be calculated after arriving at the debt-equity ratio 3:1.

Margin for the Term Loan

The Margin for the Term Loan is:

  • 25% for all the backward areas in the State.
  • 30% for the municipal limits and other areas of all the cities in the State.

Rate of Interest

Term Loans

  • The rate of interest charged for the new units in the backward area is 12.5% during the period of construction. The rate of interest is 13.5% for the remaining period.
  • The rate of interest for the units in the non-backward areas during the period of construction is 13.5%. The rate of interest for the remaining period is 14.5%.

Working Capital Loans

  • The rate of interest for all the loans up to an amount of Rs.2 lakhs during the construction period is 15%.
  • The rate of interest for all the loans exceeding the amount of Rs.2 lakhs during the construction period is 16.5%.

Period of Repayment

Working Capital Loans: The repayment period of the loan is up to 10 years for the working capital loan, which includes the moratorium period of 13 years.

Term Loans: The repayment period of the loan is up to 8 years and 6 months for the term loan, which includes the moratorium period of 18 months.


The State Financial Corporation will first have a charge on the fixed assets and also the current assets. For the Working Capital Loan, the corporation may also ask for collateral security.


  • The maximum amount that can be availed through composite loan is 25 lakhs.
  • The scheme is operated by financial institutions and banks.

Terms and Conditions

  • The working capital loan should be utilised within a year of the commencement of the production.
  • The Micro, Small & Medium Enterprises (MSME) unit should open an account with the bank. The working capital loan amount will be credited to the bank when the State Financial Corporation disburses the amount.
  • The MSME unit should use this account for all the transactions of the business, which includes all the payments and the receipts.
  • If the MSME unit approaches the bank for more working capital, then the MSME unit should have repaid the previous loans completely and the amount approved by the State Financial Corporation.
  • The MSME unit should provide a statement on the monthly stock which shows the inventory level position of the State Financial Corporation. If the unit fails to submit the monthly stock system, then the State Financial Corporation will recall the loan.

For more details, please contact:

Office of DC MSME
Development Commissioner (Micro, Small and Medium Enterprises),
A-Wing, 7th Floor, Nirman Bhavan, New Delhi 110011
Phone: 91-11-23063800, 23063802, 23063803, 23063804, 23063805, 23063806
Fax: 91-11-23062315