Credit Limit For MSME: A Complete Guide


A credit line is essential for a business because it will ensure that a company can sustain its operations during the long intervals of the invoice payment process. Therefore, several schemes are offered to an MSME business by the government and private sector lenders with varying credit limits, depending upon the nature and financials of the business. 

Credit Limit of Various Schemes

As medium and small-scale industries are the engines fueling the growth of India Inc., the government wants to give full support to every MSME business in the country. Covering each of the MSME schemes is impossible — in light of the number of programs available for this sector. We have covered exclusively several government schemes in our previous article, which can help you boost working capital significantly. 

Therefore, other than that, many schemes by the private banks and NBFCs give a business a revolving credit line like CredFlow, which is helping to bridge the credit gap. In India, only 15 per cent of businesses have access to formal credit, and NBFCs play a crucial role in bridging this gap. With that said, further in this article, we will list some schemes by the government of India and the credit limits (if available) that are different from traditional lending!

Credit Linked Capital Subsidy Scheme

CLCSS is a scheme exclusively designed for technological upgradation for an MSME. It will give a subsidy of up to 15 per cent with an additional investment of up to 1 crore in a pre-established business. Thus, it means that the credit limit of this scheme is up to Rs. 15 Lakhs. 

Through this scheme, it is easy for MSMEs to facilitate the induction of state-of-the-art technology into their business. Therefore, it will help in increasing the efficiency of the business. 

Equity Infusion Via Fund of Funds 

A fund of funds is the type of fund in the mother-daughter structure where the private equity and venture capital firms become the daughter firms. Every MSME gets initial stage funding, helping them to grow their business, but on the contrary, every organization struggles to get funding during the expansion stage. Therefore, the government has set up a corpus fund of funds Rs. 50,000 crores with leverage of 1:4. Therefore, economically viable MSMEs can get access to capital via private equity and venture funds. Thus, the credit limit for this scheme depends upon the convincing skills and nature of the business. 

Discouragement of Global Tender Up to Rs. 200 Crore

So, it is not a credit line as per the definition; rather, it is a unique initiative by the government of India, where they have amended the general financial rules. So, as per the new regulations for the procurement of goods of up to Rs.200 crores by the government of India, only Indian MSMEs can put their quotations for their tenders. Through this scheme, medium and small enterprises will not face indiscriminate competition from big multinational organizations.


Through these initiatives, MSMEs have significant credit limits for expenditure and growing their business. On the other hand, growing MSMEs in our country would result in significant infrastructural development with a huge number of job opportunities for all classes of people. 

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