What is a Gold Loan for MSME Business?

A gold loan for MSMEs (Micro, Small & Medium Enterprises) refers to a financing option where MSMEs can avail loans by pledging their gold jewellery, bars or coins as collateral with banks or Non-banking Financial Companies (NBFCs).

Key features include:

• Leveraging their idle gold assets allows MSMEs to access quick financing for working capital, inventory purchases, investments, etc.
• Minimum documentation and faster approval compared to business loans make it ideal for urgent needs.
• The loan amount sanctioned depends on the quantity and quality of gold pledged. It can range from a few thousand to lakhs to even crores.
• Interest rates are reasonable, generally starting around 9-15% with flexible repayment tenures.
• A moratorium period may be available for principal repayment. Only interest needs payment initially.
• Gold ornaments pledged remain safely stored with the loan provider till repayment.
• There is no restriction on end use, funds can be utilised for any business requirement.

Gold loans help MSMEs unlock value from existing gold assets to fulfil urgent financing needs, expand working capital, or undertake new investments without liquidating gold. It offers a cost-effective credit option with flexibility."