Government Loan Schemes for Small Businesses in India

According to the Ministry of Micro, Small and Medium Enterprises there are about 40 million registered and unregistered Micro, Small and Medium Enterprises (MSMEs) in India. MSMEs can be classified as belonging to either the organised or unorganised sector. MSMEs are an important source of employment that generates about 40% of India’s overall GDP. National drawback such as unemployment is efficiently addressed by MSMEs. The government has introduced several programmes to provide loans to MSMEs to strengthen their businesses and economical condition of the country.

Pradhan Mantri MUDRA Yojana (PMMY)

Micro Units Development and Refinance Agency Ltd provides
start-up business loans. It offers NBFCs and Banks refinancing support for lending to small enterprises that need loans upto INR 10 lakh. Borrowers can use the MUDRA loan as a collateral-free financing alternative at a reasonable interest rate. Additionally, borrowers have the option of extending the repayment tenure. For closing the loan account, neither a processing fee nor prepayment penalties apply. MUDRA loans are available to owners of businesses involved in commerce, services, women entrepreneurs, etc. Following are the MUDRA Loan schemes:

MSME Loan in 59 Minutes

A government-launched digital platform called MSME (Micro, Small, Medium Enterprises) loan or PSB loan in 59 minutes ensures speedier disbursement of loan funds for people who want to expand their existing businesses. NBFCs and banks offer lump sum loans to borrowers with an interest rate of 8.50% p.a. for amounts ranging from INR 1 Lakh to INR 5 Crore. Due to the portal’s connection to the CGTMSE scheme (Credit Guarantee Fund Trust for Micro and Small Enterprises), borrowers are not required to put up any collateral.

Stand Up India

Stand Up India is a government programme that provides business loans to women entrepreneurs and members of underrepresented groups like SC and ST. The SIDBI (Small Industries Development Bank of India) supports this programme, which offers loans in the range of INR 10 Lakh to INR 1 Crore.

Stand Up India offers financial assistance to businesses engaged in manufacturing, trading, agriculture, and other industries. Additionally, qualifying candidates who are SC/ST individuals or women entrepreneurs must own 51% of the company’s shares if the funding is received for a non-individual venture. Keep in mind that this loan requires security, it is not a collateral-free loan. The Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL) or other collateral may be pledged as security for a Stand-Up India Loan

Credit Linked Capital Subsidy Scheme (CLCSS)

Majority of small businesses are unable to pay the hefty costs of incorporating technology upgrades. The Credit Linked Capital Subsidy Scheme (CLCSS) was established to offer financial support for business technology adaptation, working capital requirement, etc. Businesses can utilise the fund for vital corporate functions like production, supply chains, marketing, etc.
INR 1 Crore in loan principal is available to borrow. Additionally, they are eligible for financial assistance in the form of a 15% subsidy on a loan amount of up to INR 15 Lakh. Following the distribution of the previously indicated 15% subsidy, MSMEs owned by people who fall under the SC/ST category will also receive an extra 10% subsidy.

National Small Industries Corporation (NSIC)

Individuals who participate in the NSIC (National Small Industries Corporation) programme receive financial support for marketing, technology, financing, raw materials, and other business necessities. This Indian Government MSME enterprise with ISO certification supports companies’ success in this cut throat commercial environment.
The marketing aid programme supports small-scale industries by providing free tender additionally, if the project expense does not exceed INR 25 Lakh, small-scale companies are not required to pay any security deposits and are given additional financial support for the land and construction departments. NSIC provides the following schemes: