Top 6 Government Loan Schemes For Small Businesses In India

Government loan scheme of India

  • 12 Feb 2020
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    Do you want to get a reliable financial aid for your budding ideas?  Here are a few government loan schemes for small businesses in India.

    India is a vast country with a population of about 1.34 billion. 50% of this population is employable, but India’s unemployment rate has increased by 45%. According to a recent survey 83% of Indians would like to start their own micro, small or medium businesses depending on their financial strength but not every good idea is funded well. These small business entrepreneurs who have a lot of potential and revolutionary ideas which can do good to our country and must be encouraged through funds.

     

    Recognising this problem, the Government of India has taken steps to help these small scale and home businesses. The government schemes listed below have helped many businesses and will be of help to you too :-

     

    Read: What Does a Small Business Owner Do?

     

    Business Loans in 59 Minutes for Micro, Small and Medium Enterprises (MSME)

     

    Small Business Loan

     

    This government loan scheme introduced by the government is for already existing small businesses. They lend money for small businesses to carry out their everyday operations. The minimum and maximum amount loaned is from Rs. 10 Lakh to Rs. 1 Crore. The minimum business loan rate of interest offered is 8% but it may vary according to the applicant’s credit score. There is no collateral considered for this loan also known as an unsecured business loan.

     

    The benefit of this Government loan scheme for small businesses  in India is that it gives an approval or disapproves the loan within 59 minutes rather than spending 30 days on the same loan making it much faster and the loan is received in 7 to 8 days if it is approved. 

     

    Pradhan Mantri Mudra Yojana (PMMY)  

     

    Pradhan mantri mudra yojna

     

    There are three types of loans in PMMY, namely :-

     

    The first category which is known as Shishu loans are for extremely small business units and can loan you a sum of money upto Rs 50,000. The second category is known as kishore loans which are for slightly bigger units and lends above Rs 50,000 but upto Rs 5 lakh. The third category known as Taru covers loans above Rs 5 lakh and upto Rs 10 lakh for units requiring loans bigger than the category of Shishu and Kishore loans.

     

    MUDRA is a refinancing Institution that means it finances one loan by taking a loan from someone else. MUDRA does not lend directly to micro business owners. It is beneficial for small business owners as there is comparatively less and doesn’t require the borrower to keep any property or collateral for security. You don’t have to go to the bank to withdraw cash each time as there is a MUDRA debit card provided giving an easier access to funds.

     

    Mudra loans under Pradhan Mantri Mudra Yojana (PMMY) can be availed from any nearby branch office of a bank, NBFC, MFIs etc. Borrowers may file an online application for MUDRA loans on Udyamimitra portal.  

     

    Read: How to do Bookkeeping for a Small Business

     

    Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS)

     

    CGTMSE

     

    CGS loan is another unsecured business loan by the Government where you don’t have to offer any asset or pledge any property to get a loan. A maximum of  Rs. 2 crore, can be covered under Credit Guarantee Scheme of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

     

    Both the existing and the new enterprises are eligible to be covered under the scheme. This government subsidy loan for business has options for micro, small and medium enterprises as well. This loan provides guarantee for a large portion of the loan amount.

     

     

    National Small Business Subsidy Scheme

     

    NSIC mudra loan

     

    The National Small Industries Corporation (NSIC) subsidy for small businesses offers three kinds of financial benefits – Marketing Assistance, Technology Upgradation and Raw Material Assistance. Under the raw material assistance scheme of NSIC the raw materials can be from India itself or imported as per need, this is the basic benefit of the scheme. It obtains raw material for upto 90 days. It is a very reliable government subsidy loan for business.

     

    Read :- How To Do Inventory Management For Your Business.

     

    SIDBI, Make in India Loan for Entrepreneurs (SMILE) 

     

    Make in India loans

     

    The government loan scheme is intended to take forward the Government of India’s ‘Make in India’ campaign and help micro, small and medium enterprises take part in the campaign by taking a loan from a Small Industry Development Bank of India. The objective of this loan is for it to be favourable for the borrower to meet the debt-equity ratio of any enterprise. This government subsidy loan for business has the basic objective to increase the small business ventures by making products in India with our resources.

     

    The terms are in favour of the borrower so it is also called a soft loan. The interest rate is very low and there is a longer payment period.

     

    For enquiries, please contact the nearest SIDBI office or contact www.sidbi.in with the details of your business and requirement. 

     

    Read: Health Tips For Small Business Owners

     

    Stand-up India  

     

    stand up india

     

    Stand-Up India Scheme loans a minimum of Rs. 10 lakh to a maximum of Rs. 1 Crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a project on the unused lands where there is no need to remodel or demolish an existing structure.This makes it a good and reliable government scheme for women. This enterprise may be in manufacturing, services or the trading sector. 

     

    The primary benefit of this government loan scheme is that it gives a fair chance to scheduled caste, scheduled tribe and for women too. For further information contact https://www.standupmitra.in/ 

     

    Brilliant ideas need efficient funding to become reality! The government of India has implemented certain loan schemes through which small businesses like ours can opt for. Here are a few government schemes which can be of help to you.

     

     

    How to register for the loan scheme you have opted for?

     

    Step 1: Go to the opted bank’s official online portal associated with the scheme

    Step 2: Register on the portal and log in through the One-Time Password (OTP) authentication

    Step 3: Agree to the terms and conditions of the Government loan scheme on the online portal

    Step 4: Enter your financial credentials and all the information which is required

    Step 5: Continue with filling the forms asked to fill and uploading the required documents

     

     

    Government Business Loans: Eligibility Criteria

     

    All the information given by you on the online portal is for them to evaluate the applicant and check if he is eligible for the loan he or she has opted for. The factors taken into consideration to check the eligibility of the applicant are listed below :- 

    • Amount of loan required
    • Type of Business he or she owns
    • Age of the applicant
    • Credit Score of applicant
    • Capital Invested in the business
    • Annual Turnover of the business owned

     

    The minimum age criterion to apply for a government business loan is to be 18 years of age. For the existing businesses the minimum business existence to apply for a loan is 2 years. Minimum credit score has to be above 650 for loans to be sanctioned by the respective banks.

     

     

    Documents Required to avail Government Loan Schemes

     

    The documents required for these government schemes may vary from one loan scheme to another though, we have listed a few common documents required for all government loan schemes:-:

    • Blue Print of Business plan
    • GST Identification number
    • Details of income tax paid for the last 3 to 5 years
    •  Age, Address, Identity and Income Proof
    • Bank statements of last 6 months minimum
    • Registered business address proof
    • Income Tax Return for the last 2 years
    • E-KYC: All the documents required to apply for E-KYC
    • Details of the type of loan that the applicant has opted for
    • List of company Directors or partners of the company 
    • Passport-size photographs

     

    Read :- Government Schemes For Women Entrepreneurs.

     

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