TOP 5 GOVERNMENT LOAN SCHEMES FOR SMALL BUSINESSES IN INDIA

At present, MSME (Micro, Small, and Medium Enterprise) sector is playing a vital role in the Indian economy. The sector is a crucial source of employment and a contributor to around 40% of the total GDP of India. Given the significance of this sector and its role in India’s growth, the government presents various schemes to sanction loans to the MSME sector to improve their business and economy. The Government of India has started different business loans to provide funding support to SMEs and MSMEs and individuals related to manufacturing, trading, and services activities. Also, there are schemes related to business loan for women, helping them fulfil their entrepreneurial dreams. All the loans for small and medium businesses are provided through diverse financial institutions in India, including NBFCs, private and public sector banks, etc.

Let’s have a look at the top 5 government business loan schemes in India.

Pradhan Mantri Mudra Yojana (PMMY)

Established with a mission to finance the unfunded, the Pradhan Mantri Mudra Yojana loan can be availed from regional rural banks (RRBs), private and public sector banks, corporate banks, and small finance banks. Mudra loans are aimed at boosting the commercial activity of existing small businesses and promoting first-generation entrepreneurs engaged in small-scale businesses and startups. There are three types available in this government loan scheme for businesses. These include:

• Kishor loans

• Shishu loans

• Tarun loans

National Small Industries Corporation (NSIC) Subsidy

The NSIC works with a primary goal to support and grow the small and medium-size industries. The National Small Industries Corporation provides funding support to SMEs and MSMEs, allowing them to boost their competitiveness and raise the market value of their products and solutions. It is a loan that any small-scale firm may get to improve their businesses’ efficiency and profits. The NSIC customizes a set of schemes to help enterprises to improve their business growth and competitiveness. In this government business loan, schemes are:

• Raw Material Assistance

• MSME Global Mart

• Bill Discounting Scheme

• Performance and Credit Rating

• Skill and Development

MSME Loan

This type of government business loan is normally provided to startups and small business entrepreneurs. It is a short-term loan accessible to small businesses, startups and women entrepreneurs. MSME loans can help you get instant money for your business and fulfil various financial requirements of corporate activities. Many private and public banks and NBFCs offer MSME loans for new businesses and existing enterprises that require support in terms of infrastructure and activities. One can apply for this loan for various business-related plans and activities, such as:

• Infrastructure development

• Business expansion

• Purchase raw materials or stock inventory

• Technology upgrades

• Machinery and plant equipment

The Stand Up India Scheme

It is presented by the government of India to provide funding support for businesses or small enterprises run by Scheduled Castes, Tribes, and Women. The loan given under this government loan scheme can range between 10 lakhs to 1 crore. Any enterprises involved in manufacturing, trading, or any other industry related to services can apply for a loan in this scheme. One of the best women loan schemes, Stand Up India, allows entrepreneurs to get the required fund to set up a new business.

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

The CGFMSE is a loan plan that provides funding support without collateral to businesses under the MSME sector. This government business loan can be given to all new and existing enterprises. In this scheme, MSMEs can apply for a loan amount from 50 Lakh to 200 Lakh with preference given to eligible women. CGTMSE works with a goal to encourage young entrepreneurs to get collateral-free loans for starting a business without thinking about the failure of repayment.

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