India has about 40 million Micro Small and Medium Enterprises (MSMEs), including registered and unregistered ones. MSMEs fall under the categories of both the organized and the unorganized sectors. These MSMEs contribute to about 40% of the total GDP of India, and it remains a critical source of employment. The MSMEs provide solutions to critical issues in the country like poverty, unemployment, income inequality, regional imbalances, etc. The government for this purpose has introduced various schemes to sanction loans to MSMEs to boost their business and their economy. The entrepreneurs who run such MSMEs can borrow money in the form of a loan through any one of the schemes that suit their requirements.
1. Mudra Loan
PMMY (Pradhan Mantri Mudra Yojana) is a scheme aimed at small firms in the disorganized sector. The scheme offers up to INR 1 lakh to small enterprises.
Mudra stands for Micro Unit Development and Refinancing Agency. Vendors, machine operators, shop keepers, those working in food units etc. can apply for this loan. Public banks, regional banks and other small financing banks offer this facility.
Eligibility:
Any such small business in the non-corporate segment which consists of enterprise firms or proprietorship in the urban and rural areas might apply for the Mudra loan. It also further also includes:
- Food-service units
- Food processors and others
- Fruits or vegetable vendors
- Machine operators
- Shopkeepers
- Small manufacturing units
- Small businesses and industries
- Truck operators
- Repair shops
Benefits include:
The benefits of the Mudra loan are:-
- The three types of loan offered in this category are:-
- Shishu: Loans: Loan amount paid in this category is up to Rs. 50,000
- Kishor: Loans: Loan amount paid in this category is between Rs. 50,001 and up to a maximum Rs. 5 lakh
- Tarun: Loans: Loan amount paid in this category is between Rs. 5 lakh
- and up to a maximum Rs. 10 lakh
- One can easily get the required funds with a Mudra Card. The card given acts like a debit card for the Mudra loan account.
- With cash credit arrangement facility it offers capital facility
2. Credit Linked Capital Subsidy Scheme
This is one among the government loan schemes the Ministry of MSMEs offers. It offers collateral-free loans to small and medium enterprises in rural and partly rural areas. The scheme also offers 15% subsidy on machinery, investment and land. This lets small business owners upgrade their infrastructure as per the requirements of a diverse market.
Eligibility:
The eligibility criteria for Credit Linked Capital Subsidy Scheme depends on factors like:-
- Age of the business owner or the applicant
- Amount of loan
- Business type
- Business and personal credit score
- Capital that is already invested in the business and the growth potential
- Turnover of the business annually
Benefits Include:
Benefits for the small scale industries are as follows:
- You may get around 15% of the subsidy for buying a required plant, machinery and equipment for the various small-scale businesses.
- It helps in the small and medium industries for upgrading the latest and necessary technologies that are necessary for its growth.
- For boosting this growth of the small industries.
3. National Small Industries Corporation
This too is another business loan scheme the Government of India introduced in recent years. The scheme is divided into two categories; marketing and credit support. Name your requirement; the scheme offers financial support.
Eligibility:
The eligibility is as follows:
- MSMEs which are under this turnover that ranges between the Rs. 5 crore or greater and up to a maximum of Rs. 250 crore
- Enterprise that are operating for the last 3 years
- Collateral for the loans in cash credit, banks that need details of its business
- Loan record for repayment, if its applicable
- CIBIL score
Benefits Include:
The benefits are mentioned below:-
- It helps in the small industries for upgrading the latest and necessary technologies that are necessary for its growth.
- For boosting this growth of the small industries.
4. MSME loan in 59 minutes
The scheme lets you expand or take your business to the next level. Under this business loan scheme, you get up to INR50000000 at an interest rate of 8.50% within 59 minutes. To avail the facility, you need to submit proof of your capability to repay the loan on time. If you are eligible, this is one among the fastest ways you can arrange quick cash.
Eligibility:
Here are the eligibility factors for getting a 59 minutes MSME loan are:
- Revenue which is generated from this business
- The capacity of repayment of the borrower or business
- Previous or existing credit history
Benefits Include:
Benefits which one gets from the scheme:
- The loan processing process is very quick and can be completed with some minimal documentation
- The loan scheme is backed by a Advanced Technology thus making it very convenient for business owners to apply for it
- This loan offers affordable rates that makes the scheme very pocket friendly for borrowers.
5. Credit guarantee fund government business loan scheme
This business loan scheme, started 18 years ago, is perhaps the best financing facility available for MSMEs. From its beginning, the scheme offers security-free loans to business owners. You can avail this loan from any authorized bank or any regional rural bank. The bank determines your eligibility based on your projected capability to repay the loan. Contact your bank for more information in this regard.
Eligibility:
The business owners for all new and existing SMEs or Small and Medium Enterprises are eligible to apply for it.
Benefits offered:
Benefits which one gets from the scheme are:-
- It helps in the small and medium industries for upgrading the latest and necessary technologies that are necessary for its growth.
- For boosting this growth of the small industries.
6. SMILE (SIDBI Make In India Soft Loan Fund For MSMEs)
This initiative aims to help new enterprises in the manufacturing sector. It also helps established businesses to take their venture to the next level. Small Industries Development Bank of India launched this scheme in 2015. The purpose of this loan is to minimize the gap between equity and debt. You get a repayment tenure of ten years. The Government of India introduced this business loan scheme as part of its make in India initiative. The loan is available, both as a term and soft loan.
Eligibility Criteria:
- A big emphasis would be on the newly started enterprises in the service and manufacturing
- There is a big emphasis which would be on financing of the smaller enterprises in the MSME sector
- The existing industries that want the expansion for taking advantage of the new opportunities and technology modernization and involving upgradation techniques are eligible
- For the SMILE Equipment Finance (SEF), MSME must be working for a minimum of 3 years and has a good financial position.
Benefits Offered:
The benefits for the scheme are:-
- Lower interest rates
- Greater extended periods for repayment of loan
- Very fast dispensation of the financial assistance
- Greater funding of the partial promoter for the contribution by various methods for soft loans
- Very fast dispensation of the machinery loan for the contactless platform
- For the SMILE equipment finance, there is a lower amount of the promoter contribution
7. Stand Up India
This is one among the government loan schemes aimed at the SC/ST small and medium entrepreneurs. The applicants should be new ventures wanting to work in the manufacture, trade and service sector. If the governing body of the firm is a trust, at least 51% of the stake should be owned by someone belonging to the scheduled caste or tribe. Women entrepreneurs receive priority in the scheme. Stand-up India offers a minimum of INR 1 lakh and a maximum of INR 1 crore. The loan will cover up 80% of the project to assist them in their ventures.
Eligibility:
- Minimum age for applying is 18 years of age for the SC or ST or women entrepreneurs
- For Green Field Projects only loans are available
- A minimum of the 51% of the shareholding stake needs to held with the SC/ST or a women entrepreneur, if it is an non-individual enterprise
- Applicants must not have, in any way, defaulted in any loan(s)
- The applicant must be Indian citizen without any criminal records
Benefits Offered:
The benefits of the scheme are mentioned below:-
- Interest Rate for this: (Base Rate plus (MCLR) + 3 percent + Tenor Premium)
- Loan Amount: One can take loan upto a minimum of Rs. 10 lakh and maximum loan of up to Rs. 1 crore
- Repayment Tenure: The repayment tenure is 7 years, which includes moratorium period of around 18 months
Registering for government loan schemes
Follow the steps given below to register for a government loan scheme in India:
- Visit your choice bank’s online platform.
- Choose the scheme you want to apply for.
- Register on the portal.
- Log-in using the one-time-password authentication.
- Give your consent to the terms and conditions.
- Key in your financial details and other information required
- Continue with the registration.
General Eligibility requirements
Your eligibility for your choice government loan scheme depends on the following factors:
- Loan amount
- Type of scheme
- Indian citizen
- Credit score
- Loan repayment history
FAQs on Government Schemes
1. What is the fee charged for CGTMSE?
The CGTMSE fees charges is mentioned below:
- For the credit option for up to a maximum of Rs.5 lakh: The fee charged is 0.50% of the total amount.
- For the credit facility started above Rs.5 lakh up to a maximum of Rs. 1 crore: The fee charged is 0.75% of the total amount.
2. What is the lock-in tenure in CGTMSE?
For CGTMSE the lock-in tenure is 18 months.
3. What is the maximum loan amount which can be considered under this guarantee of CGTMSE?
Under CGTMSE, the maximum loan offered is either up to Rs. 2 crore or it is 75% of the total project cost.
4. Can NRIs apply for Stand-Up India?
No, NRIs cannot apply for Stand-Up India.
5. How can a person apply for the Stand-Up India scheme?
The person needs to visit their nearest bank and fill and submit a loan application form, with the required documents and the photographs for applying for the Stand-Up India scheme.
6. Is it necessary for the applicant to get IT-PAN for becoming an eligible loan borrower in the Government scheme?
Yes, it is compulsory for the borrower to get IT-PAN.
7. Does CGTMSE scheme cover Mudra Loan?
No, CGTMSE scheme doesn’t cover Mudra Loan
8. Is there any requirement for security or collateral loan requirement for the Pradhan Mantri Mudra Loan?
No, there is no such requirement for the loan under the Mudra loan scheme.
9. For Mudra loan is ITR compulsory?
Yes, for all the salaried people and existing businesses, previous years’ ITR is mandatory for applying for such business loans under the Mudra Yojana.
10. How can one check this Mudra loan status?
One can check their Mudra loan status by going to the bank’s website and checking the ‘Mudra loan application status’ section.
