Karnataka has been at the forefront of promoting MSMEs in the country. It is one of the most industrially advanced states in India, with a strong focus on the development of the MSME sector. To encourage entrepreneurship, the government of Karnataka has introduced several loan schemes for MSMEs. These schemes provide financial assistance and support to MSMEs to start, expand, or upgrade their businesses. In this blog, we will discuss some of the loan schemes available for MSMEs in Karnataka.
Karnataka State Finance Corporation (KSFC) Scheme
KSFC provides financial assistance to MSMEs through various loan schemes. They offer term loans, working capital loans, and loans for setting up new businesses or expanding existing ones. The scheme is available for all categories of entrepreneurs, including women, SC/ST, and minorities. The following are some of its highlights:
| Loan amount | Up to 8 crore |
|---|---|
| Collateral | Required |
| Loan tenure | 3-8 years |
| Processing fee | 0.50%+ Service Tax |
| Promoters Contribution | Between 10% and 22.5% |
Karnataka Small Scale Industries Development Corporation (KSSIDC) Loan Scheme:
The Karnataka Small Scale Industries Development Corporation (KSSIDC) offers loans to MSMEs for the establishment, expansion, and modernization of their businesses. The scheme is open to all eligible MSMEs in Karnataka, including women entrepreneurs. The following are its main highlights:
| Loan amount | 5 lakh to 5 crore |
|---|---|
| Interest rates | 9.5% to 11.5% |
| Loan tenure | Up to 7 years |
| Age | Minimum age of 18 |
| Promoters Contribution | Between 15% and 25% of the project cost |
Shramashakthi scheme MSME loan Karnataka
Shramashakthi is a Karnataka state government MSME loan scheme launched under the Karnataka Minorities Development Corporation. This scheme was launched to support the religious minorities in the state through training and financial assistance. The following are some of its highlights:
| Loan amount | Up to 50,000 |
|---|---|
| Interest rates | 4% |
| Loan tenure | 36 months |
| Residency | Permanent resident of Karnataka |
| Age | Between 18 and 55 years of age |
Credit Linked Capital Subsidy Scheme (CLCSS)
Credit Linked Capital Subsidy Scheme was launched in October 2000 by the Government of India. This scheme provides necessary funds to MSMEs for upgrading their existing technologies. Enterprises can use this scheme to upgrade their existing plant and machinery and increase profit. This scheme has no upper loan limit, but the subsidy is calculated on the loan amount sanctioned for P&M purchase only. The following are its main features:
| Loan amount | No upper limit |
|---|---|
| Subsidy | 15% of the loan amount |
| Annual guarantee fee | 0.75%-1.0% |
| Loan tenure | Flexible tenure depending upon the repayment capacity |
Pradhan Mantri MUDRA Yojana (PMMY)
The Pradhan Mantri MUDRA Yojana (PMMY) is a flagship central government scheme launched in 2015. It provides micro-loans to non-corporate, non-farm micro and small enterprises in both rural and urban areas.
PMMY offers loans under three categories, depending on the stages of business growth and funding needs:
- Shishu Mudra: Up to Rs. 50,000
- Kishore Mudra: Rs. 50,001 to Rs. 5 lakh
- Tarun Mudra: Rs. 5 lakh to Rs. 10 lakh
MUDRA loans are availed through various financial institutions, including Public sector banks, Private sector banks, Regional Rural Banks, Small Finance Banks, Microfinance Institutions, and Non-Banking Financial Companies (NBFCs).
Unlike other loan schemes, PMMY doesn’t have specific criteria for age, gender, tenure, interest rates, etc. All these factors can vary based on the category of the loan and the policies of the lending institution.
Prime Minister’s Employment Generation Programme (PMEGP)
PMEGP is a credit-linked subsidy scheme administered by the Ministry of Micro, Small and Medium Enterprises (MSME), which aims at creating job opportunities by establishing micro-enterprises. The main target of this scheme is Women, Traditional and prospective artisans and Unemployed youth. The following are some of its main features:
| Age | Minimum age of 18 |
|---|---|
| Interest rate | Between 11% -12% depending on the bank |
| Loan tenure | 3-7 years |
| Education qualification | VIII standard pass |
| Maximum Loan amount | Rs. 1 Crore |
| Subsidy | 15% to 35% |
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
CGTMSE is a joint initiative launched in 2000 by the Ministry of Micro, Small and Medium Enterprises (MSME), the Government of India, and the Small Industries Development Bank of India (SIDBI). It encourages financial institutions to provide collateral-free credit schemes to micro and small enterprises. In case of any default, the bank can file a claim with CGTMSE. The following are some of its main features:
| Loan amount | Up to 5 crore |
|---|---|
| Collateral | Not required |
| Loan tenure | 5-10 years |
| Annual Guarantee fee | 0.37%-1.35% |
| Age | Minimum age of 18 |
Stand-up India
Stand-up India is a central government scheme launched in 2016. It provides bank loans for entrepreneurship among women and members of Scheduled Castes (SCs) and Scheduled Tribes (STs). Existing businesses cannot avail loans through this scheme, as these are provided for starting new businesses. These loans are provided through various banks, including scheduled commercial banks, regional rural banks (RRBs), and small finance banks.
This scheme provides loan amounts ranging from Rs. 10 lakhs to Rs. 1 crore. The interest rates and tenure vary depending on the nature of the business and other factors such as the nature of the business, credit policies of the lender, etc.
SIDBI Make in India Soft Loan Fund for Micro, Small, and Medium Enterprises (SMILE)
SMILE is a scheme launched by the central government to provide financial assistance to 25 Identified sectors under the ‘Make in India’ initiative. This scheme promotes the ‘Make in India’ initiative among entrepreneurs. SMILE provides adequate funding for the setting up of new enterprises and also for the expansion of existing ones. The following are some of its main features:
| Loan tenure | Maximum 10 years |
|---|---|
| Loan amount | From Rs.10 lakhs to Rs.25 lakhs |
| Interest rates | Depending on enterprises’ requirement |
| Nature of loan | Quasi-equity and term loans |
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