MSME Loan Schemes Available in Kerala

Kerala is one of the most progressive states in India, and its government has always been at the forefront of promoting entrepreneurship and supporting MSMEs. To help entrepreneurs start and grow their businesses, the state government has launched several loan schemes that provide financial assistance to MSMEs. In this blog, we’ll take a look at some of the most popular loan schemes available for MSMEs in Kerala.

Kerala Financial Corporation (KFC) MSME Term Loan Scheme

The Kerala Financial Corporation (KFC) offers a term loan scheme to help entrepreneurs with long-term financial needs of industry and industry-related projects. This loan scheme is specifically designed to support micro, small and medium enterprises (MSMEs) in Kerala. The following are its main highlights:

Kerala Financial Corporation (KFC) MSME Working Capital Loan Scheme

The Kerala Financial Corporation (KFC) also offers a working capital loan scheme that helps in managing MSME’s day-to-day operational expenses. Working capital loans can support businesses to become more focused on their growth and generate capital. The following are its main highlights:

Kerala State Industrial Development Corporation (KSIDC) Seed Funding Loan Scheme

The Kerala State Industrial Development Corporation (KSIDC) provides financial assistance to entrepreneurs and MSMEs. Through this scheme, KSIDC aims to provide seed fund assistance to innovative start-up ventures. The following are its main highlights:

Kerala State Backward Classes Development Corporation (KSBDC) Scheme

The KSBDC provides financial assistance to MSMEs belonging to the backward classes in Kerala in the form Self-Employment Loan Scheme.  The scheme is available to both new and existing MSMEs in Kerala. It is provided by KSBDC in partnership with the National Minorities Development and Finance Corporation (NMDFC). The following are its main highlights:

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:

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:

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:

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:

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