Top 5 Government Loan Schemes for Small Businesses

Approximately 40 million Micro Small and Medium Enterprises (MSMEs), both registered and unregistered, exist in India. The government provide some loan schemes to assist small and medium enterprises. These loans primarily aim to assist the less fortunate and middle-class segments of society. The top 5 government loan schemes for small businesses in India are discussed in this article by Finline.

1. MSME Business Loans

One of the several loan programs made available by the government in September 2018 is the MSME business loan. The loans approved under this program are intended to increase financial support for national development and promote local business expansion. The program enables both new and established enterprises to make use of the financial support it offers. The plan earns the designation “MSME business loan in 59 minutes” primarily because it obtains permission for the credit within 59 minutes.

Benefits

The loans offered under these schemes range up to Rs. 1 crore and take between 8 and 12 days to complete the procedure. The type of enterprise the loan application involves will determine the interest rate. The loan amount issued under this plan can vary from 1 lakh to 5 lakh, and the interest rate on such loans starts at 8.5%.

Eligibility Criteria

The following criteria must be met in order to be eligible for a loan under this program:

• GST confirmations
• IRS tax-related documentation
• The most recent six months’ worth of bank statements
• Ownership-related records
• KYC specifics

2. MUDRA Loans

The Micro-Units Development and Refinance Agency organization, which was founded by the Indian government to provide financing to micro business units, approves the MUDRA loans. “Fund the unfunded” is the guiding principle of MUDRA loans. MUDRA loans are offered by all bank branches in India. These loans were significant in developing the idea of low-cost finance for small and medium-sized firms. The following categories apply to MUDRA loans:

Eligibility Criteria

All enterprises, including sole proprietorships, partnership firms, private limited liability corporations, publicly traded companies, and other legal organizations, are qualified to apply for credit under this program.

3. Stand-Up India Scheme

The Stand-up India program was initiated by the government to offer loans to women and members of Scheduled Castes as well as Scheduled Tribes who own companies. This program is run by the Small Industries Development Bank of India (SIDBI). 

Benefits

The loan amount awarded under this program may be anywhere between Rs. 10 lakh and Rs. 1 crore. This loan must go to at least one woman entrepreneur or member of a Scheduled Caste or Scheduled Tribe from each bank. This loan is supposed to cover approximately 75% of the project’s entire cost.

Eligibility Criteria

Companies operating in manufacturing, commerce, or other service-related industries can apply for loans under this program. If the company is not a sole proprietorship, at least 51% of the assets must be owned by a woman or a member of a Scheduled Caste or Scheduled Tribe.

4. Udyogini

A program called Udyogini, which means “women empowerment,” has been started to educate Indian women. The Women Development Corporation, on behalf of the Government of India, launched the program. Cash provided under this program assists women in obtaining the capital they need to establish a company.

Benefits and Eligibility

Under this program, the lender can only provide a loan of up to Rs. 15,00,000. A woman entrepreneur must be between the ages of 18 and 55 in order to be qualified to apply for this program, and her family’s yearly income cannot exceed Rs. 15,00,000. For physically impaired or widowed women, there is no upper-income restriction. For loans under this program, there are no processing fees or collateral requirements.

Documents Required

• Passport-sized photos
• Birth certificate
• A card showing they fall under the federal poverty line
• An Aadhar card
• Proof of their caste
• A passbook or bank account
• A ration card
• Documentation of their income

5. Credit Guarantee Fund Scheme for Micro and Small Enterprises

The Indian government has introduced a credit program that enables funding for enterprises that are part of the MSME sector through unsecured loans. The program may offer loans to both new and established businesses. The Ministry of MSMEs and Small Industries created the Credit Guarantee Fund Trust as a trust with the goal of administering the CGFMSE program. This program may make cash flow loans of up to Rs. 200 lakhs available, with advantages given to qualified women entrepreneurs.

Eligibility

Examples of organizations engaged in manufacturing include retail businesses, institutions of higher education, self-help organizations, and training facilities. Additionally, companies in the service industry are also eligible to use this loan program’s money.

Entrepreneurs should take full advantage of these top 5 government loan schemes to start their dream business.

Frequently Asked Questions (FAQs)

How are government business financing programs implemented?

The government implemented its business loan programs to help people, particularly those who own Micro, Small, and Medium-Sized Enterprises, obtain financial support in the form of loans for their company’s needs.

How can a startup obtain loans?

If a start-up is not eligible for bank loans but is an MSME, the person in charge of the enterprise may be able to obtain a business loan through any recently implemented government programs.

The above-mentioned schemes need detailed documentation and a perfect project report.  We, at Finline will help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Also, all public and private sector banks working in India accept our project report. Click to create your report.