Top 5 Government Loan Schemes for Small Businesses in India

Just like you need to eat healthy and get necessary nutrition to live a healthy and fulfilling life, running a business successfully requires constant flow of funds. Whether you want a new business or running a well-established small business enterprise, having the necessary funds is critical to fuel the business' growth and accomplish your business goals.

 

Without having ample cash flow, keeping your business running for long is next to impossible. Today, although many banks and financial organisations offer business loans to meet the financial requirements, the government of India has also taken several initiatives to offer monetary support to small businesses to keep their business going.

 

In this guide, we take a look at the top of government loan schemes for small businesses.

 

MSME Loan Scheme in 59 Minutes

 

To help the MSMEs (Micro, Small, and Medium-sized Enterprises) get the working capital they need, the government of India introduced the MSME Loan Scheme. Under this government business loans scheme, as an entrepreneur of any new or existing MSME, you can avail of a business loan of up to Rs. 1 Crore.

 

Generally, when you apply for a business loan with any bank or NBFC (non-banking financial company), it takes about 7-15 days for loan processing and the amount to be credited to your bank account. However, with the Indian Government's MSME loan scheme, the process is completed in 59 minutes. That is incredible, right? Within 59 minutes, you can know whether your loan is approved or disapproved.

 

Another important thing to know about this loan scheme is that you can avail of the loan at an affordable interest rate, starting from 8% per annum. Additionally, if you are a woman entrepreneur, you get the benefit of 3% reservation under this scheme.

 

PMMY – Pradhan Mantri MUDRA Yojana

 

The PMMY, or the Pradhan Mantri MUDRA Yojana, is another incredible government loan scheme that you can take advantage of in 2024. It is specifically beneficial for women entrepreneurs and businesses in the services and trading sector.

 

MUDRA is the acronym for Micro Units Development and Refinance Agency Ltd., which acts as a refinancing support system for NBFC and banks that offer loans to small business enterprises. Under this scheme, you can avail yourself of a business loan without having to provide any collateral to the lender, and you also have the choice to extend the repayment period.

 

Under the MUDRA business loan scheme, three types of credit options are available –

 

• Shishu MUDRA Loan – Under this scheme, you can get a loan of up to Rs. 50,000 at an interest rate of 1% to 2%.
• Kishor MUDRA Loan – Under this scheme, you can get a loan of up to Rs. 500,000 at an interest rate of 8.60% to 11.15%.
• Tarun MUDRA Loan – Under this scheme, you can get a loan of Rs. 500,000 to Rs. 10,000,000 at an interest rate of 11.15 to 20%.

 

NSIC – National Small Industries Corporation

 

This loan scheme for small businesses is considered to be a major boon for business owners who wish to get financial support for specific business purposes like marketing, finance, and technology. Many small and medium-sized business owners in India consider NSIC the best government credit scheme for business owners.

 

NSIC offers the following credit schemes:

 

• Marketing Support Scheme – Under this government business loans scheme, you can get marketing support for your business through Consortia schemes, Tender Marketing, etc. This can significantly help you promote your business, expand your market reach, be visible to potential new clients, and expand your business operations.
• Credit Support Scheme – Under this scheme, you get financial support for procuring finances, marketing collaterals, and raw materials for production.

 

CLCSS – Credit-Linked Capital Subsidy Scheme

 

CLCSS, as the name says, is a government subsidy loan for businesses scheme that specifically caters to the needs of business owners who need funds to use new technology in their industry. Here, new technology covers a wide range, and it may include manufacturing technology, marketing technology, or supply chain technology.

 

Whether you own a private partnership business, sole proprietorship entity, or private limited company, you can get loans under the CLCSS. Under this scheme, you get a 15% capital subsidy upfront.

 

SIDBI – Small Industries Development Bank of India Loan

 

SIDBI is one of the oldest financial organisations in India that offers government business loans to small business owners. It mainly provides financial support to MSME businesses that desperately need funds. SIDBI offers direct loans and indirect loan schemes to Non-banking Financial Companies.

 

One of the most important facts about the Small Industries Development Bank of India is that under this scheme, you can get a business loan of any amount, from Rs. 10 Lakh to Rs. 25 Crores.

 

You can get the credit for a maximum repayment period of 10 years. Also, you can get this credit without offering collateral, provided your loan amount is up to or less than Rs. 1 crore.

 

Other government loan schemes for small businesses

 

Apart from the top 5 government loan schemes for small businesses mentioned above, you can also explore other funding options like the Credit Guarantee Fund Scheme, Prime Ministers' Employment Generation Programmer, Stand Up India Loan Scheme, etc. All these government business loan schemes offer financial support to boost your business.

 

Final Word

 

To run a business successfully and keep it going for a long, you would require a regular supply of capital. To meet this need and take your business to the next level, taking a loan under the government loan scheme can turn out to be a fruitful decision. 

 

If you are looking for more credit options beyond the government loan scheme for small businesses, you can consider applying for a business loan with Udyog Plus, which is a part of Aditya Birla Finance Limited and secured a loan of up to Rs. 10 Lakh with minimal documents and at lowest interest rates.

 

To learn more about business loan eligibility, the documents required, and other details, you can visit the Udyog Plus website and apply for the loan online. The 100% digital process, from log-in to disbursement, gives you a hassle-free loan application experience.