In the past few years, the start-ups in India have made some promising business and have changed the face of Indian economy. Currently, there are more than 39,000 start-ups in India that have the potential to grow and become market leaders in future. But most often businesses shut down due to lack of credit facilities. Since these budding businesses do not have access to stock market funding they need a strong credit system to fund the crucial aspects of the business. With enough funds, these businesses can focus on innovation and long-term perspective of the business.
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A start-up business loan can be availed by individuals who are about to start their own business venture or are into existing businesses. These funds can facilitate the growth of this small business venture by maintaining the flow of cash into their business.
Here are some government schemes that allow start-ups and MSMEs to get monetary assistance.
See Also: Why Loan is Important for Business?
It is often difficult for small and medium scale industries to get easy credit and they often end up lending money from private lenders at a very high-interest rate. Therefore the government has introduced MUDRA loan to enable these MSMEs to avail easy credit and invest in opportunities to grow.
These are government loans initiate to bring the small and medium-sized enterprises under the financial system. Its main objective is to encourage business prospective and thus the loan is further divided into three categories of funding based on the stages of growth of the business:
See Also: Business Loans For Women Entrepreneurs
This is a government-funded scheme which can be availed by both micro and small units in the country. To strengthen the credit delivery system, the CGS scheme was introduced to extend easy credit to businesses involved in the service and manufacturing activities.
The scheme enables you to get collateral-free loans if you meet the eligibility criteria. You can avail collateral-free working capital loan up to Rs. 10 lakh for funding new and existing business. MSMEs engaged in manufacturing or service activities, excluding retail trade, educational institutions, agriculture, Self-Help Groups (SHGs), training institutions are eligible to get loans under this scheme.
The government has identified the roadblocks in the path of the start-ups i.e. lack of affordable credit leading to the failure of the business. Thus the start-up India scheme was launched in April 2016 to provide funds to start-ups in India.
The scheme aims to promote woman entrepreneurship and extends loans to businesses involved in the manufacturing, trading and services sector. Since start-ups can create jobs at the grass-root level the credit institutions are thus encouraged to provide loans between Rs. 10 Lakhs to Rs. 1 crore to eligible candidates. The scheme also seeks to empower the schedule caste, schedule tribe and woman entrepreneurs by enabling them to become contributing members of their family and participate in the economic growth.
The scheme is headed by the national small industries corporation to promote the growth of the MSMEs. The scheme offers two types of benefits to the borrowing entity namely raw material assistance and marketing assistance. The NSIC has partnered with various financial organisations to provide such loans to micro and medium-sized units.
The scheme allows you to enhance the market value of your products and services under the market assistance program. On the other hand, the raw material assistance scheme allows you to fund the purchase of both indigenous and imported raw materials. This scheme mainly focuses on improving the prospects of micro and small industries by giving financial assistance and help in the growth of these units both qualitatively and quantitatively.
This is a government-backed scheme headed by SIDBI and launched during 2012-13 for sustainable development projects. It aims at providing credit to industries involved in green energy, renewable energy, technology hardware and non-renewable energy. The main objective of the scheme is to provide support to energy efficiency and cleaner production and sustainable development projects.
New and existing MSMEs are eligible to get assistance under this scheme. However, they should have a good track record and have a sound financial position. The scheme offer loans at normal lending rates to borrowers based on the credit ratings of the MSME.
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