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Top 5 Government Loan Schemes for Small Business Research Team | Posted On Thursday, October 03,2019, 04:28 PM

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Top 5 Government Loan Schemes for Small Business



If you are running a business you will know how capital plays an important role to fuel the growth of businesses. To scale new heights in your venture you need funding and that is main challenge faced by the almost all entrepreneurs and start-ups in India. To meet the business capital demands, the government has launched several schemes and subsidy loan schemes to help the small enterprises run their business successfully. Let’s discuss the top 5 government scheme for small businesses:

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MSME Business Loans in 59 Minutes:

The 59 minutes MSME business loan scheme is designed to ease credit access for businesses. The scheme was announced by the government in September 2018. The loans under this scheme are provided to extend financial assistance for the growth of the MSMEs within the country. The scheme supports new and existing micro, small and medium businesses and disburses loans up to Rs. 1 crore.

As the name suggests, the approval of the loan takes 59 minutes while the processing of the loan takes 8-10 days to complete. The loan process is completely online and you can scan the documents and submit the application form online. The interest rates will be levied as per your credit ratings and the nature of your business.

To apply for a business loan under this scheme, you need GST verifications, Income Tax details, bank account statements, ownership related documentation, and KYC details. You can visit the SIDBI portal for other necessary information about the loan.

See Also: How To Get A Business Loan From A Bank?

MUDRA Loans:

Most often, the small and medium businesses are left on their own to finance their ventures. So, the government devised the MUDRA loan scheme to bring the micro units and medium enterprises under the financial system. The MUDRA loan is a government initiative that aims to encourage business prospects and the growth of micro-units. The MUDRA loans are refinanced business loans that can be availed from public and private sector banks, co-operative banks and rural banks. The loan is structured in three categories and the financing can be availed based on the stage of growth of the enterprise.

Sishu: under this category, the maximum loan that can be availed is Rs. 50,000 with an interest rate of 12% per annum

Kishore: the loan limit under this category is Rs. 5 lakh.

Tarun: the maximum loan that can be availed under this category is up to Rs 10 lakh. 

See Also: Get Business Loans Instantly

Credit Guarantee Fund Scheme for Micro and Small Enterprises:

The Credit Guarantee Fund Scheme was launched by the government to provide monetary assistance to micro and small units in the country. The government felt the need to strengthen the credit delivery system through the credit guarantee fund scheme.

It is often noted that businesses fail or shut down due to a lack of capital. The government has identified these hindrances in the path of small and micro units and has facilitated the credit guarantee scheme through Public, private, and foreign banks along with Regional Rural Banks (RRBs) and the SBI with its associate banks. 

 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.

See Also: Business Loan Interest Rates, Calculations And Eligibility

National Small Industries Corporation Subsidy:

The NSIC is a scheme customized to enhance the competitiveness of the MSMEs. NSIC has been working to promote and foster the growth of micro, small and medium enterprises in the country. The NSIC subsidy offers financial assistance in the form of raw material assistance and marketing assistance.

The scheme helps you to avail funds for enhancing the market value of your products under marketing assistance. On the other hand, you can avail funds to purchase raw material under the raw material assistance scheme. 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.

Credit Link Capital Subsidy Scheme for Technology Upgradation:

The main objective of the Credit Link Capital Subsidy Scheme is to facilitate technological up-gradation in the MSME sector by providing a 15% subsidy on institutional finance availed by the MSME to integrate well-established and improved technology in the specified sub-sectors/products approved under the scheme.

Through this scheme, the government aims to reduce the production cost of goods and services in the MSME sector. This will allow them to bring the necessary changes in manufacturing, marketing or supply chain and remain competitive in the local and global markets.

The scheme has a list of approved sectors who are eligible to receive subsidy and financing under this scheme. However, the government has capped the minimum amount that can be availed as a subsidy under the scheme which is set at Rs. 15 lakh. Private and public limited companies, co-operatives and partnership firms come under the scope of this business loan scheme.

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