5 Government Loan Schemes for Small Businesses in India

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India has about 40 million Micro, Small and Medium Enterprises (MSMEs), including registered and unregistered ones. Medium and small businesses contribute around 40% to the total GDP of the country. These businesses are the future of the country because they have increased a lot of employment opportunities for the population in India. India has high young entrepreneurship energy and skills. However, these businesses have only one common obstacle and that was insufficient funds. Business needs capital at every juncture of the business cycle.

There are various sections of a business that need a smooth flow of funds, like working capital, technology, and marketing. The success of the business depends upon the fulfilment of fund requirements. A business develops and creates a market cap only when there is no shortage of funds. It becomes easier to meet small and big expenses in business. A business loan by government has helped these small businesses to develop and stabilize. It is a very important part of the Indian economy. There are various loan schemes that have come up for small businesses in India by the government of India.

Types of small business loans by the government

The MSME business loan in 59 minutes.

The MSME loan by the government of India is designed to disburse a loan to small businesses in just 59 minutes. This was introduced in September. This type of loan has been available to boost the economy of the country. It improves financial assistance and brings stability. Small new and existing businesses can register under this scheme to get a good amount of money.

The amount can be extended up to 1 crore and it takes around 12 days to process the loan request. However, the approval of the loan is done in just 59 minutes. That is even less than an hour. The loan is available for small and medium-scale businesses that are supported by the government with a good sum of funds as per the eligibility. The interest will be only 8.5% and it is much lower as compared to private sector loans. The business needs to have the following documents to enroll in the process:

  • GST verification
  • Bank accounts statements for 6 months
  • KYC details
  • Income tax verification
  • Ownership of business documents
  • MUDRA loan

This loan is an initiative by the government of India and sanctioned by the refinancing agency organization and micro unit development. The business loan was established to help micro business units with extensive financial help to develop and sustain. The theme of this loan is to fund the unfunded.

All the branches in India offer this loan and it focuses on low-cost financial loans for small micro businesses. There are three types of loan amounts available, like, 50,000 for the Shishu loan, 50,000 to 5,00,000 for the Kishor loan and 5,00,000 to 10,00,000 for the Tarun loan. All micro businesses, including proprietary concerns, partnership firms, private limited companies, public companies, and all other business entities can apply for this MUDRA loan. Apply For home improvement loans.

Stand-up India

The loan granted under this scheme can range from Rs. 10 lakhs to Rs. 1 crore. This kind of loan is designed to meet the financial needs of the scheduled caste and the scheduled tribes. The backward classes have a lot of young entrepreneurship energy and the government of India came up with this loan type to manage funds for these classes.

The backward classes of India, like SC and ST, are supported by a good amount of funds to meet their business expenses. Every bank in India needs to offer business loans to the backward classes, like scheduled castes and scheduled tribes. Those businesses engaged in trading, marketing, manufacturing, or any other sectors relating to private and public utilities can apply for this.

Credit Guarantee Fund Scheme for Micro and Small Enterprises

This business loan by the government of India works for both new and existing loans. business loans to small and medium-scale businesses. The loan is available only on the basis of collateral or security. This will be available to any medium or enterprise that can offer collateral or property to the bank to get a business loan for small and medium-scale businesses. Businesses in manufacturing activities, like retail trade, educational institutions, self-help groups and training institutions, can apply for this.

National Small Industries Corporation Subsidy

This loan is focused on aiding the growth of MSMEs by providing services including finance, technology, marketing and other services across the country. It supports small and medium enterprises that are related to services like finance and technology. The marketing and credit support systems are available for this type of loan.

Wrapping up

These 5 business loans by the government will offer small and medium-scale businesses. This will help the country to boost the economy. These types of loans act as financial support for all of the above mentioned small and medium business loans.