According to some research reports, India has over 40 million small business enterprises under the MSME (Micro Small and Medium Enterprises) category. While some of these enterprises are registered, others are unregistered. However, these MSMEs contribute significantly to India’s exports and up to 40% of the GDP (gross domestic product). Also, this sector creates employment opportunities for millions of skilled and unskilled labourers.
Since the small business sector’s contribution to the overall Indian economy is significant, the government of India offers several special government loan schemes for businesses to further boost this sector and encourage more people to start their own businesses.
If you are a small business owner looking for a secured business loan to expand your venture, you must be aware of the various government schemes for business loans and take advantage of them. Using a business loan EMI calculator can help you make informed decisions when choosing the best loan option for your needs
Scheme 1 – Small Industries Development Bank of India Loan (SIDBI)
SIDBI is one of the oldest lending organisations in India. It extends a government loan scheme for small business owners and mainly provides financial support to MSME businesses that need funds to run their operations and expand.
It offers direct and indirect loan schemes to NBFCs (non-banking financial companies). One critical factor to know about the business loan offered by SIDBI is that under this scheme, you can get a high-ticket loan, ranging from Rs. 10 Lakh to Rs. 25 crore.
Also, you get an extended repayment duration of up to 10 years, which gives you enough time to repay the loan without any hassles. Lastly, you can get a business loan from SIDBI without offering the lender any asset as a security cover. However, this condition applies only if your loan amount is less than Rs. 1 crore.
Scheme 2 – Credit-Linked Capital Subsidy Scheme (CLCSS)
The CLCSS, as the name itself says, is a subsidy-based government loan for small businesses. It specifically caters to the financial needs of businesses that need funds to adapt to new technology and stay abreast of the latest technological innovations in their sector.
In this context, new technology is an umbrella term. It may include adopting new manufacturing practices, buying new machinery that increases production output, adapting innovative marketing solutions, or revamping supply chain technology.
Whether you are the sole proprietor of the business enterprise or own a partnership firm, you can get a small-scale business loan under CLSS and enjoy a 15% upfront subsidy on the capital.
Scheme 3 – National Small Industries Corporation (NSIC)
The National Small Industries Corporation loan scheme is designed to help business owners who need funds for specific business purposes, such as adapting to new or upgrading to the latest technology, marketing their business, or financing. Several small and medium-sized enterprises in India struggle to market their enterprises effectively due to a lack of funds.
However, they can use the NSIC, a government credit scheme, to get the funds they need to market their firm, attract new customers, and expand their operations. NSIC offers the following credit schemes –
- Credit support scheme
Under his credit scheme, you can get a loan to procure raw materials, increase production output, design innovative marketing collaterals for your business, or market your enterprise better.
- Marketing support scheme
Under this government loan scheme for businesses, you can get the marketing support you need through Tender Marketing, Consortium schemes, etc. This can be very helpful in innovatively promoting your business, expanding your reach to new geographies, and offering the products or services to a newer set of potential clients.
Scheme 4 – Pradhan Mantri MUDRA Yojana (PMMY)
This government business loan scheme is perhaps the most popular government loan scheme. You can use this loan scheme 2024 to meet your business goals. While this loan is meant for all, and all business owners can avail of it, PMMY is specifically more beneficial for women business owners and businesses in the trading and services sector.
MUDRA stands for Micro Units Development and Refinance Agency Ltd. It is a refinancing support system for NBFCs that offer small and medium enterprises business loans. Under this scheme, you can take out a business loan without providing any collateral to the lender. This means you can get the funds you need even if you don’t have any significant business assets to pledge. Additionally, you can get the loan for an extended period.
Under the MUDRA loan scheme, there are types of credit options that you can avail, including:
- Shishu MUDRA Loan
Under this MUDRA loan scheme, you can get a business loan of up to Rs. 50,000 at a subsidised interest rate ranging from 1 to 2%.
- Kishor MUDRA Loan
This MUDRA scheme is specially meant for small and medium enterprises, and they can get a loan of up to Rs. 5 Lakh at special interest rates ranging from 8.60% to 11.15%
- Tarun MUDRA Loan
Under this scheme, you can get a loan of anywhere from Rs. 5 Lakh to Rs. 10,000,000 at special interest rates ranging from 11.15% to 20%.
Scheme 5 – Micro Small and Medium Enterprise Loan Scheme in 59 Minutes (MSME Loan in 59 Minutes)
Many MSMEs in India fail to reach their fullest business potential due to a lack of working capital. To help these MSMEs get the funds they need, the Indian Government introduced the MSME Loan Scheme.
Under this government initiative, if you are a business owner or aspire to start your enterprise, you can avail of a business loan of up to Rs. 1 crore. Since this scheme offers such a large loan support, it is considered one of the best government loan schemes for new businesses.
Typically, when you apply for a business loan NBFC or a bank, they take about 7 to 15 days to process the loan application before granting the approval and finally disbursing the amount. However, with the MSME business loan offered by the Government of India, you can get your loan approved and disbursed within 59 minutes.
This incredible feature lets businesses quickly get the necessary funds and handle business-related expenses. Another important feature of this loan scheme offered by the government of India is that you can get the loan at the most attractive interest rates, starting from 8% per annum. In addition, if you are a woman entrepreneur, you can get an additional benefit of 3% reservation under the scheme.
Final Word
So, you can apply for one of these government business loan schemes and get the financial support you need to keep your business running. And, if you are looking for a loan option beyond the government schemes, you can consider applying for a business loan with and get a loan of up to Rs. 10 Crore with an extended repayment tenure of up to 12 years. Also, the interest rate is affordable.