The small-scale business sector, commonly known as Small and Medium Enterprises (SMEs), accounts for roughly 40% of India’s overall GDP. This sector is critical for boosting employment prospects in India, but it is up against stiff competition from privately funded firms. As a result, the Government of India offers a variety of financing programs to help small enterprises get started. Small businesses can use these loans to fund operations, purchase new equipment, expand their operations, and so on. SMEs are found in both the organized and unorganized sectors. SME entities, like small firms, face a number of challenges in securing the correct kind of financial backing for a variety of activities, such as purchasing infrastructure to support existing company activities or expanding their operations.
Following are some business loans offered:
1. MUDRA Loan by Pradhan Mantri MUDRA Yojana (PMMY)
The government provides financial assistance to non-farm small/micro-enterprises and non-corporate through this loan program. Their credit needs, however, should not surpass Rs. 10 lakhs. Interested applicants can submit an application through MUDRA’s official website or by approaching private or public sector lenders, regional rural banks (RRBs), or small financing lenders. This business loan is of three types – Shishu, Kishor, and Tarun. The loan amount in Shishu is up to Rs. 50,000. The loan amount in Kishore is Rs. 50,000 to Rs. 5 lakhs. The loan amount in Tarun is from Rs. 5 lakhs to Rs. 10 lakhs.
Any Indian citizen with a business plan for a non-farming income-generating activity like trading, manufacturing, processing, or the service sector and a credit need of up to 10 lakh rupees can apply for MUDRA loans under PMMY through a bank, a microfinance institution, or a non-bank financial institution.
2. SIDBI Make in India Soft Loan Fund
This lending scheme, launched by the Small Industries Development Bank of India (SIDBI), offers new and current businesses attractive business loan interest rates. It provides low-interest loans to new SMEs to help them improve their debt-to-equity ratio. Loan amounts up to Rs. 25 lakhs are available, with a maximum repayment term of 10 years.
All MSMEs are under MSME Act 2006. The emphasis is on funding smaller businesses within the MSME sector as well as new businesses in the manufacturing and service industries. Existing businesses are expanding, modernizing, upgrading their technology, and conducting other projects to help them grow.
3. MSME Loan in 59 Minutes
The 59-minute Public Sector Banks(PSB) loan plan is one of the government’s most significant policy measures aimed at increasing credit off-take in the MSME sector and among individual entrepreneurs. This lending strategy involves giving respected banks a principle loan clearance for a maximum of Rs 5 crores. Through a website called psbloanin59minutes.com, a consortium of public sector banks has built a single online lending process.
This scheme is open to self-employed individuals who are running a business, as well as small and medium businesses that have a clear GST complaint. Candidates must submit their cash flow statements to the banks for verification.
4. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
The government established the Lending Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme to improve credit availability for SMEs. SMEs can get up to Rs. 2 crores in collateral-free business loans under this scheme. Lenders offer competitive business loan interest rates based on the cost of the project, the applicant’s profile, and the applicant’s company needs.
Micro and Small Enterprises involved in service or manufacturing activities, excluding Agriculture, Educational Institutions, Training Institutions, Self Help Groups (SHGs), and others.
5. National Small Industries Corporation (NSIC) Subsidy
The main goal of this ISO-certified government initiative is to help MSMEs thrive by offering services such as finance, market, technology, and others all throughout the country. The NSIC has launched two programs for MSMEs:
- Marketing Support Scheme – This scheme is critical since MSMEs need help to expand in today’s competitive market.
- Credit Support Scheme – Financial help is offered to MSMEs for the procurement of raw materials, marketing operations, and syndication financing with banks.
6. Credit Linked Capital Subsidy Scheme (CLCSS)
CLCSS is a financing plan by the Ministry of MSMEs with the primary goal of assisting MSMEs in improving their technology, particularly in semi-urban and rural areas. Businesses can get a 15% subsidy on eligible machinery investments under this program. The maximum subsidy amount is limited to Rs. 1 crore.
This subsidy scheme will be available to small and micro-enterprises that fall into one of the Ministry of MSME’s designated sub-sectors. This scheme provides financial assistance to both new and current businesses. Small and micro-enterprises with a valid UAM number in semi-urban and rural areas are also eligible.
7. Stand-up India
The Small Industries Development Bank of India (SIDBI) launched the Stand-up India scheme, which provides easy business loans to women and SC/ST entrepreneurs. The loan amounts available under this scheme range from Rs. 10 lakhs to Rs. 1 crore. Applicants can apply in person at a bank branch, through the SIDBI’s Stand Up India portal, or by a phone call with the Lead District Manager (LDM).
SC/ST and/or female entrepreneurs over the age of 18. Only greenfield projects are eligible for the scheme’s loans. In this sense, greenfield refers to the beneficiary’s first effort into the manufacturing, services, or trading sectors.
It is a scheme aimed at empowering Indian women, as the name suggests. This programme provides funds to assist women in completing their capital needs for starting a business. This scheme allows for a maximum business loan of Rs. 15,00,000. A woman entrepreneur must be between the ages of 18 and 55 to be considered. In addition, the woman’s family’s annual income must not exceed Rs. 15,00,000. To apply for the loan, one needs passport-sized pictures, a below poverty line card, a birth certificate, a caste certificate, an aadhaar card, a passbook or bank account, a ration card, and proof of income.
Indifi is the place to go if you’re a small business looking for funding. Take advantage of customizable lending options, longer loan terms, collateral-free money, and low interest rates. Enjoy speedy loan disbursement and simple loan processing. Get a handle on your EMIs and interest payable with our MSME business loan EMI calculator, and plan your future finances wisely!