India has more than 40 million MSMEs (Micro, Small, Medium, and Enterprises) that include registered and unregistered MSMEs in several sectors such as food processing, manufacturing, Information Technology, mining, packaging. It comes under both the sectors I.e., organized and unorganized sectors. The MSME loan contributes 40% of GDP in India. The MSMEs offer solutions to significant issues in India such as regional imbalances, poverty, income inequality, unemployment, etc. The business person who runs MSME can borrow money as a loan as per their requirements.
Government business loans are the financial support offered in the form of loan schemes launched by the Indian government and are provided with the help of financial bodies such as Regional Rural Banks (RRBs), Non- banking Financial Companies (NBFCs), Public and Private Sector Banks (PSBs), etc.
Pradhan Mantri MUDRA Yojana (PMMY)
MUDRA loan gives the support of refinancing to banks and non-banking financial companies for providing the needs of loans to micro units up to Rs. 10 lakhs under the Pradhan Mantri MUDRA Yojana scheme. It stands for Micro Units Development and Refinance Agency Limited and is divided the loan into 3 categories: -
MSME loan in 59 minutes
It is also known as PSB loan in 59 minutes that is inaugurated by the government in India. The borrower can loan amounts ranging between Rs. 1 lakh to Rs. 5 crores within 59 minutes at an interest rate of 8.50% from NBFCs and PSBs. There are many factors that decide your business eligibility such as existing credit card facilities, repayment capacities, income/revenue, etc. The MSMEs loans need some documents such as Income Tax verification, documents related to ownership, bank account statements, KYC details, GST verification, etc.
Credit Linked Capital Subsidy Scheme (CLCSS)
CLCSS is a modernization scheme offered by the Ministry of MSME to help the up-gradation of technology. Upgradation of technology should include several processes in the organization like supply chain, marketing, manufacturing, etc. The Credit Linked Capital Subsidy Scheme was provided a 15 % capital subsidy for buying machinery, eligible plants, and equipment that aid in decreasing the burden of small-scale industries. And also increase the improvement in rural industries that produce high-quality products.
Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGFMSE)
A trust named Credit Guarantee Fund was established by the Small Industries Development of India (SIDBI) and Ministry of MSMEs for micro and small enterprises to organize the CGFMSE scheme. Under this scheme, the loan is provided to both i.e., new and existing enterprises. The enterprises that are eligible for this scheme are manufacturing activities such as educational institutions, manufacturing, self-help groups, training institutions, retail trade & service activity. It does not require any security or collateral for financing the loan under the MSME sector. The funds in this scheme should be offered a working capital loan of a loan amount up to Rs. 200 lakhs in Favor of the eligible women.
National Small Industries Corporation (NSIC)
National Small Industries Corporation is a certified ISO by the government of India under MSMEs. It helps in the growth of micro, small, medium, and enterprises by offering services that involve market, finance, technology, and other services all over the country. The NSIC has established many schemes to encourage the growth of MSMEs.
Credit Support Scheme: - The NSIC offered financial help to acquire raw materials, financing with lenders by syndication to MSME.
Marketing Support Scheme: - Support of the market is crucial for the development of business and also for the development of MSME. To support such enterprises, national small industries corporation has designed schemes I.e., Tender marketing and Consortia.
This scheme was established by the government to offer loans for businesses operated by SC, ST, and women. The main aim of the stand-up India scheme is to enable bank loans ranging between Rs. 10 lakhs to Rs. 1 crore. Every bank in India must issue this to at least one SC (scheduled caste), ST (scheduled tribe), and one woman. The age of entrepreneurs should be above 18 years of age.
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