The Government of India (GOI) initiates various schemes and policies to bring a change in the economic condition of the country. The factors relating to the futuristic approach of various businesses need to be assured and backed up with some financial help from the government itself.
Finance is the key reason for any kind of business, whether it is a big or small enterprise, it results in generating capital. The financial liquidity with additional financing will help businesses by involving them in a variety of schemes as a helping hand.
There are several Micro Small and Medium Enterprises (MSME) which are a combination of registered and unregistered ones. The government has even considered various schemes to boost MSME’s business and enhance the growth of the Indian economy.
Some of the most significant kinds of Government loan schemes for small businesses are explained.
MSME Business Loans in 59 Minutes
MSME business loan in 59 minutes is one of the most loan schemes introduced by the government in September 2018. The loans sanctioned under this scheme are to boost financial assistance to the growth of the country and to also encourage their growth in the country. The scheme allows new and existing businesses to utilize the financial assistance that is provided by the scheme. The loans provided under these schemes extend up to Rs. 1 crore and take about 8 to 12 days to complete the process, wherein the approval for the loan is received within 59 minutes which is primarily why the name of the scheme is known as MSME business loan in 59 minutes. The rate of interest depends on the nature of the business that is carried on by the applicant of the loan. The interest of such loans begins at 8.5%, and the loan amount granted under this scheme can range from 1 lakh to 5 lakh. The following are the requirements for obtaining a loan under this scheme:
- GST verifications
- Income tax verifications
- Bank account statements for the last 6 months
- Ownership related documentation
- KYC details
MUDRA Loans
The MUDRA loans are sanctioned by the Micro-Units Development and Refinance Agency organization that has been established by the government of India for providing finance to units of micro-business. The theme behind MUDRA loans is to “fund the unfunded”. All bank branches across India provide MUDRA loans. Such loans have created the low-cost credit concept for micro and small businesses. The MUDRA loans are categorized as under:
LOAN CATEGORY | AMOUNT |
Up to Rs. 50,000 | Shishu loans |
50,000 to 5,00,000 | Kishor loans |
5,00,000 to 10,00,000 | Tarun loans |
Eligibility criteria
All businesses including proprietary concerns, partnership firms, Private Ltd., Public companies, and other legal entities are eligible to apply for a loan under this scheme.
Credit Guarantee Fund Scheme
This scheme provides collateral-free loans for MSMEs. Scheduled commercial banks and the regional rural banks can become a part of the scheme by selecting themselves as a leading authority.
Working capital loans: Rs 10 lakhs without collateral as security
Credit Facilities: Rs 10 lakh and up to Rs 1 crore
Security: Primary security and mortgage of assets like land and buildings.
Credit Link Capital Subsidy Scheme
This loan includes funds for technological upgrades to your business. Basically, used to revamp various processes like manufacturing, marketing, and supply chain.
The production cost is also reduced for the creation and providing goods and services for SMEs.
The scheme offers a capital subsidy of about 15 percent for eligible businesses.
Loan Limit: Rs 15 lakh
Eligibility: Proprietorship business, partnership firm, co-operative or private and public limited company
National Small Industries Corporation Subsidy: This subsidy is to opt for the raw material assistance scheme where a business can fund the cost of indigenous and imported raw materials required for the business.
With the marketing strategy, the funds can be utilized to create competitive market value for the business offerings.
This helps in the functioning of MSME to enhance production and quality.
NSIC offers MSMEs two different kinds of funding:
- Raw material assistance
- Marketing assistance