Business loan schemes: An economy’s growth depends on its MSMEs i.e. Micro, Small, and Medium Enterprises. Presently, the MSME sector provides about 11.10 crore jobs across the country contributing 8 percent to the overall GDP. In fact, these small enterprises are responsible for about 40 percent of the total exports, and 45 percent of the country’s manufacturing output.
MSMEs are part of the organized as well as the unorganized sectors. Yet, like all fledgling businesses, an MSME entity faces a lot of hurdles to get the right kind of financial support for various activities including, obtaining infrastructure to support existing business activities or for business expansion.
Yet, like all fledgling businesses, MSME entities face a lot of hurdles to get the right kind of financial support for existing business activities or for business expansion.
We bring to you the top 5 government loan schemes which can help MSMEs with financial aid.
1. MSME Loan in 59 Minutes
This scheme, also known as PSB Loan in 59 minutes, launched by the Government of India in which introduced a quick business loan portal for the individuals who need to expand their existing business.
Under this scheme, MSMEs can get loan amounts from INR 1 lakh to INR 5 crores in less than 59 minutes at an interest rate of 8.50% from public and private sector banks and NBFCs (Non-Banking financial companies). MSME/PSB Loans in 59 minutes provides you with the required financial resources in the stipulated time and pretty quickly.
Which business/enterprise is eligible for his loan scheme? So there are some factors that determine the eligibility of business:
- Income/Revenue
- Repayment capacity of the borrower
- Existing credit facilities
- Other factors set by the financial lender.
There are other benefits to this scheme as well;
- The entire loan process expects to be duper quick and too, with minimal documentation.
- The loan processes without human intervention until the last stage of the loan sanction. That is why it is an Advanced Technology Backed Loans scheme.
- The loan process always needs a lot of safety and security of the applicant’s details. So, consider this issue, the entire data of the applicant keep safe and secure with the highest level of security.
2. National Small Industries Corporation (NSIC)
NSIC is an ISO-certified Indian Government enterprise under MSMEs. NSIC aids and promotes the growth of MSMEs by providing finance, marketing, technology, and other allied services to encourage the growth of MSMEs.
Under this scheme, the small industries can get aid for Marketing Support which is crucial for the growth of MSMEs in the present intense competitive market, and Credit Support Scheme which helps provide finance for raw material procurement, finance for marketing activities, and finance through syndication with banks to MSMEs.
3. Pradhan Mantri MUDRA Yojana (PMMY)
MUDRA stands for Micro Units Development and Refinance Agency Ltd.
MUDRA provides refinancing support to Banks and NBFCs for lending to Micro units having loan requirements up to INR 10 lakhs under the scheme of Pradhan Mantri MUDRA Yojana. Under PMMY, MUDRA divided the loan into three categories as ‘Shishu’, ‘Kishore’, and ‘Tarun’ to signify the stage of growth/development.
| Loan Type | Coverage | Rate of Interest |
| Shishu | Covering loans up to Rs, 50,000 | @ 1% to 12% per annum |
| Kishore | Covering loans above Rs. 50,000 and up to Rs 5 lakh | @ 8.60% to 11.15% per annum |
| Tarun | Covering loans above Rs. 5 lakh and up to Rs. 10 lakh | @ 11.15% to 20% per annum |
Presently, the purpose of Mudra Loan is not to develop small units but it is offered as a;
- Business loan for the vendors, traders, shopkeepers,s and other service activities.
- A working capital loan through Mudra card;
- Loan for tractors, two-wheeler, or another Transport vehicle (only for commercial use)
- Equipment finance for micro-units.
Against the Mudra loan amount, it issues a MUDRA Card (as a debit card). Borrowers can use it for multiple withdrawal and credit facilities so that they can manage the working capital limit efficiently and keep the interest burden minimum. Mudra cards also help in the digitalization of all Mudra transactions and keep a record of the borrower’s credit history.
4. Credit Linked Capital Subsidy Scheme (CLCSS)
The primary objective of the credit-linked capital subsidy scheme is to aid the technology up-gradation of MSMEs, especially in rural and semi-urban areas. Under this scheme, Under CLSS businesses can opt for a 15 percent subsidy on investment in eligible machinery. However, there is a maximum cap on the subsidy restricting it to INR 1 crore.
Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGFMSE)
CGFMSE is a Government business loan scheme that allows collateral-free credit to the MSME sector. It includes both existing as well as new enterprises. Under this funding scheme, MSMEs get access to a loan amount of up to INR 2 crores with a special preference to eligible women.
