India has about 40 million Micro Small and Medium Enterprises (MSMEs), including registered and unregistered ones. MSMEs fall under the categories of both the organized and the unorganized sectors. These MSMEs contribute to about 40% of the total GDP of India, and it remains a critical source of employment. The MSMEs provide solutions to critical issues in the country like poverty, unemployment, income inequality, regional imbalances, etc. The government for this purpose has introduced various schemes under subsidy loan for business to sanction loans to MSMEs to boost their business and their economy including government subsidy loan for business.
List of Government Loans For Small Business
Some of the most significant kinds of Government loan schemes for small businesses are explained.
| S.No. | Govt Business Loan Schemes |
| 1. | MSME Loan Scheme in 59 Minutes |
| 2. | Pradhan Mantri MUDRA Yojana (PMMY) |
| 3. | CGFMSE Scheme |
| 4. | Stand Up India Scheme |
| 5. | NSIC |
| 6. | CLCSS scheme |
| 7. | Udyogini Scheme |
1. MSME Business Loans in 59 Minutes
MSME business loan in 59 minutes is one of the best loan schemes introduced by the government in September 2018. The business 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 on such MSME Loan 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
2. Pradhan Mantri Mudra Yojana (PMMY)
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:
| AMOUNT | LOAN CATEGORY |
| 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
The non-corporate segment of small business (NCSB) comprising enterprise firms/ proprietorship in urban and rural areas are eligible for this loan. NCSBs include artisans, small industries, repair shops, truck operators, shopkeepers, and vegetable and fruit vendors.
3. Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGFMSE)
This is a loan scheme that is launched by the government of India that allows for funding through loans without collateral to those businesses that fall under the MSME sector. The loans under the scheme can be granted to both new and existing enterprises. The Credit Guarantee Fund Trust is a trust that has been established by the Ministry of MSMEs and the Small Industries for the purposes of implementing the CGFMSE scheme. The funding under this scheme can provide for working capital loans up to Rs. 200 lakhs with a preference for eligible women entrepreneurs.
Eligibility
Undertakings who are into manufacturing activities like retail trade, educational institutions, self-help groups, and training institutions. Further, businesses which are in the service sector are also eligible to avail of funding under this loan scheme.
4. Stand Up India Scheme
Stand-up India scheme was introduced by the Government to provide loans for businesses run by Scheduled Castes/ Scheduled Tribes and women. Small Industries Development Bank of India (SIDBI) governs this scheme. The loan granted under this scheme can range from Rs. 10 lakhs to Rs. 1 crore. Every bank must provide this loan to a minimum of one Scheduled Caste/Scheduled Tribe or woman entrepreneur. According to this loan, the fund is expected to cover about 75% of the cost of the total project.
Eligibility
Those businesses engaged in trading, manufacturing, or other sectors relating to services are eligible to avail of loans under this scheme. If the business is not an individual undertaking, a minimum of 51% of the shares must be held by an individual who is a woman or belongs to a Scheduled Caste/ Scheduled Tribe.
5. National Small Industries Corporation Subsidy (NSIC)
The NSIC is a Government enterprise under the MSMEs, and it is ISO certified. One of its primary functions is to aid the growth of MSMEs by providing services including finance, technology, market, and other services across the country. The NSIC has initiated two schemes in order to promote the growth of MSMEs, which are:
A. Marketing Support Scheme
The scheme supports in the development of any business by devising schemes such as Consortia and Tender Marketing. Such a scheme is crucial as the MSMEs must be aided in order for them to grow in the current competitive market.
B. Credit Support Scheme
The NSIC provides for financial aid to procure raw materials, for activities in relation to marketing and for financing with banks through syndication to MSMEs.
The benefit of this scheme is that it offers small-scale industries access to tenders without them having to bear any costs, and the MSMEs also do not have to pay the security deposits for availing of financial aid under this scheme.
6. CLCSS scheme
This scheme allows small businesses to upgrade their process by financing technological upgradation. Technological upgradation can be related to numerous processes within the organization, such as manufacturing, marketing, supply chain, etc. Through the CLCSS scheme, the government aims to reduce the cost of production of goods and services for small and medium enterprises, thus allowing them to remain price competitive in local and international markets. The scheme is run by the Ministry of Small-Scale Industries. The CLCSS offers an up-front capital subsidy of 15% for eligible businesses. However, there is a cap to the maximum amount that can be availed as a subsidy under the scheme, which is set at ₹ 15 lakhs. Sole proprietorships, partnership firms, co-operative, private, and public limited companies come under the ambit of this business loan scheme.
7. Udyogini Scheme
Udyogini, meaning women empowerment, is a scheme that has been initiated for empowering Indian women. The scheme has been introduced by the Government of India by the Women Development Corporation. The funding under this scheme is granted in order to support women in meeting their capital requirements for starting a business.
The maximum loan that can be granted under this scheme is Rs. 15,00,000. For a woman entrepreneur to be eligible to apply for this scheme, the woman must be between the age of 18 years to 55 years and the annual income of the family of the woman must not be above Rs. 15,00,000.
There is no limit on income for women who are physically challenged or widowed. There is no processing fee or collateral that is required for availing loan under this scheme.
Women who apply for this loan will have to provide passport-sized photographs, birth certificates, Below Poverty Line Card, Aadhar Card, Caste Certificate, passbook or bank account, ration card, and certification of income to avail of the loan. There are about 88 categories of businesses that are mentioned for which loans can be availed by eligible women.
