The government offers various loan schemes for small businesses to help them access affordable financing and grow their businesses. These loan schemes offer benefits such as low-interest rates, flexible repayment options, and simplified application procedures. In this article, we will delve into the various government loan schemes available for small businesses, and how they can help your business.
Government loan scheme for business
The government offers several loan schemes for small businesses, including:
S.No. | Govt Business Loan Schemes |
1. | Pradhan Mantri MUDRA Yojana (PMMY) |
2. | Stand-up India |
3. | Credit guarantee fund trust for micro and small enterprises (CGTMSE) |
4. | National small industries corporation (NSIC) subsidy scheme |
| 5. | Credit Link Capital Subsidy Scheme |
| 6. | Udyogini |
Pradhan Mantri Mudra Yojana
Pradhan Mantri Mudra Yojana scheme provides loans of up to Rs. 10 lakh to micro, small, and medium enterprises (MSMEs) for their business operations. It has three categories based on the amount of loan required – Shishu, Kishor, and Tarun.
Stand-up India
The Stand-up India scheme is aimed at promoting entrepreneurship among women and economically weaker sections of society. Under this scheme, loans ranging from Rs. 10 lakh to Rs. 1 crore are provided to help start-ups and businesses run by SC/ST or women entrepreneurs.
Credit guarantee fund trust for micro and small enterprises (CGTMSE)
CGTMSE scheme provides collateral-free loans up to Rs. 2 crores to new or existing MSMEs. Under this scheme, banks and other financial institutions provide loans to MSMEs, and the government provides a credit guarantee of up to 75% of the loan amount.
National small industries corporation (NSIC) subsidy schemes
NSIC Scheme offers various credit-related subsidies such as financial assistance for marketing, technology upgrades, raw material procurement, and one-time settlement of outstanding dues for MSMEs.
Credit Link Capital Subsidy Scheme (CLCSS)
The Credit Linked Capital Subsidy Scheme (CLCSS) by the Ministry of Micro, Small and Medium Enterprises (MSME) aims to boost the technological capabilities of Micro and Small Enterprises (MSEs) in India. It offers up to 15% upfront capital subsidy on institutional finance, helping MSEs upgrade their machinery and adopt advanced technologies. This initiative not only enhances product quality and reduces production costs but also promotes competitiveness and sustainability among small businesses. MSEs with a valid UAM number can benefit from this scheme, ensuring inclusive growth across various sectors of the economy.
Udyogini Scheme
Udyogini is a transformative initiative that empowers women entrepreneurs across India by providing loans up to Rs. 15 lakh for their business operations and capital requirements. Administered by the Women Development Corporation, it offers financial benefits such as zero processing fees and requires no collateral, enhancing accessibility for aspiring women entrepreneurs, particularly from rural and underdeveloped areas. This scheme fosters women's entrepreneurship, promoting self-reliance, financial independence, and contributing significantly to economic empowerment at both individual and community levels.
Government loan for start up business and new business
S.No. | Govt Business Loan Schemes |
1. | Stand-up India |
2. | Startup India |
3. | Skill India |
The government offers several loan schemes that specifically cater to new businesses. Apart from those mentioned above, some of the schemes are:
Stand-up India
As mentioned earlier, this scheme provides loans from Rs 10 lakh to Rs 1 crore to new businesses and start-ups.
Startup India
Startup India scheme offers various benefits to start-ups, including access to funding, tax benefits, and incubation support.
Skill India
Skill India scheme is aimed at promoting skill development and entrepreneurship among youth and offers several subsidy schemes for setting up new businesses.
Benefits of government loan schemes
- Lower interest rates: Government loan schemes usually offer lower interest rates.
- Collateral-free: Many government loan schemes are collateral-free, making it easier for new or small businesses to obtain financing.
- Simplified application process: The application process for government loan schemes is relatively straightforward, with fewer bureaucratic hurdles.
- Longer repayment tenure: Repayment tenure for government loans is often longer than for private lenders, resulting in lower EMIs and less burden on businesses.
In conclusion, government loan schemes offer significant benefits to small businesses, including lower interest rates, simplified application procedures, and collateral-free loans. By understanding the available schemes and choosing the right one that meets their business requirements, small businesses can secure the financing necessary to grow their businesses.
