Six small business loans In India worth applying for.

Last Updated: 14 Oct 2024

According to some estimates, India is home to 5000 medium enterprises, 0.33 million small, and 63.05 million micro industries. Therefore, the need for business financing is on the rise. However, different government loan schemes for small businesses have been launched for budding entrepreneurs. Thus, you can start and grow your firm with these loan programmes.

MSME Business Loan

The MSME Business Loan for the startups in 59 minutes has added a different dimension to the MSME sector. It is one of the government loan schemes for small businesses that automate various loan appraisal processes. Hence, you get the loan approved in 59 minutes and an eligibility letter as well.

Eligibility

Your company must be IT and GST compliant and have a bank history of at least six months to qualify for this loan.

Financial Incentive

Under this government loan scheme for small businesses, you can get a minimum loan of INR 1 lakh and a maximum of INR 5 crores. The interest rate offered under this loan is 8.50% onwards.

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Pradhan Mantri Mudra Yojana

The MUDRA, which stands for Micro Units Refinance and Development Agency, is a government loan scheme for small businesses catering to the financial needs of various business activities/sectors besides entrepreneur segments. Generally, you can get a loan of up to INR 10 lakhs without any collateral.

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.

Financial Incentives

MUDRA presents incentives through Shishu, Kishor and Tarun where:

• Shishu offers loans of up to INR 50,000
• Kishor offers loans between INR 50,000 and INR 5 lakhs.
• Tarun offers loans between INR 5 lakhs and ten lakhs.

Scheme of Credit Guarantee

One of the government loan schemes for small businesses is the CGS which strengthens and facilitates the system of credit delivery to the small enterprise sector. Foreign, private and public banks, alongside the Regional Rural Banks, are included in this scheme.

Eligibility:

Existing and new MSMEs, part of the service and manufacturing activities excluding educational institutions and retail trade, are eligible for CGS.

Financial Incentives:

This government loan scheme for small businesses includes working capital and term loans of up to INR 2 crore.

Scheme of Bank Credit Facilitation

The National Small Industries Corporation (NSIC) heads the scheme of bank credit facilitation to meet the MSME units’ credit requirements. The NSIC signed an MOU with various private and public sector banks. By collaborating with these financial institutions, the NSIC ensures that the MSMEs receive free credit support.

Eligibility:

It is one of the government loan schemes for small businesses that only require the MSMEs to be registered.

Stand-Up India

Stand-Up India is a government loan scheme for small businesses provided to women entrepreneurs and anyone in the SC/ST category. This scheme presents loans between INR 10 lakhs and INR 1 crore to at least one woman and 1 SC/ST borrower per branch.

Eligibility:

If you have an enterprise in the service, manufacturing or trading sector, you can be eligible for this government loan scheme for small businesses. However, if it is a non-individual enterprise, at least 51% of the shares must be with a woman or SC/ST entrepreneur.

Financial Incentive:

Stand Up India is one of the government loan schemes for small businesses that offers composite loans between INR 10 lakh and one crore, covering 75% of the project.

Make in India SIDBI soft loan fund (SMILE)

The SMILE is one of the government loan schemes for small businesses that provide soft loans to establish new MSMEs to meet the necessary debt-equity ratio. Under the SMILE scheme, the offered interest rate is 8.36% onwards.

Eligibility:

Existing service and manufacturing sectors and new ones are eligible for this scheme. If you have an existing enterprise that desires to upgrade or start other projects to expand your business, this scheme is for you. The maximum tenure for loan repayment under this scheme is ten years and 36 months.

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Financial Incentives

Under the SMILs scheme, the loan amount offered is INR 25 lakhs minimum and above.

Frequently Asked Questions

Can I get government loan schemes for small businesses?

Yes, you can. You can select the Mudra Yojana, Startup India, and Stand Up India schemes to apply for government loan schemes for small businesses.

What loan can I get if I run a small business?

For your small business, you can avail of a maximum loan amount of INR 10 lakhs under the MUDRA yojana at a lower interest rate. You can avail of higher loan amounts by applying with public and private sector banks.