Top 10 Government Loan Schemes for Small Business in India

Government Loan Schemes for Small Business in India

India has emerged out as one of the biggest hubs for small businesses and startups. It is true that every business needs an ample base of ideas and passion to drive them, but in addition, it also requires funding and investments to grow and venture out. When you start a business, in order to get ample funding, you got to approach venture capitalists or angel investors. However, it is not easy to find the requisite help from investors for everyone.

To help out multiple industries and businesses doubling up every year, the government has come forward with a lot of schemes, policies, and incentives to promote these businesses and startups.

Let us take a look at a few schemes and policies the government of India has come forward to back these businesses up.

1. Credit Guarantee Scheme

The government has drafted the Credit Guarantee Scheme in partnership with the Small Industries Development Bank of India (SIDBI). Businesses that deal with manufacturing, production and service activities exempting educational sector have been covered under this Credit Guarantee Scheme.

The scheme gets loans availed to these firms at very reasonable interest rates. A maximum amount of 1 crore can be availed as working capital loan under the scheme. The CGS provides loans up to ten lakh without security, and for amounts that are higher than ten lakhs security needs to be obtained in association with the procedures.

2. Mudra Loans

The MUDRA Scheme or the Micro-Units Development and Refinance Agency is launched by the government to fund the micro business units which mainly have difficulties in getting funded. Thereby the motto of this particular scheme is ‘fund the unfunded.’’

The government has been active in providing finance at lower costs of interest to these units via the private, public and commercial sector banks. These loans are mainly extended to manufacturing and production industries. These loans are made into three categories. Sishu Loans, offer credit up to fifty thousand rupees, and for loans that are higher than fifty thousand rupees but lesser than five lakhs, Kishor loans must be opted for, while Tarun loans offer up to ten lakhs. All the leading Banks offer loan under mudra loan for non-corporate or micro-enterprises like HDFC Business Loan offers loan up to 10 Lacs with quick disbursal & minimum documents.

3. National Small Industries Corporation Subsidy

The NSICS or National Small Industries Corporation Subsidy mainly provides benefits of two types – Assistance for procurement of raw material and marketing assistance. With respect to the raw materials scheme, it provides financial assistance for importing and procuring these materials. As for marketing assistance NSICS provides credit for marketing research and activities and training services that help to enhance the position and competitiveness of your firm.

4. Stand up India scheme

The Stand-Up India Programme, launched in 2021 has brought about a lot of concessions and schemes for the upliftment of the SC and ST community in entrepreneurship. This scheme covers firms and services that exclude the agriculture sector in the provision of loans ranging from ten lakhs to one crore.

Here one of the main criteria that decide the eligibility for these loans is the stake of SC or ST women in these enterprises. You can access this scheme via banks, the portal or through your lead district manager.

5. Integrated Development of Leather Sector

This is a scheme specifically addressed for the development of the leather industries that cover footwear, tanneries and leather products. This particular scheme has been brought out in order to encourage more people to set up units for such manufacturing purposes.

It provides loans for established as well as units that are newly set up. In case of newly set up industries, you must produce No Objection Certificate from all government departments in charge along with your registration details.

6. Market Development Assistance Schemes

This scheme is brought into existence by the Ministry of Commerce in order to encourage and boost exports. Micro, medium and small scale enterprises can attain all the support and funding for activities related to conducting Trade Fair, Tours to other nations, Public Relations, etc.

SIDBI provides financing as well as marketing assistance to small scale industries under the same scheme. It provides shipments free of cost and also space for conducting fairs and exhibitions.

7. CLCSS or ‘’credit-linked capital subsidy scheme for technology upgradation’’

CLCSS has been launched to help private as well as public small scale industries. It aims to cut down the production costs as well as to amp up the competitiveness, in the international market. It helps in promoting technological up gradation by providing a subsidy of nearly fifteen percent and covers up to fifteen lakh of credit.

8. Under technology mission on Coconut or TMOC

This is a scheme directed towards coconut producing units that are innovative in nature, and you can easily get the assistance from the respected banks. This scheme is mainly to aid those small farmers and businesses that depend on coconut to make better returns.

9. SIDBI loan for small enterprise

The Small Industries Development Bank of India extend loans for small enterprises. Also known as SMILE, this Scheme has been established by the SIDBI in 1990 for promoting the small businesses in the nation. SMILE is mainly focused on 25 sectors that come under ‘MAKE IN INDIA’ programme. This scheme that has been allocated a total budget of over 10 thousand crores provide comparatively easy and simple rules for availing Short Term Loans.

10 SIDBI has been influential in setting up various funding scheme like – The direct assistance scheme, FPTUS, promotional and development activities and indirect assistance scheme for upliftment and promotion of entrepreneurship activities.

Leave a Reply

Your email address will not be published.