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Business Loan Schemes for SMEs

Business Loan Schemes for SMEs

The government of India has started various schemes to help the medium and small scale enterprises to grow. Start-ups, small and medium enterprises/industries need financial aid and support to get established, flourish and grow amongst the MNCs and big organisation already existing in the market. SME owners face a lot of problem due to the non-availability of adequate monetary support at a reasonable rate of interest, in arranging collateral security or third party guarantee. A major portion of their finance is absorbed in paying different taxes in getting the paperwork processed. Lack of reliable and proper credit information has also been a drawback for these SMEs.

In India, there are various Government loan schemes specified for small and medium business enterprises both from state and central government to fulfil the financial requirement of these industries across the country. Even public sector banks such as State Bank of India (SBI), Andhra Bank, Canara Bank, Allahabad Bank and Bank of Baroda are offering various financial schemes to small business and medium businesses. These schemes provide financial help and services to the entrepreneurs which help them to survive, grow and flourish. compare loans online!

Government Loan Schemes for New Businesses –

  1. Credit Guarantee Scheme for Micro and Small Enterprises.

CGMSE was launched by the Government of India in 2000 to provide monetary support to the micro and small enterprises in form of collateral-free credit, where both existing as well as new the enterprises are eligible. Credit is provided in the form of working capital. The term loans up to INR 100 lakhs per borrowing unit is allowed. The amount leant through government and SIDBI (Small industries development bank of India). The ratio of contribution made is 4:1.

  1. NSIC Government Subsidy for Small Business

National Small Industries Corporation (NSIC) has provided two basic subsidies for small scale businesses

  1. Raw material assistance, are provided to SMEs by financing the purchase of Raw Material both indigenous and imported.
  2. Marketing assistance gives the SME’s funds to enhance competitiveness and increase the market value of their products
  3. Credit Link Capital Subsidy Scheme for Technology Upgrading

Upgradation reduces the cost of production and maintains a competitive price in the market. The Ministry of Small Scale Industries (SSI) has a scheme for technology upgradations for Small Scale Industries known as the Credit Linked Capital Subsidy Scheme (CLCSS). The scheme aims at providing them upfront capital subsidy at 15% with a maximum limit of the subsidy of INR.15 lakhs. All the sole proprietorship, partnership firms, cooperative, private and public limited enterprises and companies are eligible for this scheme.

  1. Market Development Assistance Scheme for MSMEs

The scheme aims to help manufacturing SMEs gain traction in the international markets by offering funds to participate in the international trade fairs and exhibitions under MSME India stall. It also offers fund for sector-specific market studies by industry associations, export promotion councils, and FIEO.

  1. MUDRA Loan

MUDRA stands for Micro-Units Development and Refinance Agency Ltd, it aims to provide development and refinancing help to the micro units with the vision of – ‘Funding the Unfunded’. Mudra bank loan provides low-cost credit/ funding to the MFI (Micro Finance Institutes). Their primary objective is to refinance the financial institutions engaged in the financing of Small Businesses, Trusts Section 8 Companies, Co-operative Societies, Small Banks, Scheduled Commercial Banks and Rural Banks which are indulged in the business of lending to micro or small businesses engaged in manufacturing, trading and services sector.

Factors Deciding the Eligibility Criteria to Qualify for the Government Business Schemes –

The documents required to verify & evaluate whether the applicant is deserving of the schemes or not are –

  1. Type of business
  2. Business and Personal Credit Rating
  3. Annual turnover from the Business
  4. Capital Requirement
  5. Business potential


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