5 Best Government Schemes For Small Businesses

The economic growth of a country depends on its MSMEs (Micro, small and medium enterprises). MSMEs offer a remedial solution to economic problems like income inequality, unemployment, poverty, regional imbalances, etc. Hence, solid support to small businesses contributes immensely to the country’s GDP.

At present, there are dozens of government schemes available to lend a helping hand to SMEs. However, these 5 best government schemes for small businesses seem to top the list. Let’s check it out.

Government Loan for Business Startup in India

1. PSB Loan in 59 Minutes

PSB loan in 59 minutes was launched by the Indian Government on the official portal for those who wish to expand their existing business. Under this scheme, small businesses can get INR 1 lakh to 5 crores in just 59 minutes. These are must for eligibility-

  • Income/Revenue
  • Existing credit facilities
  • Borrower’s repayment capacity
  • Factors set by a financial lender

Benefits

  • The entire loan process requires minimal documentation
  • The process doesn’t require human intervention as it is advanced technology backed loans scheme
  • The loan process take care of the security and safety of applicant details

2. Pradhan Mantri MUDRA Yojana (PMMY)

Here MUDRA is an abbreviation for Micro Units Development and Refinance Agency Ltd. MUDRA offers to refinance support to NBFCs and Banks so that they can lend loans of up to INR 1 lakhs to micro-units.

Loan Type Coverage Rate of Interest
Shishu INR 50, 000 @1% to 12% per annum
Kishore INR 50, 000- INR 5 lakh @8.60% to 11.15% per annum
Tarun INR 5 lakh - INR 10 lakh @11.15% to 20% per annum

The MUDRA loan will be offered to a shopkeeper, traders, vendors, and other service activists. It could be used for a two-wheeler, tractors, any transport vehicle.

Also Read: Nine Thriving Small Business Ideas Amidst Pandemic

3. National Small Industries Corporation (NSIC)

Another government loan scheme for small businesses is NSIC. It's an ISO-certified Indian Government enterprise scheme for MSMEs. It aid and promote MSMEs growth by offering combined support service surrounding technology, marketing, finance, and other allied services.

NSIC provides two schemes namely, credit support scheme and marketing support scheme. Marketing support schemes support MSMEs for the development of the business while credit support schemes provide finance for material procurement.

4. Credit Linked Capital Subsidy Scheme (CLCSS)

Credit linked capital subsidy scheme was launched by the MSMEs ministry to support technology up-gradation. Under this scheme, you can get a 15% subsidy on investment over eligible machinery. The maximum cap is set to INR 1 crores.

Benefits of Government Startup Business Loans

Help small businessmen who wish to upgrade required technologies

Provides 15% subsidy for purchasing equipment, machinery, and eligible plant to reduce the overall burden

Boost growth of rural industries so that they can manufacture high-quality products

Also Read: 10 Personal Loan Scams Signs You Must Be Aware Of

5. Credit Guarantee Fund Scheme for MSEs

It is also termed as CGFMSE that is launched by GOI (Government of India). It allows collateral-free credit to micro, small, and medium sectors. It also includes new enterprises and existing enterprises. Under this scheme, you can get a loan of INR 200 lakhs.

The guarantee covers extent to 85% of sanctioned credit amount. The fees that will be charged by funds could reach 1% per annum.

All these government loans for small businesses can be applied on the official portal. However, make sure you read all the terms and conditions before applying.