Micro, Small and Medium Enterprises (MSMEs) has been worst hit by covid-19 whereby their balance sheets have turned virtually negative.
The pandemic has adversely affected MSMEs creating it tough for them to urge back to normalcy. Since MSMEs generate business that adds up to 40% of the country’s GDP, the government has provided some relief measures to the MSMEs by launching MSME loans/MSME business loans particularly MSME loan without collateral, which might be availed from numerous banks and Non-Banking Financial Companies (NBFCs).
(Collateral is an asset against which loan is pledged).
Government launched MSME Loan Schemes:
MSMEs can execute their new business plan and existing MSMEs can grow its business by availing the below stated five MSME loan schemes launched by the Government for the development and betterment of the MSMEs:
(1) Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency Ltd) Yojana (PMMY):
Banks and Non-Banking Financial Companies are approved by the Government to provide the required business loans to Mudra Enterprises. They’re specifically loan for business without security. A business loan of up to Rs. 10 Lakhs is provided to the Micro units that are further categorized as follows based on the limit of the business loan granted:
Mudra loan offers business loan in three categories.
- Shishu Mudra Yojana: up to Rs. 50,000.00.
- Kishore Mudra Yojana: From Rs. 50,000.00 to Rs. 500,000.00.
- Tarun Mudra Yojana: From Rs. 500,000.00 to Rs. 10,00,000.00.
(2) Credit Guarantee Fund Trust for Micro and Small Enterprise (CGTMSE):
CGTMSE scheme is another great way to avail MSME loan.
Because of lack of collateral, MSMEs realize it difficult to obtain the business loans. Thus, the Government under this scheme provides the required business loan of up to Rs. 2 crores to MSMEs which are basically MSME loan without collateral.
(3) National Small Industries Corporation (NSIC):
The National Small Industries Corporation (NSIC) provides the below stated two types of monetary help to MSMEs to grow and expand its business:
- Marketing assistance: The marketing assistance needed by an MSME to grow and compete within the ever-growing world is provided.
- Raw Material assistance: The monetary help required by the MSMEs to source the raw material either from the domestic market or from other country is provided.
To avail this MSME loan, MSEs must have a valid Udyog Aadhaar Memorandum.
(4) Credit Linked Capital Subsidy Scheme (CLCSS):
The government provides the monetary help to MSMEs needed to upgrade its technology, infrastructure, etc across numerous aspects of manufacturing likewise as exports and growth.
MSMEs get a capital subsidy of 15% on the funding of its business and MSMEs with a valid UAM is only eligible to avail this business loan.
(5) SIDBI Make in India Soft Loan Fund for Micro, Small and Medium Enterprises (SMILE):
MSMEs can avail a soft business loan in the nature of the quasi-equity and a term loan on comparatively versatile terms for the formation of a new unit to grow of the present units. To avail this MSME loan scheme, MSMEs must have a valid UAM number and the minimum business loan that may be obtained is Rs. 25 lakhs.
To conclude, the Government is currently focusing on encouraging the rise in the formation of new MSMEs and growth of existing MSMEs by launching business loans. Moreover, there are many businesses that are offering a collateral-free business loan to fulfil your working capital needs, which is also possible using their business loan app.
Frequently Asked Questions
MSME loan is the small business loans/new business loans provided to MSMEs to start its new business and/or grow its existing business. Majorly, all MSME loans are a loan for business without security.
Owing to the MSME loan is an online business loan with low MSME loan interest rate, it is very easy for an MSME to opt for the desired small business loan. The MSME business loan requirements are very simply whereby an MSME has to furnish the Banks or the NBFCs with a detailed business plan, identity proof, address proof, business registration copy, rent agreement copy, bank statement copy, passport size picture, etc.
The MSME loan eligibility is that the MSME should be operating its business since more than six months, the age of the applicant should be minimum of 25 years and the investment needs to be Rs. 10 crores or less for the Manufacturing sector and Rs. 5 Crores or less in Servicing sector.
To determine the EMI (Equated Monthly Instalments), business loan EMI calculator can be used.
With the rising number of instant loan apps and its features, it is getting difficult to choose one that matches your criteria and meet your needs. However, one may always try for easy loan app i.e. Ziploan loan app, which has a user-friendly interface.
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