The Government of India has been known to offer assistance to businesses, both small and medium-sized. This assistance can involve anything from subsidies to tax deductions to even loans.
These loans, usually fall under a scheme released by either the central or state governments, can be of great value to your business. Loans could provide basic settlement until your business starts repeating a hundred folds.
Loans like the more recent PM SVANidhi or MSME-specific loans like NSIC loans can contribute to obtaining the needs of your business. Therefore, be it expanding your enterprise or getting the resources you need for better production, this article will help you choose the right loan for you.
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Best Loan Schemes from Government for MSMEs in India
The type of loan that you choose depends on a variety of factors. This includes the amount of money your business receives, repayment period, eligibility and more. Therefore, you should consider all the aspects of the following MSME loans:
Prime Minister Street Vendor’s AtmaNirbhar Nidhi Scheme or PM SVANidhi Scheme
This loan is for vendors who set up their shops on roadsides in any city till March 24th 2020. Such businesses will be identified as beneficiaries after registering at an Urban Local Body as a vendor. For your business to be eligible for this loan, it should have:
- Certificate of vending from the Urban Local Bodies (ULBs) on or before March 24th 2020.
- For the vendors that do have this certificate, they have to obtain a provisional certificate of vending. After a waiting period of one month, they can apply for a permanent certificate.
- Street vendors who do not have the certificate but possess the Letter of Recommendation from the ULB or Town Vending Committee.
The benefits that you will receive upon enrolling in this scheme include:
- Loan of up to 10,000 Rs.
- Interest subsidy at 7%.
- Repayment has to take palace in twelve equal monthly instalments
- Cash incentives if the repayment is made digitally.
- No processing fee or prepayment charges.
However, it is important to note that there is no moratorium period, so the repayments will have to be made every month and in equal amounts.
2. Stand up India scheme
Building a business can be slightly more challenging if you belong to the scheduled castes or independent women. For this reason, the Government has given certain privileges to these groups in the form of the Standup India scheme.
In addition to this, you will be eligible for this loan if you are:
- Above 18 years of age
- If it is a first-time venture in the manufacturing, services or trading industry.
- If 51% of the enterprise belongs to an SC/ST person or a woman.
In case you decide to choose this loan, you will receive:
- A composite loan (term loan+working capital loan) amounting to between 10,000 to 100,00,000 rupees.
- The interest rate will be the lowest at that particular bank. Therefore, it will differ depending on the bank.
- Repayment can take place within 7 years.
- The moratorium period is a maximum of one year and six months.
- Along with primary security, you will have to provide collateral security or guarantee the Credit Guarantee Fund Scheme.
3. Credit Guarantee Fund Scheme For Micro and Small Enterprises (CGTMSE)
This scheme differs from usual loans in that it does require you to provide collateral. That is, you will not have to provide any of your assets or possessions as credit. This encourages entrepreneurs to establish their businesses without the fear of losing their assets.
Entrepreneurs eligible for this loan can avail of a maximum credit cap of Rs. 2 crores. The credit is provided in the form of a trust known as the Credit Guarantee Fund Trust.
You are eligible to obtain the CGTMSE loan if you:
- Establish a company involved in manufacturing like retail trade, educational establishments and training institutions.
- Businesses present in the service sector.
One of the more important benefits of this scheme is the repayment conditions. The Guarantee Cover is available to the extent of a maximum of 85% of the sanctioned amount under this scheme. The fees charged by the trust funds is 1% per annum of the amount sanctioned. Meaning that it is:
- 0.75% for credit that is up to Rs. 5 lakh;
- 0.85% for credit above Rs. 5 lakh but till Rs 100 lakh
4. MSME Loan In 59 Minutes
MSME loan in 59 minutes is one of the more well-known loan options because of the ease you can avail yourself. The name itself suggests that the loan is fairly easy to obtain as the approval process takes around 59 minutes.
Choosing this loan would mean that you will receive around Rs. 1 crore to Rs. 5 crores and take around a week to two weeks to receive the amount. Businesses are eligible to receive this loan if they have the following:
- GST registration
- Income tax verifications
- Bank account statements for around six months to check repayment capacity and revenue of the business.
- Proof of ownership of the business
- KYC documents
The benefits of receiving this loan include:
- Interest rates of 8.5% in public and private sector banks.
- Requires fewer documents than other loans and schemes, which makes approval quicker
5. National Small Industries Corporation Schemes(NSIC)
This corporation is a certified enterprise that provides financial assistance to MSMEs present in finance, marketing, technology and others. Under NSIC, there are two major schemes for MSMEs:
Marketing Support Scheme:
This is primarily a marketing support loan where the NSIC provides funds to an MSME to carry out their marketing in a highly competitive area.
Credit Support Scheme:
This scheme is directed at the companies that require financial assistance in getting raw materials and marketing activities.
Through these various options, an MSME can receive the help they require to kick start their business. In addition to this, the schemes put forward by the Government also have a fairly easy repayment policy.
Frequently Asked Questions
MUDRA provides refinance support to Banks / MFIs for lending to micro units having loan requirements upto 10 lakh. MUDRA provides refinance to micro business under the Scheme of Pradhan Mantri MUDRA Yojana.
The minimum age of the applicant must be 18 years and the maximum Mudra Loan age limit is set to 65 years. Loans can be availed by non-farm income-generating businesses in trading, manufacturing and services. The requirement of credit must be ₹ 10 Lakh or lower.
Here are top five governement loan schemes:
1) Agricultural Loans.
2) Education Loans.
3) Housing Loans.
4) Loan Repayment.
5) Veterans Loans.
Here are 3 simple steps to your MSME / SME Loans:
1) Submit Application. Simply enter your personal, business and financial info to receive a MSME / SME Loans offer.
2) Upload Documents. Upload digital copies of your documents in a single step process for verification.
3) Get Sanctioned.