There are several government loan schemes offered to small businesses in India in order to help them sustain their business and growth and expand it. The main reason behind this is that India is truly an emerging market and economy at the current moment. And this growth is majorly fuelled by SMEs or Small and Medium Enterprises.
The Indian SME sector contributes approximately 40% of the total GDP. Additionally, it is also a crucial source of employment for the major part of the nation’s population. Recognizing their importance and contribution, the Indian government offers many government loans schemes for them. Let’s take a look at the best 3 loans for small business offered by the government.
MSME Loan in 59 Minutes
also read: msme loan in 59 minutes: How to avail it?
Announced in September 2018, MSME loans in 59 minutes, perhaps, is the most talked about government loan scheme. The small business loans in this scheme are given to provide financial assistance to the MSMEs and to encourage them as well. This government loan for new business and existing business offers financial assistance of up to Rs 1 crore.
The entire loan process takes somewhere between 8-12 days to complete. Nevertheless, loan approval or disapproval is given in just 59 minutes of application. Here, five public sector banks provide business loans since it is a refinancing scheme. The loan interest rate depends on the nature of the business and CIBIL rating.
also read: how to apply for mudra loan?
MUDRA (Micro-Units Development and Refinance Agency) is a government established organization that provides funds to micro businesses in India. Since most startups and small enterprises are often left on their own, the MUDRA loan scheme is given in the pretext of funding the unfunded. It is a low-cost credit to such enterprises. MUDRA loans are approved and disbursed by public and private sector banks, small banks, rural banks, scheduled banks, and co-operative societies (all those who come under this scheme). The government loan scheme is generally given to SMEs. Its structure is as follows:
- Sishu Loans – Rs. 50,000
- Kishor Loans- Rs. 5,00,000
- Tarun Loans – Rs. 10,00,000
Credit Guarantee Fund Scheme
The MSME loan scheme for new business was launched in 2000 in order to provide monetary support and assistance to micro and small enterprises. This is collateral-free small business loan offered to both new and existing eligible businesses. The unsecured business loan of up to Rs 10 lakh is offered.
However, to avail a business loan of between Rs. 10 lakhs and Rs. 1 crore, mortgage of land or building or security is compulsory. Additionally, the assets created with the loan of more than Rs. 10 lakhs (to Rs. 1 crore) are also considered as security for the loan. This type of business funding is financed by various public and private sector banks.
Best Alternative: NBFC Business Loan
All the government loan schemes are designed to help the SMEs in India in the best way possible. However, there is still a lot that needs to be done in order to make these government loan schemes effective. So, the SME owners can also avail an NBFC business loan to meet their urgent financial needs.
These business loans are offered at basic eligibility criteria and minimal documentation. Also, they are disbursed in just 72 hours (3 days) – this makes the loans the best option. Additionally, if you avail an SME loan from an NBFC, you will get the facility at the best interest rates in the market. And there is no need to visit the lender’s office in person since they offer online application.
If you want to increase your business, you can register it and the products and services offered at Connect App by ZipLoan. Through the e-marketplace, you can create a business profile, list your products/services, find business, discover new business opportunities, build connections, and also grow your business network.