The Government of India has introduced several schemes to strengthen the growth of businesses in India by offering easier access to credit. These schemes offer timely and affordable loans and incentives to entities and help them sustain, grow and expand their business.
Pradhan Mantri Mudra Yojana (PMMY)
The Pradhan Mantri Mudra Yojana was launched in 2015 to provide collateral-free business loans to micro-enterprises engaged in manufacturing, trading, services, and certain agricultural activities. Under the scheme, MUDRA loans are offered up to Rs. 20 lakh through designated banks/MFIs/NBFCs based on the following categorisation:
Eligibility: Non-Corporate Small Business Segment (NCSB), comprising proprietorship/ enterprise firms in rural and urban areas, can apply for the loan. Here are some examples of NCSBs:
All kinds of manufacturing, trading and service sector activities can get a MUDRA loan.
Read more: How to Apply for a MUDRA loan
2. MSME Business Loans for Start-ups in 59 Minutes
MSME Business Loans for Start-ups in 59 minutes add another dimension to the MSME sector and are offered at a nominal interest rate starting from 6.8 % to 21%. Headed by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), the initiative aims to automate key loan-appraisal processes so that applicants receive an eligibility letter and loan approval within 59 minutes. The applicant can choose a bank of their own choice for easy access.
Eligibility: To be eligible for this particular loan, the borrower has to be GST and IT compliant and must have at least 6 months of bank history. The mandatory parameters for determining the eligibility of one company are:
a. Income/ Revenue
b. Repayment Capacity
c. Existing credit facilities
d. Any other factors, as set by lenders (banks or NBFCs)
Fiscal Incentives: Under this scheme, business loans for start-ups are provided with loan amounts from a minimum of Rs. 10 lakh and a maximum of Rs. 5 crore. The rate of interest offered under this scheme is 6.8% onwards. The processing fee ranges from 0.1% to 6%.
Credit Guarantee Scheme (CGS)
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme has been launched by the Government to strengthen and facilitate the credit delivery system to the MSME sector. Public, private, and foreign banks, along with Regional Rural Banks (RRBs) and the SBI with its associate banks, form the network of lending institutions under this scheme.
SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)
Launched in 2015, SMILE is governed by the Small Industries Development Bank of India (SIDBI). This scheme aims to provide soft loans to meet the required debt-equity ratio for the establishment of new MSMEs and also to enable the growth of existing ones. The interest rate offered under the SMILE scheme starts from 9.15% onwards.
5. Bank Credit Facilitation Scheme
Headed by the National Small Industries Corporation (NSIC), the scheme aims to meet the credit requirements of MSME units. The NSIC has entered into a Memorandum of Understanding (MoU) with various nationalised and private sector banks for the purpose. Through syndication with these banks, the NSIC arranges for credit support (fund- or non-fund-based limits) from banks without any cost to MSMEs.
Prime Minister’s Employment Generation Programme(PMEGP)
PMEGP is a central sector scheme administered by the Ministry of Micro, Small and Medium Enterprises (MoMSME). The scheme is implemented by Khadi and Village Industries Commission (KVIC), functioning as the nodal agency at the national level. At the state level, the scheme is implemented through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centers (DICs), and Coir Board, known as the Implementing Agencies.
