Top 6 Government Loan Schemes for Small Businesses

1. 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.

MSME Business Loans for Start-ups in 59 minutes add another dimension to the MSME sector and are offered at a nominal interest rate from 6.8 % to 21% depending on the customer's credit and risk profile. 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. Normally, the loan is expected to be sanctioned/disbursed in 7-8 working days, post the verification process.

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme was 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.

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.

Headed by 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.

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.

Benefits of PMEGP