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Government Business Loan Schemes

Are you looking for business loans? Then, you must know about the government business loan scheme in India. Read to learn more!

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Mudra loans, Udyogini, India Stand-up, CGFMSE, and 59-Minute MSME loans, are some of the government-led small business loan schemes in India. In this article, we will talk about each one of these in detail. 

There are approximately 40 million registered and unregistered Micro, Small and Medium Enterprises (MSMEs) in India. They account for over 40% of India’s total GDP, and continue to be a major source of employment. They address pressing concerns like poverty, unemployment, income inequality, regional imbalances, etc. MSME’s owners might borrow cash from a loan through the schemes that suit their needs.

Whether starting a business from the ground up or expanding an existing one, you will need consistent cash flow. That is where business loans or corporate loans come in, and a business loan can assist you in obtaining the necessary capital for your company.

While many private lenders are eager to grant business loans in light of India’s recent fintech growth, the government of India also offers a variety of lending options to entrepreneurs through its various agencies. Government organisations provide business owners loans with low-interest rates and, often, no collateral.

The most important types of government financing programmes are:

59-Minute MSME Business Loans

The loans approved intend to provide financial support to the country’s progress while encouraging its growth. The scheme allows both new and current businesses to enjoy financial support.

The loans under the programmes can reach up to ₹1 crore and take a fortnight to make. The permission receives in 59 minutes. The interest rate determines the type of business conducted by the loan applicant. The interest rate on these loans starts at 8.5%, and the loan amount can range between ₹1 lac and ₹5 lac. 

Let us consider the criteria for obtaining a loan under this programme:

  • Verifications for GST and income tax 
  • Bank account records for the previous six months
  • Ownership evidence 
  • KYC information

Loans from MUDRA

Micro-Units Development and Refinance Agency approve MUDRA loans to support the economy of micro-businesses. MUDRA loans are designed to “finance the underfunded.” MUDRA loans are available at all bank branches in India. Classification of MUDRA loans is as follows:

Criteria for eligibility

This programme is open to all businesses that include single ownership, shared firms, Pvt ltd liability corporations, companies, and legal corporations.

India Stand-Up

The government launched the above scheme to grant loans to women and Scheduled Castes/Tribes who run enterprises. SIDBI oversees this scheme. This scheme provides loans ranging between ₹10 lac to ₹1 crore. This loan covers 75% of the financing.

Eligibility

Businesses involved in commerce, and manufacturing industries can apply for loans. If the company is not the only owner, a woman or a member of an SC/ ST must own 51%.

Micro and Small Business Credit Guarantee Fund Scheme (CGFMSE)

The Indian Government has launched a scheme that allows enterprises in mentioned sector to receive finance via loans without requiring collateral. The scheme’s loans can give to both modern and old businesses. Working capital loans of up to 200 lac under this scheme are available with a preference for qualifying businesswomen.

Eligibility

Trades, institutions, helping groups, and other institutes are examples of manufacturing enterprises. Additionally, the service sector enterprises are eligible for funding through this loan programme.

Subsidy for the National Small Organisations Corporation

NSOC is an ISO-certified enterprise. The main responsibilities are to help MSMEs outgrow by providing services like financial, technological, and market. To support the expansion of MSMEs, the NSIC has launched two schemes:

  • Supporting Scheme for Marketing  – This programme helps in business development by implementing different programmes. This programme is important since MSMEs require help to outstand in today’s competitive market.
  • Supporting Scheme for Credit  – The scheme provides financial help to MSMEs to procure raw ingredients, marketing strategies, and syndicate financing.

The benefit of this system is that it allows small businesses to participate in tenders without incurring any charges, and MSMEs do not have to pay deposits to get financial aid within this scheme.

Technology Upgrade CLCSS

This programme helps small industries to modernise their procedures by giving funds for technical upgrades. Technological advancements benefit manufacturing, marketing strategies, flow chain, and many facilities. The CLCSS scheme intends to decrease the cost of goods and services production. The Head of Small-Scale businesses sees the programme. For eligible companies, the CLCSS provides a 15% annual subsidy. However, the maximum subsidy amount is 15 lakhs. This business lending programme covers sole proprietorships, partnership enterprises, co-operatives, and private, and public limited companies.

Udyogini

Udyogini, which means “women empowerment,” is a scheme to empower  Indian women. The Women Development Corporation of India introduced the project on behalf of the Indian government. The cash provided under this programme intends to assist women in fulfilling their capital needs to start a business.

A maximum loan of 15,00,000 can be issued under this scheme. To be eligible for this scheme, a woman entrepreneur must be between the age of 18 and 55, and her family’s income must not exceed 15,00,000. Disabled women or widows have no income restrictions. This strategy does not demand any processing fees or collateral to obtain a loan.

To be eligible for this loan, women must provide passport-sized pictures, a birth certificate, a Below Poverty Line Card, an Aadhar Card, a Caste Certificate, a passbook or bank account, a ration card, and proof of income. There are around 88 different enterprises for which eligible women can apply for loans.

GET YOUR MSME IN JUST THREE DAYS!

Alternative: Lendingkart’s Quick Business Loans

While all these projects demonstrate the past and present Indian governments’ commitment to economic development, there is much more to do to make them effective. The government’s refinancing and subsidy strategy, for example, remove the ‘fast’ aspect from the programmes’ unsecured business loans.

Because government-sponsored banks fund these loans, the turnaround time measures in weeks or even months, which is inconvenient for a small business owner in need of rapid capital. Even the most ambitious of these programmes, the 59-Minute Loan for MSMEs, can take two weeks to complete in practice.

Non-banking financial organisations like Lendingkart approve and disburse MSME loans within 72 hours. Instead of depending on paperwork and outdated processing processes, this is accomplished by merging business analytics and internet technologies for loan approval and disbursement. Lendingkart, for example, provides company loans via its website or mobile app.

Log in to apply for a business loan, get a same-day decision, accept the quote, and upload your papers for verification. The entire process takes less than ten minutes, and Lendingkart completes the verification within three business days. So, a fourth of the time it takes a government scheme to disburse a loan; you have the funds available to utilise.

Conclusion

This post is for anyone who runs a type of business and wants to expand. It is possible to apply for a government loan. The government offers a variety of government credit initiatives designed for business women and those from SC/ST backgrounds, such as the Udyogini and India Stand-Up schemes. Understanding the aim of these loans and the eligibility criteria might thus make the procedure of obtaining them easier.

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