In India, the SME sector contributes over 40% of the total GDP and remains a major source of employment for most of the population. The current COVID pandemic has already crippled our economy where millions are starving for food. As a measure to bring the economy on the track government has laid importance ongoing local, this is for any product which you buy. This will increase the demand and supply chain helping millions to get a job in local industries. Recognizing the importance of SME in the past, the government has laid the importance of business loan schemes which will help to boost SMEs in the country. These schemes provide funding to the potential SMEs and start-up to survive in the current situation.
Here are the Top Government subsidy and loan schemes backing the entrepreneurs of the country to run small businesses.
Pradhan Mantri Mudra Yojana (PMMY)
This is one of the major initiatives taken by the government to support small entrepreneurs. MUDRA Yojana provides business loan options to meet the financial requirements of different businesses under different sectors. The loan amount which can be availed under this scheme is up to ₹ 10 Lakh which is without any collateral. However, MUDRA is a refinancing Institution which means it finances one loan by taking a loan from someone else.
Non-Corporate Small Business Segment comprising proprietorship/enterprise firms in rural as well as in urban areas are eligible to avail the scheme. Some of the examples of NCSBs eligible for PMMY are- Small manufacturing units, Service sector units, Shopkeepers, Fruits/vegetable vendors, Food-service units, Machine operators, Small industries, trading and service sector activities.
MUDRA loan can be availed in three categories which are decided based on the need and net worth of the business.
Shishu: Loans: Up to ₹ 50,000
Kishor: Loans: From ₹ 50,000 and up to ₹ 5 lakh
Tarun: Loans: From ₹ 5 lakh and up to ₹10 lakh
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Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS)
This is another unsecured business loan scheme by the Government which intends to support small and medium scale enterprises in the country. The maximum loan which one can avail under this scheme is ₹ 2 crore. However, the amount approved completely depends on your business potential and previous records.
Both the existing and the new enterprises are eligible to avail funding under this scheme.
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was launched by the government with the collaboration of the Ministry of Micro, Small and Medium Enterprises and Small Industries Development Bank of India (SIDBI). The Indian government and SIDBI formed a trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the scheme.
National Small Business Subsidy Scheme
National Small Industries Corporation (NSIC)
This was formulated by the Ministry of MSME under the Indian government in consultation with various stakeholders i.e. Small Industries Associations & Indian Banks’ Association.
Registered MSMEs are eligible to apply under this scheme. As per the revised rules, an enterprise or company whose turnover is ₹ 1 Cr or above is eligible to get assistance under this scheme. The National Small Industries Corporation (NSIC) subsidy offers three kinds of financial benefits including Marketing Assistance, Technology Upgradation and Raw Material Assistance.
Make in India Loan for Entrepreneurs
This scheme intended to take forward the Government of India’s Make in India campaign and help micro, small and medium enterprises take part in the campaign by taking a loan from a Small Industry Development Bank of India. The objective of this loan is for it to be favourable for the borrower to meet the debt-equity ratio of any enterprise. The main objective of this scheme is to increase the small & medium ventures in the country so that more products can be made in India using the local resources.
New enterprises in the manufacturing, as well as the services sector, can avail loans under this scheme. Existing enterprises undertaking expansion, modernization, technology upgradations and others can also avail the benefits to grow and expand their production and services. The interest rate charged for borrowing under this scheme is very low.
The scheme provides soft loans, like quasi-equity, and term loan on relatively soft terms. The repayment period for this loan is upto seven years inclusive of the moratorium period which is upto 1-1/2 year for the term loan and upto two years for the soft loans.
Start-Up India is the initiative taken by the Indian government especially to encourage entrepreneurs in the country. Under this scheme, the government has laid importance on the skills and knowledge which helps one to build a business. The scheme provides free learning to those who are willing to start their own venture. This is a great initiative by the government as only providing money cannot always result in success. One can enrol them to these courses on https://www.startupindia.gov.in/ where India’s top entrepreneurs will share their experiences.
Apart from the knowledge and learning, A stand-up India campaign loan can be between ₹ 10 Lakhs to ₹ 1 Crore. One of the motives of Stand-up India is to financially empower the SC, ST, and women entrepreneurs of India. Under this scheme, the loan availed has to be repaid within 7 years. One can use this loan amount to set a manufacturing, trading, or service unit.
Brilliant ideas need efficient funding! The government of India has realized this and formulated schemes for this and through these schemes, they are helping one to start their entrepreneur journey with the required guidance.