Micro, Small and Medium Enterprises (MSMEs) contribute to a great extent in the economy of the country by generating various employment opportunities, by manufacturing, exporting, etc. So to run these MSMEs, their business owners require funding to operate the same, in its initial capital investment, working capital, to carry out day to day expenses and also in its business expansion.
But considering the high risk that is involved by the financial lenders for MSME loan repayment and non-availability of required documents or the collaterals, MSMEs face a lot of hurdles in obtaining the required funds for its business.
Howsoever, the government of India still realises that MSMEs are very essential to boost the economy of the country as they are contributing to nearly 40% of the total GDP of India. Thus, they have been focusing a lot on the expansion of MSMEs and launching and introducing new MSME loan schemes by providing them with the required funds to help in the form of CGTMSE loan scheme.
Many business loans schemes have been introduced by the Government of India. However, let us take a look at the top 5 schemes in-depth:
Five Best Funding Schemes from Government in India 2021
Instant Business Loan for MSMEs:
The most popular business loan scheme in the market is the MSME business loans owing to it being availed in 59 minutes. Under this funding scheme, instant business loans are offered to the start-up entities and already existing MSMEs to operate and expand their business. An MSME loan in 59 minutes of up to Rs. 1 crore can be availed under this scheme.
Although the approval or disapproval of this particular business loan is granted within 59 minutes from the application time, the actual processing time for the business loan can be anywhere between 8-12 days.
An enterprise who wishes to be eligible for this business loan needs to have the basic business loan prerequisites such as good credit score, valid GSTN, ITR, Bank Statement copy, business registration copy, Rent agreement, etc.
Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency Ltd) Yojana (PMMY)
The Government has launched pradhan mantri mudra yojana scheme wherein the banks and the NBFCs are providing the required funds support to Mudra enterprise with a purpose to provide a business loan without collateral. Majorly most of the banks are now been authorized by the government to offer Mudra Loans which are generally used by start-up businesses.
Mudra has been further categorized based on the limit of the business loan granted to MSMEs:
- Shishu Mudra Yojana: up to Rs. 50,000.00
- Kishore Mudra Yojana: From Rs. 50,000.00 to Rs. 500,000.00.
- Tarun Mudra Yojana: From Rs. 500,000.00 to Rs. 10,00,000.00.
Credit Guarantee Fund Trust for Micro and Small Enterprise (CGTMSE)
MSMEs generally find it quite difficult to obtain a business loan owing to its non-availability of collateral. Under the CGTMSE scheme, the Government provides financial assistance of up to Rs. 2 crores to MSMEs without any collateral.
This particular funding scheme was introduced many years ago and since then it has been providing financial support to MSME entities.
National Small Industries Corporation (NSIC)
NSIC supports small and medium enterprises in its expansion by providing them with two kinds of financial support, as follows:
- Marketing assistance: MSMEs are provided with the required marketing help and have an edge in the ever-growing, competitive world.
- Raw Material assistance: MSMEs are provided with the required financial help to procure raw material from the domestic or imported source.
Credit Linked Capital Subsidy Scheme (CLCSS):
This scheme was introduced by the government of India to provide financial help to MSMEs to upgrade its equipment, machinery, technology, infrastructure, etc. This financial help can be used across various aspects of MSMEs from manufacturing to exports and gain a competitive advantage in the market with their products. MSMEs can get up to 15% subsidy on funding for its enterprise.
Lastly, the Government of India is aiming to boost the economy by providing all the required financial support as possible to the MSMEs and it is also encouraging an increase in the number of total MSMEs by introducing and launching several businesses loans schemes.
Frequently Asked Questions
1. How can a Mudra loan be applied?
MSMEs can either approach the scheduled banks or the leading NBFCs like ZipLoan to apply for Mudra loan or can also apply for the same online.
2. What is a standup India scheme?
Standup India scheme is an initiative program by the government by Small Industries Development Bank of India (SIDBI) to provide business loans to individuals from SC/ST category and also to women entrepreneurs for setting up greenfield projects.
3. What is the maximum amount that can be availed under the Credit Linked Capital Subsidy Scheme (CLSS)?
A maximum of Rs. 15 lakhs can be availed under CLCSS scheme.
4. What is the mudra card?
A debit card is issued against a mudra loan account, which an enterprise can make use of, for multiple withdrawals. This debit card is well-known as Mudra card.
5. How much loan can be availed under MSME loans granted in just 59 minutes’?
The business loan amount that can be availed under the scheme is between Rs. 1 Lakh to Rs. 5 Crore