Micro and small businesses contribute a significant part of India’s development as an emerging economy. The small and medium business sector is the primary source of employment and contributes over 40% of India’s total GDP. Since the sector is integral to the evolution and development of the market, the government has introduced several loan schemes to support its growth in the post-demonetization period. Here are some of the schemes offered by the government for small businesses in the country.

MSME Business Loans in 59 Minutes

Spearheaded by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), this initiative focuses on the automation and simplification of the loan appraisal process. The applicants are provided the eligibility letter along with the loan approval within 59 minutes of drafting the application. This scheme was announced in September 2018 and primarily offers financial assistance to new and existing small businesses upto `₹1 crore. In this refinancing scheme, the applicants are free to approach any bank from the five authorized public sector banks that support it. The nominal interest rate for the scheme is 8.50%. The loan takes about 8-12 days to be processed. The applicant would need KYC details, income tax verification, CST verification, ownership details, and bank statement for the last 6 months to apply for this business loan.

MUDRA Loans

The Micro-units Development and Refinance Agency of India launched a series of loan schemes to offer business support exclusively to micro and small businesses. With a long term vision of ‘funding the unfunded,’ this scheme provides financial support to small businesses in the form of low-cost credits. Moreover, these are refinanced business loans facilitated by public sector banks, private sector banks, co-operative societies, small banks, scheduled commercial banks, and rural banks that are included in the scheme. The three subheads under which the loans are provided are: 

– Sishu Loans up to Rs.50,000

– Kishor Loans up to Rs.5,00,000

– Tarun Loans up to Rs.10,00,000

Credit Guarantee Fund Government Business Loan Scheme

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) provides collateral-free loan schemes for new and existing small businesses. Under this system, the lending institutions include private, public, and foreign banks, along with SBI and Regional Rural Banks (RRB). New and Existing small businesses functioning in the services and manufacturing market are eligible for this scheme. The scheme offers working capital loans upto ₹10 lakhs with no collateral. For availing credit above ₹10 lakhs upto ₹1 crore, the primary security or mortgage of the land and building is obtained. 

 National Small Industries Corporation Subsidy

The NSIC offers small businesses two types of funding schemes: raw material assistance and marketing assistance. The introduction of the Single Point Registration Scheme (SPRS) initiative enables financial assistance to micro and small enterprises having EM Part-II (Optional) or Udyog Aadhaar Memorandum (UAM). The raw material assistance scheme provides funding for both indigenous and imported raw materials. In addition, marketing support is offered to small businesses to accelerate their competitiveness and market value of the products. 

Credit Link Capital Subsidy Scheme for Technology Upgradation

This scheme is run by the Ministry of Small Scale Industries. It supports small businesses in the form of funds to upgrade its technological resources. Moreover, this upgradation is applicable to all aspects of the business, like production, marketing, supply, etc. This enables the manufacturing units to reduce production costs and enhance their competitiveness in both local and international markets. It offers a capital subsidy of 15%, and the maximum amount disbursed by the lending organizations would be ₹15 lakhs. Also, the organizations that can avail of this loan scheme are sole proprietorships, partnership firms, co-operative, private, and public limited companies.