The government of India provides various schemes of business loan after realizing the importance of growth in SME after demonetization took place. The SME sector is a significant contributor toward GDP growth and employs the growing population in India.
One of the fastest-growing economies in the world is our country, India. But the base of any growing nation is development through industries and other enterprises. Hence, we can say that the growth of the nation is fuelled by small, medium, and large industries. A number of industries were established by the government to boost the economy.
Top 5 Business Loans In India Offered By The Government Are Listed As Follows:
MUDRA or Micro-units Development and Refinance Agency is a government organization that aims towards financing micro-business units. Unfunded businesses with good potential are provided funds under this scheme. The government offers startups and small companies with funds at low-interest rates. MUDRA loans are often termed as refinanced business loans. Many banks from the private sector, public sector, and cooperative societies provide loans under this scheme. Mostly, the loans are provided to the trading, manufacturing, and service sector businesses.
Structure of MUDRA loans is as follows:
- Shishu Loan – up to fifty thousand rupees (Rs. 50,000)
- Kishor Loan – up to five lakh rupees (Rs. 5,00,000)
- Tarun Loan – Upto ten lakh rupees (Rs. 10,00,000)
National Small Industries Corporation (NSIC) Subsidy:
The NSIC subsidy provides two types of financial benefits to small businesses in India. One is the Raw Material Assistance, and the other is Marketing Assistance. Mainly, small and medium industries are funded under the NSIC subsidy.
- Raw Material Assistance: In this scheme, the costs of indigenous and imported raw material are covered for SMEs.
- Marketing Assistance: In this scheme, funds are provided to enhance the market value and competitiveness for the product and services of SMEs.
MSME business loans:
MSME loan is one of the most frequently talked about loans in India. The loan application is approved or rejected within the first 59 minutes of the loan application. Five authorized public sector banks provide the loans under this scheme, and the whole process requires a timeline of 1-2 weeks. Under this scheme, business loans in India are provided for the encouragement and growth of MSME. Financial assistance through a credit of up to one crore rupees (Rs. 1,00,00,000) is granted under this scheme. You can use a business loan calculator to know the amount you have to repay according to the interest rate of the loan.
Credit Link Capital Subsidy Scheme (CLCSS) for Technology Upgradation:
Under the CLCSS scheme, business loans are given to finance the necessary technological upgrades in small industries. Through the loans provided under this scheme, the government aims to reduce the production costs of goods and services. It helps the industry to remain competitive in local and international markets. The Ministry of small scale industries operates CLCSS, and it offers an up-front 15% subsidy to eligible businesses. The cap to the maximum amount availed under this scheme is fifteen lakh rupees (Rs. 15,00,000).
(CGTMSE) Credit Guarantee Fund Trust for Micro and Small Enterprises:
CGTMSE offers collateral-free and collateral-based credit to new and existing businesses that satisfy the eligibility criteria. The business loans under the scheme are provided through various public and private sector banks under this scheme. An asset created by the money provided by the loan is also considered as collateral if the amount of loan exceeds ten lakh rupees.
Structuring of CGTMSE loans is as follows:
- Collateral-free loans – Upto ten lakh rupees (Rs. 10,00,000)
- Collateral-based loans – Upto one crore rupees (Rs. 1,00,00,000)
The government provides many different business loans in India to help boost industrial growth. But to get approval on your business loan scheme you must have to fulfill the business loan eligibility criteria. Hence, to be eligible for a loan under these schemes, you might need Income tax verifications, GST verifications, statements of bank accounts (6 months), business documents, KYC details, and other documents depending on the scheme. Make sure to use a business loan calculator to ensure that you can repay your loan on time without missing out on any of the monthly EMIs.