government loan schemes

5 Government Loan Schemes That You Every Business Owners Must Know

If you want to start a new business and are worried about your initial investment money funding, here are 5 government loan schemes to relieve you of your tensions.

Applying for these business loans schemes is easy and hassle-free. All you will need is some important documents like PAN card, Aadhar card, business address proof, IRT return copy and electricity bill, etc.

The best part of applying for a loan from the government is that they often have fewer interest rates than private banks. However, it might take you some time to get business loan approval.

Why are MSMEs important

MSME Full Form is Micro, small and medium enterprises (MSME) are crucial for the growth of the economy. MSMEs provide solutions to problems such as poverty, unemployment, income inequality, and regional imbalances. It plays an important role in balancing local development and income inequality.

This industry provides employment to millions of people across India. It highlights local talent and contributes to the GDP of the country. It creates around 11.10 crore jobs in the whole country, it is for this reason that MSME is considered the growth engine of India. MSME contributes approximately 8 percent of the total GDP and around 40 percent of total exports.

MSME falls under both organized and unorganized sectors. Even then there are many hurdles that block a smooth business path. Problems like the right kind of financial support for various activities, obtaining infrastructure to support existing business activities or for business, expansion are always persistent.

The following 5 government loan scheme can provide great help.

MSME Loan in 59 minutes

This scheme is also known as the PSB loan in 59 minutes. It was launched by the Government of India. This scheme introduced a quick business loan portal for individuals who desire to expand their existing business.

Under this scheme, businesses can get a loan amount from 1lakh rupees to 5 crores rupees in just a span of 59 minutes. The loan is provided at an interest rate of 8.50% from public and private sector banks and NBFCs.

The MSME loans provide financial resources pretty quickly. The factors which determine the eligibility of businesses are

  1. Income
  2. Repayment capacity
  3. Existing credit facilities.

Pradhan Mantri MUDRA Yojana (PMMY)

MUDRA stands for Micro Units Development and Refinance Agency Ltd. It provides refinancing support to banks and NBFCs for lending money to Micro units which require loans. The MUDRA loan scheme is divided into three categories, “Shishu”, “Kishore” and “Tarun”.

The present purpose of MUDRA loan is not to develop small units but it is to offer

  1. Business loans for vendors, traders, shopkeepers and other service activities. (PM svanidhi offers a similar scheme).
  2. A capital loan through MUDRA card
  3. Loan for tractors, two- wheelers or other transport vehicles.

This scheme issues a MUDRA card which enables the borrower to use it for multiple withdrawals and facilities ensuring that the borrower can manage the capital efficiently and keep the interest to the minimum.

Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGFSMSE)

CGFSMSE is a government business scheme that was launched by the Indian Government. It allows collateral-free credit to the MSME sector. This applies to both existing and new enterprises. To implement CGFMSE the Ministry of MSMEs and small industries development bank of India has established a trust named Credit Guarantee Fund Trust for the Micro and Small Enterprises.

Under this scheme, MSMEs can get access to a loan amount of up to 200 lakhs rupees with a preference towards women. A maximum of 85 percent of the sanctioned amount is given a guarantee. 1 percent of the sanctioned amount is charged as a fee per annum.

National Small Industries Corporation

The NSIC is an ISO-certified Indian Government enterprise that falls under MSMEs. It helps and promotes the growth of MSMEs by providing combined support services regarding finance, marketing, technology, and other allied services across nations.

To promote MSMEs NSIC provides various schemes

  1. Marketing support Scheme

Marketing support is very crucial for the development of MSMEs. To support such enterprises NSIC created schemes such as Consortia and Tender marketing

  1. Credit Support Scheme

NSIC provides finance for resources, finance for marketing activities through syndication of banks to MSMEs.

Credit Linked Capital Subsidy Scheme (CLCSS)

CLCSS was launched by the ministry of MSMEs. Their objective is to help the technological upgrade of MSMEs, especially in rural and suburban areas.

Under this scheme, businesses can opt for a 15 percent subsidy on investment in eligible machinery. But there is a limit of 1 crore rupees for the subsidy. Such loans are created to aid and promote MSMEs and in the process boost the economy.

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