What Are The Best Government Loan Schemes For SMEs In India?
The expansion of Small and Medium Enterprises (SMEs) has contributed massively to the industrial growth of our country. Moreover, SMEs also create a lot of job opportunities, thereby solving the major issue of unemployment to a certain extent. Since SMEs are considered as the backbone of the Indian economy, the Government of India has taken various initiatives to promote SMEs by resolving the common challenges often faced by them. One of the major concerns faced by SMEs is unavailability of sufficient funds for their expansion. In order to resolve this issue, the Government of India has launched several financing schemes for SMEs. Some of them are mentioned below:
Credit Guarantee Fund Scheme
- It is a collateral-free loan offered to micro and small scale enterprises. Both the existing and new enterprises are eligible for the Credit Guarantee Fund Scheme. In order to implement this scheme, the MSME and Small Industries Development Bank of India (SIDBI) has established a trust, named Credit Guarantee Fund Trust for MSEs (CGTMSE).
- Under the Credit Guarantee Fund Scheme, the unsecured business loan is offered only up to Rs 10 lakhs. For availing the loan amount of between Rs. 10 lakhs and Rs. 1 crore, the borrower has to provide security for the same. This type of funding is financed by various public and private sector banks.
MUDRA loan
- Micro-Units Development and Refinance Agency (MUDRA) is a government established organization that offers funds to small businesses in India.
- MUDRA loans are approved and disbursed by public and private sector banks, small banks, rural banks, scheduled banks, and co-operative societies that come under this scheme. The structure of Mudra loan is as follows:
Sishu Loans – Rs. 50,000
Kishor Loans- Rs. 5,00,000
Tarun Loans – Rs. 10,00,000
MSME Loan in 59 Minutes
- Launched in September 2018, MSME loans in 59 minutes, is one of the most popular government loan schemes. This government loan can be availed by existing as well as new businesses.
- The loan amount availed through this scheme can be up to Rs 1 crore. The rate of interest charged on this loan depends upon the nature of the business and its credit report.
Market Development Assistance Scheme for MSMEs
- Under this scheme, MSMEs can avail funding for participating in international trade fairs and exhibitions under MSME India stall.
- This scheme also offers financing for the sector-specific market studies by industry associations/ export promotion councils.
Apart from all these government funding schemes, business owners can also resort to availing a small business loan to fulfill the financial requirements of their business. Flexible eligibility, minimal documentation, and quick disbursal are some of the major advantages of availing a business loan through a leading financial institution. Moreover, borrowers also get the option to customize their business loan according to their requirement.
Now that you are well aware of various types of SME loans, make sure that you choose a financing option that is best suited for your business. Lastly, it is recommended to read all the terms and conditions of the loan agreement carefully before signing it.
