Micro, Small and Medium Enterprises (MSME) are considered the backbone of the Indian economy. They contribute about 30 percent to the country’s GDP and provide employment to more than 11 crore people. A strong MSME sector is vital for India’s economic growth; However, the biggest challenge faced by this sector is to get loans easily and cheaply. Understanding this need, the Central Government has launched several business loan schemes to provide financial help to entrepreneurs. If you want to start your own business, there are many government schemes that can help you.
Pradhan Mantri Mudra Yojana
Pradhan Mantri Mudra Yojana (PMMY) was launched in 2015. Under this scheme, loans up to ₹10 lakh are given to non-corporate, non-farm small business owners. Mudra loans are divided into three categories: ‘Shishu’ (loan up to ₹50,000), ‘Kishore’ (loan between ₹50,001 to ₹5 lakh), and ‘Tarun’ (loan between ₹5 lakh to ₹10 lakh). These loans are given by banks, small finance banks, NBFCs and microfinance institutions.
Prime Minister’s Employment Generation Program
The Prime Minister’s Employment Generation Program (PMEGP) was created by merging the Prime Minister’s Employment Generation Program and the Rural Employment Generation Program. Its objective is to promote self-employment among youth and traditional artisans. Under this scheme, loans up to ₹25 lakh are available for manufacturing units and up to ₹10 lakh for the service sector. In this, subsidy ranging from 15 to 35 percent is also available, which is decided on the basis of area and category.
Credit Guarantee Fund Trust for Micro and Small Enterprises
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme was jointly launched by the MSME Ministry and SIDBI. Under this scheme, loans up to ₹2 crore are given without any collateral or third-party guarantee. Guarantee coverage of up to 85% is available for loans up to ₹5 lakh, while for larger loans this coverage goes up to 75%.
Credit Linked Capital Subsidy Scheme
Credit Linked Capital Subsidy Scheme (CLCSS) is specially designed for those MSMEs who want to adopt new and modern technology. Under this scheme, a subsidy of 15% is given on loans up to ₹1 crore. With this, manufacturing units are able to increase their productivity and competitiveness. Additionally, the government has launched the ‘Fund of Funds’ scheme to bridge the equity gap in the MSME sector. The total fund of this scheme is ₹50,000 crore. Through this initiative, MSMEs with growth potential get investment through venture capital and private equity, which can help them get listed on stock exchanges and attract private investment.
‘Make in India’ loan for enterprises
Under SIDBI’s ‘Make in India Loans for Enterprises’ (SMILE) scheme, loans (soft loans) are given to MSMEs at easy terms. Its objective is to help small enterprises adopt modern technology and expand their operations. Under this scheme, a minimum loan of ₹ 10 lakh is available for machinery and up to ₹ 25 lakh for other needs, which is given up to 10 years to repay.
MSME loan in 59 minutes
The government has completely digitalized the loan approval process under the ‘MSME Loan in 59 Minutes’ scheme. Loans ranging from ₹1 lakh to ₹5 crore are available under this scheme, with interest rates starting from 8.5%. Businesses following IT and GST rules can apply for this. The online process makes loan approval and payment faster. These government loan schemes assist MSMEs by providing unsecured loans, credit guarantee, support for technology upgrades and help in starting new businesses. By making proper use of these schemes, entrepreneurs can not only strengthen their businesses but also contribute to employment generation and economic growth in the country.