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Top 5 Government Business Loan Schemes in India

mahindra-finance-author

by Mahindra Finance

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April 10, 2024

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4 mins read

Running a business requires a constant flow of funds, just like we need the right amount of food and nutrition to survive. While banks offer business loans, the Indian government has also taken effective steps to provide monetary support to startups and existing businesses. This guide will explore the top 5 government business loans in India that can help your business thrive.

1. Government business loans: MSME loans

The MSME Loan Scheme is designed to fulfil the working capital needs of Micro, Small, and Medium Enterprises (MSMEs). Under this scheme, both new and existing enterprises can avail themselves of loans up to Rs. 1 crore. What makes this scheme even more appealing is that the loan processing time is as short as 59 minutes!

For example, let's say Ramesh owns a small manufacturing unit and needs funds to purchase raw materials and meet his working capital requirements. Through the MSME Loan Scheme, he can easily apply for a loan of up to Rs. 1 crore at an attractive business loan interest rate of just 8%. Moreover, women entrepreneurs can benefit from a 3% reservation under these government loans for women.

2. Pradhan Mantri MUDRA Yojana (PMMY)

Pradhan Mantri MUDRA Yojana is a fantastic government loan scheme that primarily caters to women entrepreneurs, service-oriented enterprises, and trading businesses. These government loans for women encourage them to become self-reliant. The scheme offers collateral-free credit options with different loan amounts. Moreover, the business loan interest rate is based on the size of the enterprise.

3. National small industries corporation

The National Small Industries Corporation (NSIC) offers two beneficial schemes for entrepreneurs looking for financial assistance in technology, marketing, and finance. The Marketing Support Scheme provides various marketing support options such as Consortia schemes and Tender Marketing to help businesses promote their products and expand their market reach.

On the other hand, the Credit Support Scheme assists in procuring raw materials, financing marketing activities, and meeting other financial requirements.

4. Credit-Linked Capital Subsidy Scheme

The Credit-Linked Capital Subsidy Scheme (CLCSS) is designed to provide financial assistance to businesses for technological advancements in industries such as marketing, manufacturing, and supply chain management. Under this scheme, eligible enterprises receive an upfront capital subsidy of 15%.

5. SIDBI loan

The Small Industries Development Bank of India (SIDBI) offers direct loans along with indirect loan schemes through Non-Banking Financial Companies (NBFCs) and Small Finance Banks (SFBs). SIDBI primarily focuses on lending to Micro, Small, and Medium Enterprises (MSMEs) that require funds for their business operations.

For instance, imagine Rajesh wants to expand his small-scale manufacturing unit and needs a loan of Rs. 1 crore. SIDBI can provide him with the required financial support without any collateral requirement. So, if you are scouting for startup business loans from the Indian government, consider this.

Other government loan options for businesses

In addition to the top 5 government business loan schemes mentioned above, there are several other options available to boost your business. These include the Credit Guarantee Fund Scheme, Stand Up India loan scheme, NABARD loan scheme, Prime Ministers' Employment Generation Programme, and many more. Each scheme aims to offer easy financing options tailored to meet specific business requirements.

Conclusion

Accessing funds is essential to fuel the growth of your business. We have witnessed various startup business loans by the Indian government. There have been several government schemes for startups in recent times. By exploring these top 5 government loans in India, you can find the financial support you need to take your business to new heights.

Don't let financial constraints hold you back! Take advantage of these government schemes and pick the one that aligns with your financial requirements. And remember, if you need further assistance or personalised financial advice, Mahindra Finance is here to empower you on your entrepreneurial journey.

FAQs:

Q: What is the business loan interest rate of government schemes?

A: The business loan interest rate by the government varies depending on the scheme and the borrower's profile. It is always advisable to check with the respective government agency or bank offering the loan for accurate information regarding interest rates. Additionally, you may find it helpful to use a business loan EMI calculator to estimate your monthly repayments based on the loan amount, interest rate, and tenure.

Q: Are there any government schemes for startups?

A: Yes, there are several government schemes for startups in India. The MSME Loan Scheme and Pradhan Mantri MUDRA Yojana (PMMY) are two popular schemes that cater to startup businesses by providing them with easy access to finance at competitive interest rates.

Q: Is there a government loan scheme for women entrepreneurs?

A: Absolutely! The government of India offers specific schemes to empower women entrepreneurs. Schemes like the Pradhan Mantri MUDRA Yojana (PMMY) and Udyogini Scheme provide financial support and reserved benefits to women-owned businesses.

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