- Loans Under Government Schemes Overview
- Loans Under Government Schemes
- Business Loan under Government Schemes:
- Pradhan Mantri MUDRA yojana loan
- Credit Guaranteed Fund Scheme for Micro & Small Enterprises
- National Small Industries Corporation:
- Credit Linked Capital Subsidy Scheme (CLCSS)
- Benefits of Credit Linked Capital Subsidy Scheme (CLCSS):
- finance for the MSMEs industry
- Technology and Quality Upgradation Support (TEQUP):
- Integrated Processing Development Scheme (IPDS):
- Eligibility Criteria for applying for a business loan under government schemes:
- Steps to register and apply for business loans from the banks under government schemes:
- Documents required for applying for loans under the government schemes:
Loans Under Government Schemes Overview
MSME enterprises face many difficulties in order to get proper financial support for the business to run smoothly without any obstacles. MSMEs need financial support for many daily activities of the business such as the machinery, for the expansion of business the infrastructure development for the productive growth of the enterprise.
Loans Under Government Schemes
The economic growth of a nation depends on its enterprises such as Micro, Small, and Medium (MSMEs). The MSMEs provide better solutions to the issues of the society of India such as poverty, unemployment, regional imbalances, and many more. As MSMEs provide employment to millions of people in the nation thus, it maintains the balance of the local development which results in the growth of the nation and contributes to the GDP of the country. Around 11.1 crores of employment is created due to the MSMEs till the present date which not only increases the economic growth of the country but also is considered India’s Growth Engine. The overall contribution of GDP by the MSMEs is about 8% and it also has 40% of the contribution to the export of the country. MSMEs also contribute around 45% to the manufacturing of the country. MSME enterprises face many difficulties in order to get proper financial support for the business to run smoothly without any obstacles. MSMEs need financial support for many daily activities of the business such as the machinery, for the expansion of business the infrastructure development for the productive growth of the enterprise. To avail of these financial supports, a large number of MSMEs go for the loans that are provided by the Indian government.
Business Loan under Government Schemes:
Micro, Small, and Medium enterprise (MSME) are considered as the heart of the Indian economic growth as; a major part of the nation’s economy is dependent on these MSMEs. MSMEs are considered the largest job creator sector which in return contributes to India’s GDP of about 30% overall. As MSMEs play a vital role in the country’s growth, the government thus provides various loan schemes to these MSMEs to strengthen the sector. The government of India offers the right financial support to the MSMEs through various schemes in order to help the MSMEs in their business expansion. Not only this loan, the government of India also provides financial support to the new startups by providing capitals for the MSMEs to carry daily activities smoothly and to meet the business expenses.
The following are some of the schemes offered by the government to the MSMEs:
MSME or PSB loan within 59 minutes:
The government of India has launched the MSME loan and is also called the PSB loan which is sanctioned within 59 minutes and thus is considered the fastest business loan portal for business owners to expand and grow their business as per the requirement. Under this MSME loan, the loan amount is sanctioned between Rs. 1 lakh to Rs. 5 Crores depending on the business type and the affordability of repayment of the same business. This loan is sanctioned within 59 minutes with an interest rate of 8.5% from any private or public banks and NBFCs.
Eligibility for MSME or PSB loan:
To be eligible to get the MSME loan or the PSB loan within 59 minutes requires certain factors to be fulfilled. The below mentioned are factors that determine the eligibility of the business to get the MSME loan.
- The income or revenue of the business is checked and it plays a vital role in deciding the eligibility for the loan.
- Repayment capacity is considered an eligibility criterion for the business.
- Existing credit facilities of the business are also checked before sanctioning the loan.
- There may also be other factors that are set by the lending institution for checking the eligibility of the loan.
Benefits of MSME or PSB loan
There are many benefits offered for customers who are opting for MSMEs or PSB loans. A few benefits of MSME loan are as mentioned below:
- The MSME or PSB loan process is not only super quick but the documents needed are also less for the loan to be sanctioned.
- This loan is considered an Advanced Technology backed government loan scheme as there are no human interactions as the loan is applied through the online portal with a hassle-free procedure.
- As the loan process needs a high level of security, in MSMEs loans the entire details of the customers are maintained under high security.
Pradhan Mantri MUDRA yojana loan
This loan is offered by the government of India for the MSMEs, the word MUDRA stands for the Micro Units Development and Refinance Agency Limited which offers refinance support to the banks and NBFCs for helping the micro, small, and medium enterprises to develop their businesses. Under the scheme of Pradhan Mantri MUDRA yojana the amount offered is up to Rs. 10 lakhs. The Pradhan Mantri MUDRA yojana is further categorized into 3 types as mentioned below:
Shishu : In this category, the Pradhan Mantri MUDRA yojana loan provided to the business for the coverage loans is up to Rs. 50,000/- with an interest rate of 1% to 12% annually.
Kishore: In this category of the loan, the coverage of the loan is provided above Rs. 50,000/- and up to Rs. 5 lakhs with an annual interest rate of 8.6% to 11.15%.
Tarun: In this category of Pradhan Mantri MUDRA yojana offers loan amounts between Rs. 5 lakhs to Rs. 10 lakhs with annual interest of 11.15% to 20% per annum.
Pradhan Mantri MUDRA yojana loan can be used by vendors, shopkeepers, and other traders to develop their businesses. A working capital loan is offered in the Pradhan Mantri MUDRA yojana through the Mudra card, which can be used by borrowers for transactions. This Pradhan Mantri MUDRA yojana loan can also be used for purchasing commercial vehicles such as tractors or any transport vehicles. The Mudra card can be used multiple times for managing the working capital efficiently and the Mudra card keeps all the records of the transaction done by the card for maintaining the credit history.
Credit Guaranteed Fund Scheme for Micro & Small Enterprises
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGFMSE) is the scheme that is offered by the government of India to MSMEs where there is no need to submit security or collateral documents to avail of the loan amount. The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGFMSE) is the scheme where a loan amount of up to Rs. 200 lakhs is provided and also to special preference is given to the eligible women of the country. Loans Under Government The fees charged by the lenders on the loan amount are about 1%. The fee charged for a loan amount up to Rs. 5 Lakhs is 0.75% and for a loan amount above Rs. 5 Lakhs to Rs. 100 Lakhs is 0.85%. The businesses which are best suited for The Credit Guaranteed Fund Scheme for Micro and Small Enterprises (CGFMSE) loan are manufacturing industries, Educational and training institutions, and other service activity businesses.
National Small Industries Corporation:
The National Small Industries Corporation (NSIC) is the ISO-certified government scheme under Micro, Small, Medium Enterprise (MSMEs). The main objective of the National Small Industries Corporation (NSIC) scheme is to support MSMEs not only in terms of finance but also in marketing and other technology services across the country. Loans Under Government There are various small business schemes Loans Under Government under National Small Industries Corporation (NSIC) to support the growth of MSMEs. Below listed are the schemes of the National Small Industries Corporation.
Marketing Support Schemes of NSIC: Marketing support is very important for the development of the business and also it plays a vital role in the growth of MSMEs across the nation. In order to support the marketing of the businesses, National Small Industries Corporation (NSIC) has incorporated Consortia and tender marketing in the market. The marketing support scheme by National Small Industries Corporation (NSIC) also spreads awareness about different schemes in the market and also shows the technology fairs in the market.
Credit Support Schemes of NSIC: Under the Credit support scheme of the National Small Industries Corporation (NSIC), the loan is provided to the business owners for raw material purchases, for marketing expenses, and also supports other banks in funding MSMEs and Loans Under Government .
Credit Linked Capital Subsidy Scheme (CLCSS)
The Credit Linked Capital Subsidy Scheme (CLCSS) is an innovation credit scheme that is basically working with the objective of providing support to businesses mainly MSMEs in upgrading their technologies mainly in the rural and semi-urban areas of the country. Under Credit Linked Capital Subsidy Scheme (CLCSS) the business owner can opt for an almost 15% of subsidy on the investments done for the machinery of the business. The amount that is offered under Credit Linked Capital Subsidy Scheme is up to Rs. 1 crore.
Benefits of Credit Linked Capital Subsidy Scheme (CLCSS):
There are many benefits associated with the Credit Linked Capital Subsidy Scheme (CLCSS), especially for the small-scale enterprises of the nation. Some of the benefits of opting for CLCSS are as followed below:
- The Credit Linked Capital Subsidy Scheme offers almost 15% of subsidy when an investment is made in the machinery, plants, and other equipment required for the growth of the business which reduces the burden from the small-scale industries of the nation.
- Credit Linked Capital Subsidy Scheme also helps the business to upgrade its technologies and tools in order to increase the productivity and growth of the business.
finance for the MSMEs industry
To help the need for finance for the MSMEs industry, the (SIDBI) or Small Industries Development Bank of India schemes was formed by the Indian government in the year 1990.Loans Under Government Small Industries Development Bank of India provides funding to the MSMEs directly and provides indirect funding to the Non-Banking Financial Companies (NBFCs) and Small Finance Banks (SFB). The loan amount offered under the Small Industries Development Bank of India schemes is from Rs. 10 Lakhs and up to Rs. 25 Crores for a tenure of almost 10 years is provided. The offer that is provided under this scheme is that if the loan amount taken is Rs. 1 Crore then there is no requirement for collateral.
There are various kinds of schemes offered by the Small Industries Development Bank of India which include the SIDBI-Loan which can be used for the purchase of machinery for the better efficiency of the business which is also called Purchase of Equipment for Enterprise’s Development (SPEED), the other schemes are SIDBI Make in India Soft Loan Fund for MSME (SMILE) and Smile Equipment Finance (SEF), and there are many other schemes as well. Loans Under Government The eligibility, loan tenure, and loan amount vary for different schemes under the Small Industries Development Bank of India.
Udyogini which means “Women Empowerment” is a scheme launched by the Indian government for supporting and empowering Indian women. The “Women Development Corporation” has offered this scheme under the government in order to encourage Indian women to meet the capital requirement of their business to increase productivity and efficiency. The loan amount offered under the Udyogini scheme is up to Rs. 15,00,000/-.
The eligibility condition required by this scheme is the age of the woman applicant must be between 18 to 55 years and the annual income of the applicant’s family must not be greater than Rs. 15,00,000/- although this condition of annual income is exceptional for the handicapped, widowed, and disabled women.
The main feature of the Udyogini scheme is that there is no need to submit any collateral and securities for availing of the loan amount. The documents required by the woman applicant are they need to provide a passport-sized photo along with a birth certificate, Aadhar card, cast certificate, financial certificates, ration card, and relevant documents. There are as many as 88 categories of businesses for which the Udyogini scheme can be applied by eligible women of India.
The stand-up India scheme was laid by the Indian government to support the background classes of the society such as SC or ST and even women entrepreneurs of India. The Stand-up India loan is one of the most famous schemes offered by the government as it supports the finance system of at least one ST, SC, or woman and sets up the balance in society by maintaining equal opportunities for business development.
The loan amount offered by the scheme is from Rs. 10 Lakhs to Rs 1 Crore. The Stand-up India scheme is mostly applicable to the manufacturing, trading, or agricultural industry and in non-individual businesses SC, ST or women must have a total of 51% at least a share in the business in order to apply for the loan under the Stand-up India scheme Loans Under Government
Technology and Quality Upgradation Support (TEQUP):
The Technology and Quality Upgradation Support is the scheme under the government sector which aims at providing awareness of the use of energy-efficient technology among the MSMEs in order to remain competitive in the Indian market by lowering the production cost. The government of India provides up to 75% of financial support for the actual expenditure of the MSME and also about 25% of the project cost is assessed by the Indian government. The loan amount assisted by the government under this scheme is up to Rs. 10 Lakhs.
Integrated Processing Development Scheme (IPDS):
The Integrated Processing Development Scheme (IPDS) is the scheme which is laid by the Indian government to help in resolving the issues faced by the textile process industry of the country such as water scarcity and environmental pollution. With the help of the Integrated Processing Development Scheme (IPDS) scheme, these issues are being resolved by using eco-friendly technologies and by creating advanced processing parks. Loans Under Government The central government of India shares almost 50% of the total cost of the scheme whereas the state government, beneficiaries, and financial institutions share 25%, 15%, and 10% in total.
Eligibility Criteria for applying for a business loan under government schemes:
Eligibility plays an important role in order to obtain business loans without any difficulty. If the business needs support in terms of machinery purchase and technology upgrade in order to expand the business or to maintain working capital, before applying for the business loan and below are some of the eligibility criteria that one should check Loans Under Government .
Age: The age of the applicant must be minimum of 22 years at the time of applying and must not be older than 65 years.
Applicant experience: The individual who is applying for the business loan must have an experience of at least 3 years in the current business and overall a total of 5 years of experience is required.
Business Type: Any private limited corporation, self-employed individual, firms under partnerships, and any trading, manufacturing, and other service businesses can opt for business loans under the government scheme.
Business Turnover: The business turnover plays a vital role in the eligibility and is checked before sanctioning the loan by the lenders. The turnover of around Rs. 10 Lakhs per year is considered eligible.
Business Vintage: The business should be a minimum of 2 years in profit.
Steps to register and apply for business loans from the banks under government schemes:
In order to apply for a loan under the government sector, Loans Under Government a certain procedure has to be followed. Below are the steps that have to be followed in order to register for the banks or lending institutions under the government scheme and to apply for the loan:
Step 1: Visit the nearest bank’s official website to check eligibility for loans under Govt. loan schemes
Step 2: Register on the portal of the bank and through OTP login to the portal for applying for the loan.
Step 3: Click “Agree” to the ”Terms & Conditions” of the Government loan Loans Under Government scheme in the portal after thoroughly reading.
Step 4: In this step, fill out the financial details and other basic information as requested.
Step 5: After completely filling out the form, upload the required documents and then submit the application.
Documents required for applying for loans under the government schemes:
There are necessary documents that need to be submitted as proof of identity in order to avail of the loan under the government schemes Letter of credit . The basic documents regarding address proofs, business details and bank details that are required for applying for business loans under government schemes are as mentioned below:
Application: The application form along with passport-sized photographs and correctly filled information.
KYC documents: To check the identity of the customer Passport, Voter ID, or Aadhar card need to be uploaded.
Address Proofs: For the address proof any of the documents with the residence address like the Driving License, PAN card, or Utility bills such as electricity bills can be submitted.
Financial Documents: Bank statements from the past 3-6 months have to be submitted at the time of applying.
Business Establishment Document: The documents related to business such as the business registered document with the Loans Under Government business address and vintage proofs have to be submitted by the applicant .
Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the Prime Minister of India on April 8, 2015. Under Pradhan Mantri MUDRA Yojana, business loans of up to 10 lakh are offered to non-corporate, non-farm small/micro enterprises.
Under the MUDRA scheme, there are 3 inventions namely Shishu, Kishor, and Tarun to demonstrate the stage of the requirement of funding needed by the businesses
Any Indian citizen who has the business of manufacturing, trading, and other such service and wants to upgrade the technology or develop the business with credit need up to Rs. 10 Lakhs can opt for the MUDRA loan under Pradhan Mantri MUDRA Yojana (PMMY).
In the Credit support scheme which is under the National Small Industries Corporation (NSIC), the loan is provided to the business owners for raw material purchases and for marketing expenses.
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