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Government schemes for small businesses.
Small businesses contribute significantly to the Indian economy. In addition to that, Small and Medium Enterprises (SMEs) also create job opportunities, thereby solving the major issue of unemployment in the country to a certain extent. Since SMEs play a crucial role in the economic growth of the country, the Indian government has taken several initiatives to promote the small and medium businesses. One of the major concerns that small businesses often face is the unavailability of enough funds for their growth and expansion. To tackle this issue, the Indian Government has come up with several schemes for SMEs. Some of them are mentioned below:
MUDRA loan is offered under the Pradhan Mantri Mudra Yojana (PMMY). Micro-Units Development and Refinance Agency (MUDRA) is a government established organization that offers funds to small businesses in India. The MUDRA loan is approved and disbursed by public and private sector banks, small banks, rural banks, scheduled banks, and co-operative societies that are registered under this scheme. The types of Mudra loan is as follows:
- Shishu Loans – Rs. 50,000
- Kishor Loans- Rs. 5,00,000
- Tarun Loans – Rs. 10,00,000
You can avail a MUDRA loan despite your low credit score. Another major advantage of MUDRA loan is that you do not have to pledge any collateral while availing the loan amount. All small businesses can benefit from the MUDRA loan. However, it is to be noted that the applicant should not have defaulted on any type of loan availed in the past by any lender in order to be eligible for the MUDRA loan.
Let us have a look at the process to apply for a MUDRA loan:
- You can apply for a MUDRA loan with the help of leading banks and other Non-Banking Financial Companies (NBFCs). The loan amount availed through MUDRA loan can help you get access to the required funds for the growth and expansion of your small business. You can also avail the MUDRA loan to manage the working capital needs of your business.
- Before you start with the MUDRA loan application process, make sure that you have all the required documents available with you. Some of the basic documents required to avail a MUDRA loan are Identity proof, address proof, and business proof.
- Once you have all the necessary documents readily available with you, you must visit the official website of the lender through which you wish to avail the MUDRA loan. You must then fill in the Pradhan Mantri Mudra Yojana application form by providing all your personal and business details.
- You must then specify the loan amount and the repayment tenure you wish to opt for. You can avail a MUDRA loan amount ranging from Rs. 50,000 to 10, 00,000 for a repayment tenure from 3-5 years as per your requirements.
- After you apply for the loan, the lender will sanction the loan amount and it will be reflected in your bank account shortly.
Credit Guarantee Fund Scheme
- Credit Guarantee Fund Scheme is an unsecured loan provided to micro and small scale enterprises. However, the unsecured loan amount is offered only up to Rs 10 lakhs. But you can apply for a loan amount between Rs. 10 lakhs and Rs. 1 crore by pledging collateral for the same. New as well as existing businesses can apply for the Credit Guarantee Fund Scheme.
- To implement this scheme, the MSME and Small Industries Development Bank of India (SIDBI) has set up a trust, named Credit Guarantee Fund Trust for MSEs (CGTMSE).
Market Development Assistance Scheme for MSMEs
This government scheme allows small and medium businesses to avail funding for participating in international trade fairs and exhibitions under MSME India stall. This scheme also provides financing for the sector-specific market studies by industry associations/ export promotion councils.
MSME Loan in 59 Minutes
It is one of the most popular government loan schemes for small businesses. Under this scheme, MSMEs can avail a loan amount up to Rs. 1 crore in a short duration. The interest rate charged on this loan depends upon the nature of the business and its credit report.
Now that you have a fair understanding of various types of government loan schemes for small businesses, ensure that you choose the right financing option for your small business. Lastly, make sure that you read all the terms and conditions of the loan agreement carefully before signing it. This will help you avoid any inconvenience in the later stage.