Small businesses are the backbone of the economy and the Government of India understands their importance. That is the reason why they have come out with numerous schemes that will benefit small businesses. One of the oft-repeated complaints, small businesses have the availability of MSME loans and CGTMSE loans. Business loans are essential for any business and the faster a business gets one the better for it. While it used to be a bureaucratic muddle at a point in time, with the opening up of the economy, financial services have become intensely competitive. The Government of India has themselves come out with several schemes designed to help small businesses. Let us look at the 6 best government loan schemes for small business in India in 2021.
MSME loan in 59 minutes
This is one of the most popular government schemes that has helped small businesses. The Government of India had launched a quick business loan portal that focused on the MSME sector. It was created with the sole idea of helping the small business community grow and become competitive.
The interest rate for this loan was fixed at 8.5% and would be provided by any public or private sector bank and NBFC.There is a list of factors that are required by the lender to process the application:
- Revenue stream
- Repayment capability
- Existing loans
- Other financial factors
Pradhan Mantri MUDRA Yojana
MUDRA stands for Micro Units Development and Refinance Agency Ltd. It is designed to help small businesses and help them move up the financial ladder. The loan has three categories: ‘Shishu’, ‘Kishore’ and ‘Tarun’. These stages are dependent on the revenue return of the small businesses.
The loan aims to help vendors, traders, shopkeepers and other small businesses and not develop small units.
It also aims to provide working capital to the aforementioned group to sustain their business.
A MUDRA card is issued and can be used as a debit card.
Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE)
It is a collateral-free scheme started by the Government of India. It is for both legacy and newly started businesses. CGTMSE is a joint venture between the Ministry of MSME and the Small Industries Development Bank of India (SIDBI) and is accorded the status of a trust? Under this scheme, small businesses get access to loans up to INR 2 crores and special preference is given to women.
National Small Industries Corporation (NSIC)
This is an ISO certified company under the Government of India which assists small business in the field of finance, marketing and technology. It finances the procurement of raw materials, bears the expense for the marketing services through liaison with banks.
Credit Linked Capital Subsidy Scheme (CLCSS)
This scheme by the Government of India is aimed at assisting small businesses to scale up their technology. Under this scheme, the eligible business can avail of upto 15% subsidy on machinery. The maximum cap on the subsidy has been capped at INR 1 crore.
This scheme is specially designed to assist the entrepreneurs from the backward classes and businesswomen. The criteria are that the business must be in the following sector:
- Service Industry
In case the business is owned by more than an individual, then a 51% controlling stake would need to be with someone who is from the backward classes or is a woman entrepreneur.
Lastly, with schemes like Udyog Aadhar and the ones mentioned above, the Government of India wants the sector to rise and compete with the best in the world. It would then have a cascading effect on the country.