Government loan programs for small businesses; All the details inside

Commercial loan

Government Business Loans are financial assistance offered by the Government of India in the form of loan programs, which are made available through financial institutions such as private and public sector banks, NBFCs, banks regional and other rural areas.

These loans are useful to anyone (including those in the rural community) who are considering starting a small business.

The 6 best government loan packages for new MSMEs and startups:

– India standing:

Stand up India was established by the Small Industries Development Bank of India (SIDBI) to provide money to people in the SC / ST group as well as women entrepreneurs. At least one SC / ST borrower and one female borrower per bank branch are eligible for bank loans ranging from Rs 10 lakh to Rs 1 crore under this program.

Eligibility criteria:

This program is open to businesses in the trade, manufacturing and service sectors. In the case of non-sole proprietorships, at least 51% of the stake must be owned by a SC / ST or a woman entrepreneur.

Loan characteristics:

The interest rate would be the cheapest applicable rate – (MCLR Base Rate + 3% + Tenor Premium).

It provides composite loans ranging from Rs. 10 lakh to Rs. 1 crore to cover up to 75% of project costs including term loan and working capital.

The loan is expected to cover 75% of the project costs, depending on the loan conditions. This will not be relevant if the borrower’s contribution, as well as the convergence support of any other regime, exceeds 25% of the cost of the project.

– PSB /MSME loans in less than an hour:

On November 5, 2018, our Prime Minister introduced psbloansin59minutes, a digital platform or specialist webpage that allows new businesses and MSMEs to get loans of up to Rs. 5 crore in just 59 minutes. Government start-up loans have been created to help micro, small and medium enterprises (MSMEs) across India. Here are some of the amazing qualities of this facility:

Interest rate: The interest rate offered under this scheme starts at 8.50 percent per annum and goes up from there.

Amount of the loan: The loan amount given under this loan would vary from Rs. 1 lakh to Rs. 5 crores.

Quick financial aid: Typically, these loan applications take 7-10 business days. The loan approval process, on the other hand, takes just 59 minutes.

Quick disbursement: Once the loan is accepted within an hour, the funds should arrive in your bank account within 7-8 business days.

– Grant from the National Small Industries Corporation (NSIC):

Under the National Small Industries Grant (NSICS), the government assists small businesses with two financial benefits: marketing support and raw materials support. Here are some of its advantages:

– Free calls for tenders: As part of the marketing support program, Small Industries (SSI) will have free access to calls for tenders.

– There is no security deposit requirement: SSI (Small Scale Industries) are not required to pay a security deposit to obtain financing.

– Land and construction financing: The program provides financial assistance to the land and construction department for SSI units whose project cost does not exceed Rs. 25 lakh.

Government loans

– Make in India Soft Loan Fund for MSMEs by SIDBI:

SMILE, which was established in 2015, is managed by the Small Industries Development Bank of India (SIDBI). The objective of this program is to provide loans at low interest rates in order to meet the debt ratio required for the development of new MSMEs as well as the expansion of existing ones. SMILE Timely Working Capital Assistance during the COVID Period offers an interest rate of 8.25% and above.

Eligibility criteria: As of February 29, 2020, all current borrower accounts, including those under a credit delivery agreement, with a total of outstanding credit facilities of up to Rs 25 crore were eligible.

Amount of the loan: Up to 20% of total outstanding loans with SIDBI up to Rs. 25 crore with a Rs. 5 crore exposure cap.

MUDRA loan under PMMY:

This program was created by the government to provide financing to non-commercial and non-agricultural small / micro enterprises. Private and public sector banks, commercial banks, regional rural banks (RRBs), small finance banks, and merchant banks all offer Mudra loans. Interested applicants should contact one of the funding institutions listed above or apply online on the official MUDRA website. Small businesses and startups are the most common recipients of MUDRA loans.

Loan characteristics:

– Banks and NBFCs offer competitive interest rates.

– Lend an amount of up to ten lakh rupees

– The repayment terms range from 12 to 5 years.

– Unsecured loans

– There is no processing fee.

– There is no charge to pay in advance.

– Women entrepreneurs get special interest rates

Eligibility criteria:

– The applicant must be at least 18 years old and not more than 65 years old.

– Applicants who have never defaulted on a loan before.

Individuals, MSMEs, rural and urban landlords / businesses can apply for the loan under the Small Non-Business Business (NCSB) segment.

The three Mudra loan programs, along with the loan amounts available, are listed below.

– Shishu: Loan program: up to Rs. 50,000 Shishu: Loan program: up to Rs. 50,000 Shishu: Loan program: up

– Kishor: loan amounts vary from Rs. 50,000 to Rs. 5 lakh.

– Tarun: The loan amount varies from Rs. 5 lakh to Rs. 10 lakh.

– Credit Guarantee System (CGS):

The government launched the Micro and Small Enterprise Credit Guarantee Trust Fund (CGTMSE) to strengthen and facilitate the provision of credit to the MSME sector. Under this agreement, public, commercial and foreign banks, as well as regional rural banks (RRBs) and SBI with its affiliated banks, are included as credit institutions.


This program is open to new and current MSMEs involved in manufacturing or service operations, except retail, educational institutions, agriculture, self-help groups (SHGs) and institutes training.

Loan characteristics:

– Term loans and / or working capital loans up to Rs. 2 crore are available under this MSME program for entrepreneurs.

– Up to 75% of the loan limit up to Rs. 1.5 crore is covered by the collateral.

– Micro enterprises are eligible for 85 percent of the credit for loans up to Rs. 5 lakh.

– All loans to the North East region, including Sikkim, including 80 percent of credit facilities for MSMEs owned / managed by women

– Guarantee coverage for MSME retail trade is 50% of the amount in default, up to a maximum of Rs. 50 lakh.

Documents needed to apply for a loan:

The documents required for various government programs may differ from each other. However, we have listed a few common documents to give you an idea of ​​the documents that may be required to apply for the plans:

– Passport-sized photos and a completed application form

– Documents proving your identity: Proof of identity, age and address of the applicant: Passport, voter card, Aadhar card, driver’s license, PAN card and utility bills are some of the required documents (water and electricity bills)

– Bank statements for the last six months

– Certificate of incorporation, proof of address and PAN card

– If applicable, proof of membership of the SC / ST / OBC group.

– Any other document required by the bank

How to enroll in government loan programs

Step 1: Go to the official website of the nearest bank that is eligible to lend under government initiatives.

Step 2: Create an account on the portal and use one-time password authentication (OTP) to log in.

Step 3: Accept the terms and conditions of the government loan program.

Step 4: Fill in your financial credentials and any other required information.

Step 5: Complete the remaining steps by filling out the forms and submitting the relevant documents.

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