Micro, Small and Medium Enterprises (MSMEs) majorly contribute to the economy of the country by creating employment opportunities, by manufacturing, by exporting, etc. They require financial assistance to operate, for its initial capital investment, the working capital, day to day expenses and also to expand its business.
But owing to being perceived as high risk by the financial lenders for loan repayment and non-availability of collaterals, MSMEs face hurdles in obtaining the required financial help.
The government of India realises that MSMEs are essential to boost the economy of the country as they contribute to nearly 40% of the total GDP of the country. Thus, they have been focusing on the expansion of MSMEs and formation of new MSMEs by providing them with the required financial help in the form of business loan.
Several business loans schemes have been launched by the Government of India of which top 5 schemes have been detailed as follows:
(1) Quick Business Loan for MSMEs:
The most popular business loan scheme in the market is this MSME business loans owing to it being availed in 59 minutes. Under this scheme, business loans are offered to the start-up entities and already existing MSMEs to operate and expand their business. A business loan of up to Rs. 1 crore can be availed under this particular scheme.
Though the approval or disapproval of the business loan is granted within 59 minutes from the application time the actual processing time for the business loan is 8-12 days.
An entity to be eligible for this business loan need to have the basic business loan requirements such as good credit score, valid GSTN, ITR, Bank Statement copy, business registration copy, Rent agreement, etc.
(2) Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency Ltd) Yojana (PMMY):
The Government has launched PMMY scheme wherein the banks and the non-banking finance companies are providing the require refinancing support to Mudra enterprise with a purpose to grant a business loan, especially without collateral (Collateral is an asset against which loan can be pledged). Majorly all banks have been authorized by the government to offer Mudra Loans which are generally used by start-up entities.
Mudra has been further categorized based on the limit of the business loan granted to Micro units:
(i) Shishu Mudra Yojana: up to Rs. 50,000.00.
(ii) Kishore Mudra Yojana: From Rs. 50,000.00 to Rs. 500,000.00.
(iii) Tarun Mudra Yojana: From Rs. 500,000.00 to Rs. 10,00,000.00.
(3) Credit Guarantee Fund Trust for Micro and Small Enterprise (CGTMSE):
MSMEs generally find it difficult to obtain business loan owing to the non-availability of collateral. Under the scheme of CGTMSE, Government provides the financial assistance up to Rs. 2 crores to MSMEs without any collateral.
This particular scheme has been launched many years ago and since then it has been providing financial support to MSME entities.
(4) National Small Industries Corporation (NSIC):
NSIC supports MSMEs in its growth and expansion by providing them with two kinds of financial support, as follows:
(i) Marketing assistance: MSMEs are provided with the required marketing assistance to a growing and have an edge in the ever-growing, competitive world.
(ii) Raw Material assistance: MSMEs are provided financial help to procure raw material from the domestic or imported source.
(5) Credit Linked Capital Subsidy Scheme (CLCSS):
This scheme has been launched by the government to provide financial support to MSMEs to upgrade its technology, infrastructure, etc. This financial support can be used across various aspects of MSMEs from manufacturing to exports and gain an edge in the market with their products. MSMEs can get a 15% subsidy on the funding for its business.
To conclude, the Government is aiming to boost the economy of the country by providing all the required financial assistance to MSMEs and also is encouraging an increase in the number of MSMEs by launching several businesses loans.
(1) How can a Mudra loan be applied?
Micro units can either approach the scheduled banks to apply for Mudra loan or can also apply for the same online.
(2) What is a standup India scheme?
Standup India scheme is an initiative program government by Small Industries Development Bank of India (SIDBI) to provide business loans to individuals from SC/ST category and also to women entrepreneurs for setting up greenfield projects.
(3) What is the maximum amount that can be availed under the Credit Linked Capital Subsidy Scheme (CLSS)?
A maximum of Rs. 15 lakhs can be availed under CLSS.
(4) What is the Mudra card?
Against Mudra Loan account, a debit card is issued which an entity can use for multiple withdrawals This debit card is known as Mudra card.
(5) How much loan can be availed under MSME business loans granted in just 59 minutes’?
The business loan amount that can be availed under the scheme is between Rs. 1 Lakh to Rs. 5 Crore.