The government offers various loan schemes for small businesses to help them access affordable financing and grow their businesses. These loan schemes offer benefits such as low-interest rates, flexible repayment options, and simplified application procedures. In this article, we will delve into the various government loan schemes available for small businesses, and how they can help your business.
Top 6 Government Schemes for Business Loans in 2025
Explore some of the top government-backed business loan schemes available in India:
S.No |
Government Business Loan Scheme |
1 |
MSME Loan Scheme in 59 Minutes |
2 |
Pradhan Mantri MUDRA Yojana (PMMY) |
3 |
National Small Industries Corporation (NSIC) |
4 |
Credit-Linked Capital Subsidy Scheme (CLCSS) |
5 |
SIDBI Loan |
6 |
Udyogini Scheme |
1) MSME Loan
Micro, Small, and Medium Enterprises (MSMEs) are vital to India's economic landscape, driving innovation, creating jobs, and accelerating growth. To support their development, the government has introduced specialised loan schemes designed to meet their unique financial needs. These MSME loans provide easy access to funding, helping businesses thrive and expand.
Key highlights
- Financial support – These schemes provide essential funding to help MSMEs launch, grow, or sustain their businesses.
- Affordable borrowing – Competitive interest rates make government business loans a cost-effective financing option.
- Simplified process – Streamlined application procedures ensure quick and hassle-free access to funds.
- Flexible repayments – Customised repayment options help MSMEs manage cash flow efficiently while focusing on expansion.
2) Pradhan Mantri MUDRA Yojana (PMMY)
The Pradhan Mantri MUDRA Yojana (PMMY) is an excellent government-backed loan scheme, particularly beneficial for women entrepreneurs and businesses in the service and trading sectors.
MUDRA (Micro Units Development and Refinance Agency Ltd.) serves as a refinancing body that supports banks and NBFCs in extending credit to small businesses.
One of the key advantages of this scheme is its collateral-free credit, allowing borrowers to access funds without pledging assets. Additionally, it offers flexible repayment periods, making it easier for businesses to manage finances.
Types of MUDRA Loans
S.No |
MUDRA Loan Type |
Loan Amount |
Interest Rate |
1 |
Shishu MUDRA Loan |
Up to Rs. 50,000 |
1%-2% p.a. |
2 |
Kishor MUDRA Loan |
Up to Rs. 5 lakh |
8.60%-11.15% p.a. |
3 |
Tarun MUDRA Loan |
Rs. 5 lakh - Rs. 10 lakh |
11.15%-20% p.a. |
3) National Small Industries Corporation
NSIC: A valuable support system for entrepreneurs
National Small Industries Corporation scheme is a game-changer for entrepreneurs seeking financial assistance in areas like technology, marketing, and finance. Recognised as one of the best government schemes for business owners, it provides essential support to help businesses grow and thrive.
NSIC schemes available
- Marketing support scheme – Businesses can leverage this scheme for marketing assistance through consortia schemes, tender marketing, and more. It helps in business promotion, brand visibility, and expanding market reach.
- Credit support scheme – This scheme offers financial assistance for essential business needs like raw material procurement, working capital, and marketing.
4) Credit-Linked Capital Subsidy Scheme
This government subsidy loan is ideal for businesses seeking financial support to invest in technological upgrades across various sectors, including marketing, supply chain, and manufacturing.
The scheme is open to a wide range of business entities, including partnership firms, private and public limited companies, sole proprietorships, and cooperative companies, making it highly accessible.
A key benefit of this scheme is the 15% upfront capital subsidy, which reduces the financial burden on businesses looking to modernise their operations.
5) SIDBI Loan
The Small Industries Development Bank of India (SIDBI) is one of the oldest institutions offering government-backed business loans.
It primarily supports MSMEs in need of financial assistance. While SIDBI provides direct loans to businesses, it also extends indirect loan schemes through NBFCs and small finance banks (SFBs).
A key highlight of this scheme is its loan range, which starts from Rs 10 lakh and goes up to Rs 25 crore, with a repayment period of up to 10 years. Notably, businesses can avail of loans up to Rs 1 crore without any collateral.
6) Udyogini Scheme
Udyogini scheme is a government-backed initiative designed to support women entrepreneurs in India. It provides financial assistance of up to Rs 15 lakh to help women-led businesses meet their operational and capital requirements.
To be eligible, applicants must be between 18 and 55 years old, with an annual income not exceeding Rs 15 lakh.
Key points to remember
- Loan opportunity: Women entrepreneurs can avail of loans up to Rs 15 lakh for business expansion and working capital.
- Financial benefits: With zero processing fees and no collateral requirement, the scheme makes funding more accessible for women-owned businesses.
More government loan options for businesses
In addition to the options mentioned earlier, there are several other government-backed loan schemes that can help boost your business. Here are a few to consider:
- Credit Guarantee Fund Scheme (CGTMSE) – The CGTMSE scheme provides financial assistance to small businesses without requiring collateral. It helps businesses access loans easily to manage and expand operations.
- Stand Up India loan scheme – Stand Up India loan scheme is designed to support entrepreneurs from SC/ST and women categories, this scheme provides loans for setting up greenfield projects.
- NABARD loan scheme – The NABARD loan scheme is aimed at supporting rural businesses, this scheme provides funding for various agriculture and allied activities, boosting businesses in rural India.
- Prime Ministers' Employment Generation Programme (PMEGP) – The Prime Ministers' Employment Generation Programme aims to create new jobs and self-employment, this scheme offers financing for setting up micro-enterprises.
These schemes offer flexible terms, making it easier for businesses to access much-needed funding for growth and expansion.
Benefits of government loan schemes
- Lower interest rates: Government loan schemes usually offer lower interest rates.
- Collateral-free: Many government loan schemes are collateral-free, making it easier for new or small businesses to obtain financing.
- Simplified application process: The application process for government loan schemes is relatively straightforward, with fewer bureaucratic hurdles.
- Longer repayment tenure: Repayment tenure for government loans is often longer than for private lenders, resulting in lower EMIs and less burden on businesses.
In conclusion, government loan schemes offer significant benefits to small businesses, including lower interest rates, simplified application procedures, and collateral-free loans. By understanding the available schemes and choosing the right one that meets their business requirements, small businesses can secure the financing necessary to grow their businesses.
Other Government Schemes |
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