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.
Government loan scheme for business
The government offers several loan schemes for small businesses, including:
- Pradhan Mantri Mudra Yojana: This scheme provides loans of up to Rs. 10 lakh to micro, small, and medium enterprises (MSMEs) for their business operations. It has three categories based on the amount of loan required – Shishu, Kishor, and Tarun.
- Stand-up India: This scheme is aimed at promoting entrepreneurship among women and economically weaker sections of society. Under this scheme, loans ranging from Rs 10 lakh to Rs 1 crore are provided to help start-ups and businesses run by SC/ST or women entrepreneurs.
- Credit guarantee fund trust for micro and small enterprises (CGTMSE): The CGTMSE scheme provides collateral-free loans up to Rs. 2 crores to new or existing MSMEs. Under this scheme, banks and other financial institutions provide loans to MSMEs, and the government provides a credit guarantee of up to 75% of the loan amount.
- National small industries corporation (NSIC) subsidy schemes: This scheme offers various credit-related subsidies such as financial assistance for marketing, technology upgrades, raw material procurement, and one-time settlement of outstanding dues for MSMEs.
Government loan for start up business and new business
S.No. |
Govt Business Loan Schemes |
1. |
Stand-up India |
2. |
Startup India |
3. |
Skill India |
The government offers several loan schemes that specifically cater to new businesses. Apart from those mentioned above, some of the schemes are:
Stand-up India
As mentioned earlier, this scheme provides loans from Rs 10 lakh to Rs 1 crore to new businesses and start-ups.
Startup India
Startup India scheme offers various benefits to start-ups, including access to funding, tax benefits, and incubation support.
Skill India
Skill India scheme is aimed at promoting skill development and entrepreneurship among youth and offers several subsidy schemes for setting up new businesses.
Factors affecting eligibility for government loan schemes
The primary factors influencing an applicant's eligibility criteria are:
- Age of the applicant
- The applicant's repayment history and financial stability
- The nature, type, and age of the business
- The applicant’s credit score or the company's credit rating
- The desired loan amount and selected repayment tenure
- Annual business turnover, Income Tax Returns (ITR), and Profit and Loss statements
- Capital invested, along with the goods, raw materials, equipment, or machinery intended for use
- Existing debts, loans, or any prior defaults
Government loans are accessible to a wide range of applicants, including individuals, startups, MSMEs, retailers, manufacturers, traders, sole proprietorships, partnership firms, business owners, and both public and private limited companies. The minimum age requirement for applying for a government business loan is 18 years, while the maximum age limit is 65 years. For established businesses or enterprises, a minimum operational period of at least one year is necessary to qualify for a loan.
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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