4 min
25 March 2025
MSME loan schemes are financial assistance programmes designed to support micro, small, and medium enterprises in India. These schemes, initiated by the government and financial institutions, help businesses secure funding for expansion, working capital, infrastructure, and technology upgrades. MSME loans offer benefits such as lower interest rates, credit guarantees, and collateral-free financing to promote entrepreneurship. Various schemes, including the Pradhan Mantri Mudra Yojana, PMEGP, and CGTMSE, cater to different business needs, ensuring financial stability and growth opportunities. These schemes empower startups and existing enterprises to scale operations, enhance productivity, and contribute to India’s economic development.
If you have an MSME business that is running short on funds, you can also have a look at our business loan for additional cash flow. Check your business loan eligibility now.
Apart from the mentioned loans, our business loan is also a good option you can consider for your MSME business. Check out your pre-approved business loan offer now.
If you have an MSME business that is running short on funds, you can also have a look at our business loan for additional cash flow. Check your business loan eligibility now.
Latest MSME budget updates in February 2025
The Union Budget 2025 introduced several key updates for the MSME sector, focusing on credit access, digital integration, and financial relief. The government announced increased funding, subsidies, and policy changes to support small businesses.| Budget initiative | Details |
| Increased MSME credit limit | MSMEs can now avail loans up to Rs. 5 crore under government-backed schemes |
| Interest subsidy extension | Interest subsidy on MSME loans extended for an additional two years |
| Digital MSME platform | A new portal launched to streamline loan applications and approvals |
| Tax benefits | Startups and MSMEs receive extended tax exemptions until March 2027 |
| Collateral-free loan expansion | More banks and NBFCs authorised to provide unsecured MSME loans |
| Export incentives | Increased financial support for MSME exporters through credit subsidies |
| New skilling programme | Special training initiatives for MSME workers to enhance productivity |
Pradhan Mantri Mudra Yojana (PMMY)
The Pradhan Mantri Mudra Yojana (PMMY) is a flagship government scheme aimed at providing financial assistance to micro and small enterprises. Launched in 2015, this scheme enables businesses to avail loans up to Rs. 10 lakh without collateral. PMMY is divided into three categories—Shishu (up to Rs. 50,000), Kishore (Rs. 50,000 to Rs. 5 lakh), and Tarun (Rs. 5 lakh to Rs. 10 lakh), catering to businesses at different stages of growth. The scheme is available through banks, NBFCs, and microfinance institutions, ensuring accessibility to entrepreneurs. By promoting self-employment and small business expansion, PMMY fosters economic growth and financial inclusion.Prime Minister’s Employment Generation Programme (PMEGP)
The PMEGP is a credit-linked subsidy programme aimed at generating employment by supporting micro-enterprises in rural and urban areas. The scheme provides financial assistance for new business ventures, with the government offering a subsidy of 15% to 35% based on business category and location. PMEGP is implemented by the Khadi and Village Industries Commission (KVIC) and other state-level agencies. Eligible entrepreneurs can avail loans up to Rs. 50 lakh for manufacturing units and Rs. 20 lakh for service-based enterprises. The scheme promotes self-employment by reducing financial barriers and encouraging skill development among aspiring entrepreneurs.Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT MSE)
The CGTMSE scheme offers collateral-free loans to micro and small enterprises, ensuring easy access to credit for businesses without tangible assets. Launched by the Government of India and SIDBI, this initiative provides a credit guarantee of up to 85% on loans up to Rs. 2 crore. CGTMSE covers both new and existing businesses, reducing the risk for lenders and encouraging financial institutions to provide unsecured loans. The scheme enables entrepreneurs to secure funding without pledging property, facilitating business expansion, working capital requirements, and technology upgrades. By bridging the credit gap, CGTMSE boosts MSME sector growth and innovation.Credit Linked Capital Subsidy Scheme (CLCSS)
The Credit Linked Capital Subsidy Scheme (CLCSS) is designed to support MSMEs in upgrading their technology and improving competitiveness. Under this scheme, businesses receive a capital subsidy of 15% on loan amounts up to Rs. 1 crore for purchasing new machinery or modernising equipment. The initiative aims to help MSMEs adopt state-of-the-art technology, increase production efficiency, and enhance product quality. CLCSS is available across various sectors, including manufacturing, food processing, and textiles. The scheme, implemented through SIDBI and other financial institutions, ensures that small businesses remain competitive in both domestic and international markets.Equity infusion for MSMEs through fund of funds
The Fund of Funds initiative provides equity support to MSMEs, enabling them to strengthen their capital structure and scale operations. This government-backed scheme aims to invest in promising MSMEs through venture capital and equity-based funding mechanisms. By addressing the liquidity gap, the fund helps small businesses access long-term investment without relying solely on debt financing. The initiative is particularly beneficial for high-growth MSMEs looking to expand their market reach and invest in technology and infrastructure. With structured financial backing, this scheme enhances MSME competitiveness and contributes to sustained business growth and job creation.Credit Guarantee Scheme for Subordinate Debt (CGSSD)
The Credit Guarantee Scheme for Subordinate Debt (CGSSD) is designed to assist stressed MSMEs facing financial difficulties. The scheme provides partial credit guarantees to lenders, allowing entrepreneurs to secure subordinate debt up to Rs. 75 lakh. CGSSD helps businesses restructure their financial obligations and regain stability without requiring additional collateral. The scheme is particularly beneficial for businesses impacted by economic downturns, ensuring continued operations and job retention. By offering credit support to struggling MSMEs, CGSSD facilitates recovery and business continuity, reducing the risk of closure due to financial constraints.SIDBI Make In India Loan For Enterprises (SMILE)
The SIDBI Make in India Loan for Enterprises (SMILE) scheme supports MSMEs engaged in manufacturing and service sectors. The initiative offers financial assistance with soft loans and a flexible repayment structure to encourage business expansion. MSMEs can avail loans starting from Rs. 10 lakh, with lower interest rates for eligible applicants. The scheme prioritises businesses aligned with the Make in India initiative, promoting domestic production and reducing import dependency. By facilitating long-term funding for asset creation and working capital needs, SMILE enhances the financial capabilities of small businesses, fostering innovation and industrial growth.MSME business loan for startups in 59 minutes
The MSME business loan for startups in 59 minutes is a digital lending platform that provides quick loan approvals for small businesses. This initiative allows startups and MSMEs to apply for loans ranging from Rs. 1 lakh to Rs. 5 crore, with approval in under an hour. The platform integrates with multiple banks and financial institutions, ensuring seamless loan processing with minimal documentation. By using automated credit assessment tools, the scheme accelerates loan disbursement, reducing wait times for entrepreneurs. The initiative helps businesses meet their funding needs efficiently, promoting ease of doing business and faster financial access for MSMEs.Apart from the mentioned loans, our business loan is also a good option you can consider for your MSME business. Check out your pre-approved business loan offer now.
