The Government of India offers around 125 financing, funding, and assistance programs via its various ministries and departments.
Out of these, the number of schemes offered by different ministries to businesses include –
4 schemes from Ministry of Finance, 31 from the Ministry of Micro, Small and Medium Enterprises and 6 from the Ministry of Textiles.
Out of these, some provide business loans to help micro, small, and medium entities to establish or expand their operations.
As per government records, most of these financing schemes have been highly beneficial, especially for those who lack the necessary funds to set up their own business.
Some of these schemes are discussed below –
Pradhan Mantri MUDRA Yojana (PMMY) - Ministry of Finance
PMMY or the Pradhan Mantri MUDRA Yojana led to the establishment of the Micro Units Development and Refinance Agency (MUDRA), an NBFC that offers loans of up to Rs.10 lakh to small businesses.
Loans under the MUDRA scheme are classified into the following –
Tarun – Between Rs.5 lakh and Rs.10 lakh.
Kishor – Between Rs.50,000 lakh and Rs.5 lakh.
Shishu – Up to Rs.50,000.
Tarun loans require a processing fee of 0.5% + taxes, while for Kishor and Shishu loans, one does not have to incur such charges.
During 2019-20 –
A number of MUDRA loans sanctioned – 5.8 crores.
Total amount sanctioned – Rs.3.2 lakh crore.
Total amount disbursed – Rs.3.1 lakh crore.
The majority of MUDRA loans were sanctioned to women entrepreneurs during the Financial Year 2018-19. 3.7 crore accounts were created and a total of Rs.1.2 lakh crore was disbursed to such borrowers.
The MUDRA loan application form can be availed through MFIs, RRBs, NBFCs, commercial financial institutions, and small financial institutions.
Stand-Up India - Ministry of Finance
The Stand-Up India scheme offers loans between Rs.10 lakh and Rs.1 crore to women and Scheduled Cate/Scheduled Tribe (SC/ST) individuals. In case it is a partnership company, 51% of the business’ shares must belong to the beneficiary.
More than 68,000 applications were received for financing under the scheme, out of which 53,000+ have been approved till date.
Business loans amounting to more than Rs.15,000 crore have been sanctioned, out of which, close to Rs.8,300 crore has been disbursed.
This scheme is only available for those setting up a greenfield business in the trading or services sector. Beneficiaries can apply for this scheme from a designated financial institution, through the official website, or with the Lead District Manager.
There are more than 100 financial institutions offering loans under the Stand-Up India scheme through their 1.3+ lakh branches.
Coir Udyami Yojana (CUY) - Ministry of MSMEs
The Coir Udyami Yojana is a credit-linked subsidy scheme to help individuals establish a coir business. The scheme provides business loans for units with a project cost of up to Rs.10 lakh.
It also offers funding for one cycle of working capital that will not be more than 25% of the project cost.
While the financial institution will fund 55% of the project cost, 40% will be from the subsidy, and the remaining 5% has to be contributed by the beneficiary.
Individuals will be able to build a successful manufacturing business in this area with funding received through this scheme.
Beneficiaries can avail a Coir Udyami Yojana application form from the Coir Project or Board Offices, Panchayati Raj Institutions, District Industries Centres, or one of the Coir Board-approved nodal agencies.
CGTMSE or Credit Guarantee Fund Trust for Micro and Small Enterprises - Ministry of MSMEs
CGTMSE or the Credit Guarantee Fund Trust for Micro and Small Enterprises is a scheme operated jointly by the Ministry of MSMEs and SIDBI.
This scheme provides credit facilities of up to Rs.2 crore. It offers a guarantee cover of 50%, 75%, 80%, and 85%.
Other than the above, businesses can also opt for MSME loan. There are several benefits of MSME loans, financing up to Rs.30 lakh and within 24 hours being two of them.
NBFCs like Bajaj Finserv provide such loans along with several other features against minimum eligibility criteria fulfilment.
The financial institution also brings pre-approved offers, which reduce the time taken to avail loans by making the process hassle-free. These offers are available on credit cards, personal loans, business loans, and a range of other financial products. Individuals only have to provide their basic details to check their pre-approved offer.
Apart from the above, SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE), Sustainable Finance Scheme, and Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation are some of the schemes helping small businesses grow in India.