Top 4 Government Loan Schemes

Top 4 Government Loan Schemes for Micro, Small and Medium Enterprises (MSME) in India

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India is one of the fastest-growing developing country and is one of the most emerging markets in the global scenario. According to the recent survey, there are around 28 emerging markets in the world out of which India ranks in second place. The main factors behind this booming emerging market are the economic liberalization policies that have been undertaken in 1990. There has been a significant growth of the Indian market in the last few years which has resulted in the high Gross Domestic Product (GDP). The average annual growth rate ranges from 6 to 7 %. The government of India is now targeting a $ 5 Trillion Economy by 2024.

In Indian Economy, the role of Micro, Small and Medium Enterprises (MSME) is the most dynamic and vibrant with high growth potential. As per a report of the Ministry of Commerce, the MSME sector contributes almost 40% of the total GDP and also contributes 43% of exports. There are close to 51 Million MSME units in the country that employ about 117 Million people across various sectors, constituting 40% of the workforce.

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Mudra Loan

वीमेन आंत्रप्रेन्योर के लिए फंडिंग स्कीम्स

To boost the emerging market of India, the government is also taking some positive steps. Now they have reduced the processing time, documentation and formalities. The government of India also launched some schemes where MSME can take a loan on a minimum rate of interest so that people can start their own business or expand their existing business.

Here are top 4 Government Loan schemes for Micro, Small and Medium Enterprises (MSME) in India where MSME can get the loan and start their own business:

  1. SIDBI Make in India Loan For Enterprises (SMILE): This scheme is run by the government of India in collaboration with SIDBI (Small Industries Development Bank of India) to give unsecured loans to businesses. It means this loan is a collateral-free loan. An applicant can borrow up to ₹100 Lakh as term loans or working capital loans as per their eligibility and feasibility. Both the existing and the new enterprises are eligible to be covered under the scheme. Under this scheme, loans will be offered in the forms of soft loans and term loans. New enterprises in the services and manufacturing sector will be given importance.
  2. Pradhan Mantri Mudra Yojana (PMMY): Mudra Yojana is a very popular scheme in India. It is designed for non-corporate and non-farming micro and small enterprises. Mudra Yojana has 3 different products; Shishu, Kishore, and Tarun. An applicant can avail loan up to 10 Lakh on the minimum rate of interest. After the inception of this scheme, there is a significant improvement in employment and more opportunities also generated specially in services, manufacturing, retail, and agriculture. Mudra Loan is a collateral-free loan. The loans will be provided by public sector banks, private sector banks, cooperative banks, Regional Rural Banks (RRBs), foreign banks, Non-Banking Financial Companies (NBFCs), and Micro Finance Institutions (MFIs).
  3. Credit Guarantee Scheme for Micro and Small Enterprises (CGSMSE): The scheme also offers collateral-free credit to the micro and small enterprise sector. This is a kind of unsecured loan. Existing and the new enterprises are eligible to be covered under the scheme. The Ministry of Micro, Small and Medium Enterprises, Government of India and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises. The guarantee cover available under the scheme is to the extent of a maximum of 85% of the sanctioned amount of the credit facility. The Guarantee cover under the scheme is for the agreed tenure of the term loan/composite credit. In the case of working capital, the guarantee cover is of 5 years or a block of 5 years.
  4. Stand-Up India Scheme: Under this scheme, the loan will be of composite nature which means that the loan will be inclusive of working capital and term loan. It is designed especially for Scheduled Caste (SC) / Scheduled Tribe (ST) women entrepreneurs. The enterprise should be engaged in the business of manufacturing, trading, or services. If the enterprise to be set up is non-individual, the controlling stake (51%) should be held by either a SC, ST, or women entrepreneur. An applicant can borrow between ₹ 10 lakh and ₹ 100 Lakh and tenure is a maximum of 7 years.

To boost the emerging market in India, the government is also taking some positive steps. The recent economic development has also put a positive impact on the various sectors. There is a significant development in the agricultural, service and industrial sector in the country. The increase in foreign investment has also cast a favorable effect on the emerging market in India. Now every country wants to invest in India as they can see that India is a big market for them. India has already surpassed France to become the sixth-largest economy. By 2019, it may become the fifth-largest economy and hopefully, by 2024, the Indian economy will touch $ 5 Trillion. 

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