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  • Government Subsidy Loans for Businesses in India

    Published on August 26, 2019

    Small and Medium Enterprises (SME) sector is the engine of growth for any country. Indeed in recent years, the sector has registered stupendous growth. Thanks to, increasing opportunities, digital advancements, and the better economic environment! And with rising ease of business, new & young entrepreneurs are encouraged to enter the world of business in India. The number of registered & unregistered SME in India is estimated to cross the figure of 42.50 million by the end of 2019. This sector is credited with employing up to 69% of the workforce in India.

    Many new as well as established SMEs face paucity of funds. Owners are unable to put their business growth on a fast track due to difficulties in arranging for Business Loan from banks and investors. The government of India supports multiple business loan schemes and subsidies for new and existing businesses.

    If you are also an SME entrepreneur and are looking for an affordable source of funds, here are the top 5 government subsidy loan schemes that you must consider. You can avail these offers from top public sector banks such as SBI and enjoy benefits at par with SBI Business Loan.

    1. Credit Link Capital Subsidy Scheme for Technology Upgradation

    This scheme is monitored by the Ministry of Small-Scale Industries, offering a capital subsidy of 15% for eligible business. However, Rs. 15 Lakh is the maximum amount that can be availed as government subsidy loan under this scheme by an applicant. This scheme was introduced to help small businesses to upscale their process by financing technological up-gradation which can be associated with any business process like manufacturing, supply chain, etc. Through this scheme, the government aims to reduce the cost of production of goods and services for SMEs.

    1. Pradhan Mantri Mudra Yojana (PMMY)

    The Micro-Units Development and Refinance Agency (MUDRA) is an organization that has been established by the Government of India. This organisation has been created to offer Business Loan to the micro-business units. The main objective of this scheme is ‘funding the unfunded.’ The GoI has created a low-cost credit facility easily accessible for small companies and startups that require funding for their ventures. The government’s mission is to create employment and generate income in the areas of services, manufacturing, retail, and agriculture.

    The MUDRA Loans are refinanced Business Loans that are approved and disbursed through authorized banks, co-operative societies, scheduled commercial banks, and rural banks. Business owners seeking the Mudra Loans are not required to provide any security or collateral. These loans are usually provided to micro or small businesses in the manufacturing and service industries. The MUDRA loans are categorised into the following.

    • Sishu Loans with a maximum limit of up to 50,000.
    • Kishor Loans with a maximum limit of up to 5,00,000.
    • Tarun Loans with a maximum limit of up to 10,00,000.


    1. MSME Business Loans in 59 Minutes

    First announced in September 2018, the MSME Business Loans in 59 Minutes is a highly talked about offering the in recent times. While the actual process of the loan might take up to 8-12 days, the approval or rejection process is completed within 59 minutes of application, hence the name, MSME Business Loans in 59 Minutes.

    The loans offered under this scheme mostly emphasize on MSME growth in the country and provide financial assistance to the eligible entities. This is a refinancing scheme. Five authorized public sector banks will grant the funds. The loan being offered under this government scheme is mainly a working capital loan between Rs. 10 Lakh and Rs. 1 Crore with a subsidized rate of interest of 8%. However, the rate of interest might vary depending on the applicant’s credit score, business activities and other factors that determine the financial standing of an MSME. The processing fee and charges of these loans are Rs. 1,000 + GST for the borrowers who are approved for the loan.

    1. SIDBI Make in India Loan for Enterprises (SMILE)

    In order to boost the Make in India campaign, the government of India has launched the SIDBI Make in India Loan For Enterprises (SMILE) scheme. The emphasis of the SMILE scheme will be on the twenty-five sectors that have been identified under the ‘Make in India’ programme.’

    Additional importance is given to the smaller enterprises within the MSME sector for the funds related requirements. The primary emphasis of this scheme is on the development of the skill of the employees and providing adequate financial support to MSMEs. They can develop state-of-the-art manufacturing infrastructure by achieving the desired debt-equity ratio for the formation of an enterprise.

    Existing smaller enterprises, as well as new enterprises engaged in the manufacturing and service industry,  are eligible to apply for financial assistance under this scheme. The loans are offered in the form of soft loans and term loans under this scheme. The interest rate for the soft loans in the first three years range from 9.15% to 9.35% per annum. The rate of interest from the fourth year can range from 11.70% – 12.70% per annum based on the Bank’s PLR & Internal Rating. The maximum loan amount available for new enterprises is Rs. 50 Lakh and for existing enterprises, it is capped at Rs. 25 Lakh.

    1. Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGSMSE)

    The CGSMSE was launched in the year 2000 and is a monetary support scheme for Micro and Small Enterprises in India. CGSMSE scheme offers collateral-free loans to both new and existing business units that meet the eligibility criteria. The CGSMSE offers a working capital loan of up to Rs. 10 Lakh without any security or collateral. However, credit facilities above Rs. 10 Lakh and up to Rs. 1 crore require hypothecation of land and building, and such eligible accounts are covered under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Assets created through the amount availed under this scheme are also considered as collateral when the loan amount exceeds Rs. 10 Lakh. The funds under this scheme are provided through various public and private sector banks covered under the scheme.

    As the Government of India is taking the initiative to encourage new and existing enterprises, many banks are also following the cue. For instance, SBI, the largest public sector bank, is now offering SBI Business Loans of up to Rs. 20 crore for businesses to finance their operations. If you are also in an urgent need for affordable funds, the time is right to make your move.