Banking, Business Loan, Loans

Government Business loan Schemes

Posted By: Admin
June 10, 2022 |

Unsecured business loan up to Rs. 1 Crore and loan subsidy up to 35%, Explore Government Business loan Schemes, Government Aids

Government Business Loan Schemes: At times, we in business often face difficulties like lack of funds to pay salaries, expansion of the business to other locations, to indulge in a new project, to purchase a new asset, etc. Sometimes we have already started a project and suddenly there is more requirement of funds to complete the project. Else we require machinery to improve capacity and reduce dependency on labor and turn around time. COVID pandemic has made it more difficult. In such cases, business loans are very helpful and remedy the problems arising due to lack of funds. Read about Government Business loan Schemes in this article.

About Government Business loan Schemes

There are many schemes, which not only provide sufficient capital to your business but also have subsidy provision from the Government of India. These business loans are available at very low interest rates.

There are numerous banks and Non Banking Financial Companies (NBFC) or private lenders that provide the facility of business loans. However, choosing the right bank/ company from such a large pool can often be confusing. You have to select a bank or a company which is not only fulfilling your fund requirement but also it should be transparent in terms of charges and repayment conditions.

The Government of India offers loans to Micro, Small and Medium Enterprises (MSMEs) and other business enterprises. Some of which are PMEGP Loan, PMRY Loan, Standup India Loan, Mudra Loan etc. We will read more about the schemes in the article below.

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There are majorly 3 types of business loans –

Term Loan (provided to purchase machinery, setup project infrastructure, maintenance purposes, to purchase furniture or fixtures etc. and repayable in installments.)
Running limits – (Overdraft facility, open cash credit facility provided to purchase raw material, general operations and other running requirements of businesses. This is to be repaid as and when you have funds within limitation period and interest to be served regularly)
Hybrid loans – (Includes term loan and running limit both).

Government schemes for business loans –

1. Pradhan Mantri Mudra Yojana (PMMY) –

This scheme offers funding assistance of maximum Rs. 10 lakhs to individuals, MSMEs, as well as non-corporate and non-farm small/micro-enterprises.

These loans are provided under Mudra scheme and offer integrated financial assistance to the MSME sector that includes small manufacturing units, small-scale food service units and also other small industries. The main objective of launching the MUDRA scheme is to offer institutional finance to small businesses that are involved in trading, manufacturing and service industry.

Government is offering security to these loans directly to lenders, hence no borrower has to provide any security to lenders under this scheme.

One can get more information on govt official website www.udyamimitra.in.

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2. Prime Minister’s Employment Generation Program (PMEGP) –

It is a credit-linked subsidy scheme and aims to create self-employment opportunities by setting up micro-enterprise establishments especially in the non-agriculture sectors.

It focuses on extending help to unemployed youth and also traditional artisans. This scheme is taken care of by Khadi and Village Industries Commission (KVIC) nationally. The scheme is implemented at the state level via the State Khadi and Village Industries Commission Directorates, State Khadi and Village Industries Boards and District Industries Centres and banks.

The Government of India is also providing training if required to start a business where technical knowledge and project insights are required.

Banks do not demand any security against the loan up to 10 lakhs. But Above 10 Lakhs, you need to provide security to the loan.

Govt official website https://www.kviconline.gov.in/pmegpeportal/pmegphome/index.jsp

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3. Pradhan Mantri Rojgar Yojana (PMRY) –

The government looks to support and empower educated youth and women and aims to offer sustainable employment. It offers financial assistance to individuals who want to start their enterprise across categories such as trade, manufacturing, as well as services sectors.

Govt official website http://laghu-udyog.gov.in/publications/pmryprof/ABOUTPMRY.html

4. Stand-up India –

This offers financial assistance to women entrepreneurs and people from SC/ST category primarily for establishing greenfield projects. The loan amount in this scheme is ranging from Rs. 10 Lakh to Rs. 1 Crore.

At least one SC/ST or woman entrepreneur per bank branch at the time of initiation of projects can avail this loan.

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“A greenfield project is a project involving new infrastructure built on unused lands which require no remodelling or demotion of a previously existing structure.”

The Stand-up India Scheme is provided to first-time ventures in manufacturing, services or trading segments. It facilitates non-individual enterprises in which a minimum of 51% of the shareholding is with an SC/ST or woman entrepreneur. Under the scheme, the loan amount covers 75% of the net project cost. The entrepreneur must commit a minimum of 10% of the project cost under the scheme.

Link to Stand-up India Govt official website

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5. Pradhan Mantri Kaushal Vikas Yojana (PMKVY) –

This scheme helps to improve the working efficiency of daily laborers or wage earners by giving financial rewards and providing free skill-based training. The average monetary benefit for the candidates under this scheme is 8000 Rupees.

Govt official website https://www.pmkvyofficial.org/

6. Coir Udyami Yojana (CUY) –

This is a credit-linked subsidy scheme which has been set up to assist entrepreneurs in establishing coir manufacturing units.

The maximum project cost can be Rs. 10 lakhs to be eligible for this scheme. This is the best scheme for establishing a coir manufacturing unit can make the most of this scheme. Applications can be made to any coir board in the state or institutes which are designated by the coir board.

Govt official website https://www.coirservices.gov.in/

7. Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-KGY) –

This is a skills training initiative and comes under the Ministry of Rural Development (MoRD) that is set-up by the Government of India. This works towards transforming rural youth into economically independent individuals of society. This scheme provides skill training at no cost to the rural poor of age between 15 – 35 Yrs and SC/ ST/ Women/ PVTG/PWD up to 45 Yrs.

It provides funding support for placement linked skilling projects that address the market demand with funding support ranging from Rs. 25,696 to over Rs. 1 lakh per person, depending on the duration of the project.

More can be read at govt official website

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8. National Small Industries Corporation Subsidy –

This facilitates MSMEs in accessing credit support (fund-based or non-fund-based limits) of up to INR 5 lakh from the banks. All medium and small enterprises (MSEs) with a Udyog Aadhaar Memorandum (UAM) are eligible.

Govt official website http://www.nsicspronline.com/

To conclude, A Government Business loan Schemes that offers business loans for start-up businesses always offers competitive interest rates and has flexible repayment options. If you need a loan amount more than Rs. 10 lakhs, you can approach an associated bank or NBFC for the same. NBFCs generally offer loans at higher interest rates as compared to public or private limited banks.

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