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World MSME Day: 5 Govt-Backed Loan Schemes for SMEs, MSEMs in India

By: Business Desk

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Last Updated: June 27, 2021, 07:30 IST

The central government offers multiple loan schemes to finance these small-scale businesses.

The central government offers multiple loan schemes to finance these small-scale businesses.

The Government of India (GoI) offers multiple loan schemes to finance these small-scale businesses. These loans can be used by the SMEs to fund their operations, purchase new equipment, expand their business, and etc.

The small-scale business sector, also known as Small and Medium Enterprises (SME) sector, contributes around 40% to the total GDP of India. This sector plays a vital role in increasing employment opportunities in India but faces tough competition from privately-funded businesses. Therefore, the Government of India (GoI) offers multiple loan schemes to finance these small-scale businesses. These loans can be used by the SMEs to fund their operations, purchase new equipment, expand their business, and etc.

Here are the schemes offered by the government –

MSME government business loan scheme – The Government of India launched this scheme as a working capital loan, and an MSME can get a loan sanctioned of Rs. 1 crore in just 59 minutes. This loan is granted at an interest rate of 8%, so that the re-payment is easy on the pockets of the takers. Enter the GST identification number of the business, followed by Income Tax Returns in XML format. Upload the bank statement for last 6 months in the business account. Enter the personal, educational, and ownership criteria of the director and submit the application.

MUDRA business loan – Under this scheme, small businesses and start-ups are given financial support through low-cost credit. This loan is financed through public and private sector banks. An MSME working in the manufacturing, trading, and service sector can avail of this loan. There are three subheads of this scheme – Sishu loan upto Rs. 50, 000, Kishor loan up to Rs. 5, 00, 000, and Tarun loan up to 10, 00, 000.

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Credit Guarantee Fund Scheme for Micro and Small Businesses - This loan scheme allows funding without collateral to businesses that fall under the MSME sector. These loans can be granted to both new and existing enterprises. The Credit Guarantee Fund Trust was established by the Ministry of MSMEs and the Small Industries to implement the CGFMSE scheme.

Udyogini – As the name of the scheme suggests, it is a scheme that has been initiated for empowering Indian women. The funding under this scheme is given to support women in meeting their capital requirements for starting a business. The maximum loan granted under this scheme is Rs. 15,00,000. An eligible woman entrepreneur must be between the age of 18 years to 55 years. And the annual income of the woman’s family must not be above Rs. 15,00,000. Carry passport-sized photographs, Below Poverty Line Card, birth certificate, Caste Certificate, Aadhar Card, passbook or bank account, ration card, and certification of income to apply for the loan.

National Small Industries Corporation Subsidy – The primary function of this ISO certified government scheme, is to aid the growth of MSMEs by providing services including finance, market, technology, and others across the country. For the MSMEs, the NSIC has initiated two schemes – a. Marketing Support Scheme – This scheme is vital as the MSMEs must be aided to provide the growth in the current competitive market. 2. Credit Support Scheme – The financial assistance is provided to procure raw materials, for marketing activities, and for financing with banks through syndication to MSMEs.

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first published:June 27, 2021, 07:30 IST
last updated:June 27, 2021, 07:30 IST