Business loans in India – Various Schemes by Government

What are Business Loans in India?

India is one of the fast paced growing and emerging country. With its growth it has given vast opportunities to the small and medium scale industries to emerge and develop. Also, the government has been constantly working towards giving opportunities to these businesses with various programs and schemes. One such scheme is providing Business Loan and in a country like India there so many different types of business loans that can be availed. In this, the entrepreneurs can avail money from government institutions or banks for carrying on their business operations. Business Loans are great way to grow for businesses with limited capital.

Business loans in India Ezybiz

Business Loan Schemes by Government:

The Government of India has provided with various loan schemes for business in order to help them grow and develop. Whatever the purpose or reason for business loan in India are the businesses can always avail the best scheme for them. The top schemes are-

  • MSME Business Loans in 59 minutes: This scheme for loan was introduced to give a financial boost to the MSME sector. It is headed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFTMSE). It offers loan starting Rs. 1 Lakh to up to maximum of Rs. 1 Crore at a nominal rate of 8% onwards. The basic purpose for making this scheme was to automate the loan appraisal process so that businesses get loan approval and eligibility letter within 60 minutes time limit. Post the verification process the loan is sanctioned in the next 7-8 working days. For making it easily accessible the loan applicants are given an option to choose bank as per their choice. One must possess the following eligibility criteria to avail MSME Business Loan:
  • GST Compliance of the company
  • IT compliance of the business
  • Existing credit facilities
  • At least 8 months Bank History
  • Income and revenue of the company
  • MUDRA Loans: The Pradhan Mantri Mudra Yojana provides with this loan through Micro-Units Development and Refinance Agency (MUDRA). One can avail up to Rs. 10 Lakhs as loan. There are three types of loan under this scheme. These are:
  • Shishu Loan- Up to Rs. 50,000
  • Kishor Loan- From Rs. 50,000 to up to Rs. 500,000
  • Tarun Loan- From Rs. 50,000 to UP to Rs.1,000,000

To be eligible for availing this loan the criterion are-

  • The corporate must be from manufacturing unit
  • Trading Sector and service sector.
  • Credit Guarantee Fund Scheme for MSME: It was launched by government with an aim to strengthen and facilitate the credit system to MSME sector. All the existing and the new MSME can avail this scheme. They must be engaged in the service or manufacturing activities, agriculture, educational institutions, training institutes and self help groups excluding the retail traders. A maximum up to Rs. 2 Crore business loan can be availed by the entrepreneurs under this scheme.
  • SIDBI Make in India Soft Loan Fund for MSMEs: The aim for launching this scheme was to provide soft loans to MSMEs so that they can meet the establishment ratio of debt equity. And to provide with growth to existing businesses. Entrepreneurs can avail business loan from Rs. 10 Lakhs to up to Rs. 25 Lakhs. The maximum tenure to pay this loan is 10 years.
  • Credit Link Capital Subsidy Scheme for Technology Upgradation: This scheme allows small businesses to avail loan for upgrading the technological system for making the business more successful. It is governed by the Ministry of Small Scale Industries. It provides with 15% up front capital subsidy to businesses. The maximum amount of subsidy to be availed has been set to Rs. 15 Lakhs. Public Limited Companies, Private Limited Companies, sole proprietors, co-operatives and partnership firms can avail this scheme.
  • National Small Industries Corporation Subsidy: This scheme provides with two benefits to small businesses. It provides them with assistance in raw material and marketing.

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    Author: Anil Agrawal
    EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.
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