Government Loan Schemes for Small Businesses in India (Updated 2024)

Introduction

Small businesses are the backbone of the Indian economy, and the government offers various loan schemes to support MSMEs. Whether you need working capital, funds for expansion, or technology upgrades, government-backed loans provide low-interest financing with flexible repayment options.

1. MSME Loan in 59 Minutes

The PSB Loans in 59 Minutes scheme allows small businesses to get loan approvals of up to ₹5 crores within an hour.

Features:

• Loan amount: ₹1 lakh to ₹5 crores
  
• Interest rate: Starts at 8.5%
  
• No collateral is required for certain categories
  
• Quick online approval process
  

Eligibility:

• Businesses registered as MSMEs
  
• Good credit score and financial stability

2. Pradhan Mantri Mudra Yojana (PMMY)

MUDRA loans are designed for micro and small businesses, especially startups. It has three categories:

• Shishu – Loans up to ₹50,000
  
• Kishor – Loans from ₹50,000 to ₹5 lakh
  
• Tarun – Loans from ₹5 lakh to ₹10 lakh
  

Features:

• No collateral required
  
• Flexible repayment terms
  
• Focused on startups, small traders, and manufacturers

Eligibility:

• Small businesses, traders, and service providers
  
• No major financial defaults

3. Credit Guarantee Fund Scheme (CGTMSE)

CGTMSE provides collateral-free loans up to ₹2 crores to MSMEs through partner banks. The government guarantees up to 85% of the loan amount.

Features:

• Loan amount: Up to ₹2 crores
  
• No need for collateral or third-party guarantee
  
• Covers both term loans and working capital loans

Eligibility:

• New and existing MSMEs
  
• Businesses with viable projects

4. Stand-Up India Scheme

This scheme is aimed at women entrepreneurs and SC/ST business owners to help them start new ventures.

Features:

• Loan amount: ₹10 lakh to ₹1 crore
  
• Must be used for setting up a new business
  
• Can be availed by individuals or partnerships where SC/ST or women hold a majority stake
  

Eligibility:

• Must belong to SC/ST category or be a woman entrepreneur
  
• Business must be in the manufacturing, service, or trading sector

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

This scheme supports manufacturing and service sector businesses with long-term funding.

Features:

• Loan amount: ₹10 lakh to ₹25 crore
  
• Interest rates: Competitive rates based on business viability
  
• Repayment tenure: Up to 10 years

Eligibility:

• MSMEs engaged in manufacturing or services
  
• Businesses aligned with the ‘Make in India’ initiative

6. NABARD Loans for Small Businesses

NABARD provides financial assistance for agriculture-based businesses and rural entrepreneurs.

Features:

• Funds for agri-processing units, dairy farming, and handicrafts
  
• Low interest rates and flexible repayment terms
  
• Loan amounts vary based on project requirements

Eligibility:

• Rural entrepreneurs, farmers, and agribusinesses
  
• Businesses involved in food processing, dairy, and cottage industries

How to Apply for These Government Loans?

1. Check eligibility for the scheme that suits your business needs.
   
2. Prepare the required documents, such as business registration, GST details, PAN card, and financial statements.
   
3. Apply online through government portals like Udyam Registration or directly at partner banks.

Conclusion

Government loan schemes provide a great opportunity for small businesses to secure funds at lower interest rates. If you need expert guidance on choosing the best scheme for your business, contact AskMeFinance today!