Most Beneficial Government Schemes for Small Medium Business

government schemes for business

Introduction:

The Government of India is very clear on nurturing small, micro, and medium businesses in India. As the economic growth of India depends on these MSMEs. From poverty, unemployment to regional imbalances, income inequality, and so on. 

The solution to these economic problems is MSME and startups. This industry plays a pivotal role in shaping the future of our country. As small businesses have the power to contribute more to the GDP of the country. 

At present, the MSME sector falls under the category of organized and unorganized sectors. 

It is responsible for creating millions of job opportunities across the country. That is why this sector is known as the growth engine of the country. Though the government has introduced a vast number of schemes to sanction loans to the MSMEs to boost their business and their economy. 

As it aims to provide them the resources and a platform to trigger their growth. It’s not easy to reach their goal as MSMEs have to face a lot of hurdles coming their way. 

It includes financial support for various activities from supporting business activities to obtaining infrastructure. Everything comes under the loan schemes. In this article, we have curated a list of government schemes for business. 

To ease the burden and encourage new business start-ups to implement these schemes for business expansion. When it comes to business start-ups India ranks among the fastest-growing ecosystems. 

Right now both government and private sectors want these MSMEs to be a success in their business and expand their presence in the world. 

Some of the most significant kinds of Government schemes for businesses are explained here.

1. Pradhan Mantri MUDRA Yojana (PMMY) 

The term MUDRA stands for Micro Units Development and Refinance Agency Ltd. It is established by the Government of India to provide financial assistance to units of micro business. The MUDRA provides refinancing support to banks and NBFCs to support micro-businesses. 

The main motto of the MUDRA is to ‘fund the unfunded. All the bank branches across the country provide these loans. The total requirement of the loan ranges up to INR 10 lakhs. Such loans are divided into the three categories such as ‘Shishu’, ‘Kishore’, ‘Tarun’  to signify the development of growth.

Loan Type CoverageRate Of Interest 
Shishu Covering loans up to Rs, 50,000@ 1% to 12% per annum
Kishore Covering loans above Rs. 50,000 and up to Rs 5 lakh@ 8.60% to 11.15% per annum
Tarun Covering loans above Rs. 5 lakh and up to Rs. 10 lakh@ 11.15% to 20% per annum

Eligibility Criteria:

The eligibility criteria to sanction this loan includes these types of businesses. Such as proprietary concern, partnership firm, Private Ltd., Public Company, and other legal entities. They can apply for this loan under this scheme. 

2. MSME Business Loans in 59 Minutes

This scheme of the plan is also known as PSB loan in 59 minutes. It is one of the loan schemes which was introduced in 2018 for individuals as a business loan. Who need to expand their existing business. This government scheme in India allows the MSMEs to utilize this as their financial assistance.

Under this loan scheme, the loan can be provided up to 1 crore and it takes about 8-12 days to complete the process. After the approval, the loan is received at the earliest of 59 minutes. It is why it is called MSME’s business loan in 59 minutes. 

The interesting name depends upon the rate of public and private sector banks that is carried by the applicant of the loan. Some of the following requirements to obtain this loan under this scheme are

  • Income tax verifications
  • GST verifications
  • Bank statements of the last 6 months
  • Ownership related documentation
  • KYC details

The benefits of this loan are that the entire loan process is quick to finish. It is called Advanced Technology Backed Loan schemes because the process of loan is completed without any human intervention. 

3. Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGFMSE)

GCSE is launched by the Government of India as a government business loan. It allows collateral-free credit to the MSME’s sector. The loans are granted to both new and existing enterprises. A trust called Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the CGFMSE scheme by the Ministry of MSMEs and Small Industries Development Bank of India (SIDBI).

In this scheme, the funding is provided for working capital loans up to the limit of INR 200 lakhs with a special preference for eligible women. The eligibility sector to avail of this scheme is educational institutions, self-help groups, training institutions, etc. Businesses that are in the service sector can avail the funding under this scheme. 

4. National Small Industries Corporation (NSIC)

NSIC is an ISO-certified Indian Government enterprise under MSMEs. The primary function of this NSIC is to aid the MSMEs by providing combined support services. It includes technology, market, finance, and other allied services all across the nation. This loan is initiated into two schemes to promote the growth of MSMEs. They are 

  • Marketing Support Scheme 
  • Credit Scheme

The marketing support scheme fails to support the development part in any kind of business. It is a crucial scheme that is aided for them to grow in this competitive world. While the NSIC provides for financial aid to procure raw materials for activities. So to market and finance with the banks through syndication to MSMEs. 

The benefit of this scheme is that it offers full opportunities to small-scale business owners and industries to access tenders without them. They also don’t have to pay the security deposits to avail the funding in this scheme. 

The CLCSS allows small businesses to upgrade their process. It is an extensive credit scheme launched by the Ministry of MSMEs. They have the prime objective to aid the technology up-gradation of MSMEs. 

This can be related to various processes within the organization. Such as marketing, supply chain, etc. This scheme is specially processed in rural and semi-rural areas. Businesses can process for a 15% subsidy on this investment. 

Through this scheme, the government aims to reduce the cost of small and medium enterprises. However, the maximum cap on the subsidy is restricted to INR 1 crore. It allows them to remain price competitive in international and local markets. 

The scheme is run by small-scale industries by offering an upfront capital subsidy of 15% for eligible businesses. Some of the benefits it offers are it helps in reducing the burden of small-scale industries. 

It also helps these industries to upgrade to the latest and required technologies. It also boosts the growth of rural industries to manufacture high-quality products. These business schemes can be available by Sole proprietorships, partnership firms, co-operative, private, and public limited companies for the business schemes. 

Conclusion:

These are the top government schemes for business in India. These schemes display the commitment of past and present Indian developments to help the economy of the country. 

Since these loans are funded by government-sponsored banks which are detrimental for a small business owner looking for quick business finance. 

I have tried to cover all information regarding this topic. However, if you still think that I have missed something and drop your queries in the comment box of this post.