India has been lately given the title of the only genuinely emerging market in the world at the moment. Micro, small and medium enterprises of India comprise a part of this growth. The Small and Medium Enterprises (SME) section contributes approximately 40% of the total GDP and holds an integral position in employment sources for India’s growing population. The government has developed new business loan schemes and boosted other existing ones after apprehending SME growth’s importance in the post-demonetization era.
For detailed information about loan schemes provided by the Indian government – that you can utilize for small business finance – look at the below-mentioned points.
MSME Business Loans In Fifty-Nine Minutes
Currently, the forefront business loan scheme is the ‘MSME Business Loans in 59 Minutes’, a project announced in September 2018. This scheme’s primary purpose is the provision of financial assistance and encouragement of MSME growth in the country. Both new and existing businesses can utilize this strategy for financial aid up to rupees one crore. The actual process takes up to 8 to 12 days for completion, while granting approval or disapproval is informed within the first 59 minutes of submission of application. It is a recapitalizing scheme wherein five authorized public sector banks contribute funds. The rate of interest depends on the nature of your business and credit rating. There is no information provided on subsidizing the principal amount or interest subvention.
To apply for this business loan, you need GST verifications, Income Tax verifications, bank account statements for the last months, ownership-related documentation, and KYC details. For more information on applications and approvals for this business loan, visit the Small Industries Development Bank of India (SIDBI) portal.
Micro-Units Development and Refinance Agency (MUDRA) is an organization established by India’s government to provide financial aid to micro-business units. Loans are provided under this scheme on the plea of ‘funding the unfunded. Since small companies and startups often have to devise their financing methods, the government has created low-cost credit for such undertakings. MUDRA Loans hold on the recapitalization of business loans that are approved and paid out through banks under both public and private sector, co-operative societies, small banks, and other rural banks that come under the scheme. The loan helps micro or small businesses functioning in the manufacturing, trading, and services sector. The structure of MUDRA loans is as under:
- Sishu Loans till ₹ 50,000/-
- Kishor Loans till ₹ 5,00,000/-
- Tarun Loans till ₹ 10,00,000/-
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSEs) started on August 30, 2000, as a monetary support strategy for micro and small enterprises. It provides collateral-free credit for new and existing businesses that satiate its eligibility criteria. This strategy offers working capital loans up to rupees ten lakhs without any collateral. However, for all credit facilities above rupees ten lakhs and up to rupees one crore, either primary security or mortgaged property associated with the installation is obtained. Such eligible accounts can seek benefit under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme. An asset created through the credit facility, which is associated with the business unit, is also considered security when the loan amount exceeds the minimum value of rupees ten lakhs. The business loans under this scheme provide financial aid by various public and private sector banks covered under the plan.
The National Small Industries Corporation Subsidy (NSIC) subsidy for small businesses offers dual financial benefits – Raw Material Assistance and Marketing Assistance. Under the raw material assistance scheme, financing the purchase of indigenous & imported products allows MSMEs to focus better on manufacturing quality products. Under the marketing support, Small and medium-sized enterprises (SMEs) funds help enhance their competitiveness and the market value of their products and services. The NSIC mainly focuses on financing small and medium enterprises that wish to improve and grow their manufacturing quality and quantity.
CLCSS for Tech Upgradation
Credit Link Capital Subsidy Scheme (CLCSS) for Technology Upgradation scheme allows small businesses to improvise their functioning by financing technological upgradation. Technological betterment can be related to numerous organizational functions, such as manufacturing, supply chain, etc. Through this scheme, the government aims to reduce the cost of producing goods and services for small and medium enterprises, allowing them to remain competitive in local and international markets. The Ministry of Small-Scale Industries under the government of India runs this scheme. The CLCSS offers a beforehand capital subsidy of 15% for eligible businesses. There is a limit for the maximum amount available as subsidy under the plan, set at ₹ 15 lakhs. Sole proprietorships can avail of this scheme’s benefits, partnership firms, co-operative, private, and public limited companies.
Business Loans From Lendingkart
Since government-sponsored banks essentially fund these business loans, the repayment time is in weeks or even months, which is harmful to a small business owner looking for business finance. Even the most aspiring of the given schemes i.e.the 59 Minutes Loan for MSMEs, takes a minimum of two weeks.
Whereas MSME finance by non-banking financial companies like Lendingkart is approved and paid out within three working days. Lendingkart provides a combination of business analytics and technical automation to support loans and outlay instead of relying on paperwork and old recapitulating techniques. It offers business loans online through its website or mobile application. You need to log-in to apply for a business loan. You get approval on the same day. In the end, upload the required documents digitally for verification. This entire process takes just about 10 minutes, and the attestation finishes within three days. So, you have the funds ready for your business in a shorter period.