Top 5 Government Business Loan Schemes in India

Finance is the fuel for every business to cover its ongoing expenses related to setting up the business, purchasing raw materials and equipment, adding new projects to increase production, and so on. Seeking a business loan is not uncommon for enterprises, especially for medium and small-scale businesses, as credit facilities help them to sail smoothly. If you too have a business and are looking for some funds to cater to your financial needs, you may consider applying for government business loans.

Government business loan schemes were introduced mainly to offer funds and credit facilities to startups, business owners, individuals, self-employed professionals, and MSMEs engaged in the trading, manufacturing, and services sectors. 

There are various business loan schemes initiated by the Government of India with the help of Banks/ Non-Banking Financial Companies (NBFCs) that you can opt for, as per the nature and requirements of your business. 

Here we will discuss the top 5 business loan by government schemes that can help your business up and running.

1. Pradhan Mantri MUDRA Yojana (PMMY)

PMMY is a great government loan scheme which is primarily suitable for enterprises engaged in service and trading, women entrepreneurs, etc. MUDRA is an abbreviation for Micro Units Development and Refinance Agency Ltd. and it acts as a refinancing support system for banks and NBFCs lending credit to small businesses. This loan is collateral-free and borrowers also get the choice to extend the tenure of repayment.

The following 3 categories of loans are offered under the MUDRA loan:

2. PSB Loans in 59 Minutes

The Indian government introduced the PSB Loans in 59 Minutes or PSB59 to help MSME businesses suffice their working capital needs. Under this scheme, any new or existing business can avail of a loan of Rs. 10 Lakhs to Rs. 5 Crores at an interest rate starting from 8.5% p.a. Also, women entrepreneurs get the advantage of the 3% reservation under this scheme. Usually, it takes around 8 to 12 days for the completion of the loan process. However, it just takes 59 minutes for the approval/disapproval of the application.

3. National Small Industries Corporation (NSIC) Subsidy

This scheme is highly beneficial for entrepreneurs who want some financial aid in departments like finance, technology, marketing, etc. It is one of the best government schemes for business owners.

NSIC offers the following 2 types of schemes:

• Marketing Support Scheme: This scheme benefits businesses by offering marketing support through Consortia schemes, Tender Marketing, etc. It can immensely help in business promotion, marketing and expansion of market reach.
• Credit Support Scheme: Under this scheme, businesses can avail of financial assistance for procuring raw materials, finances, marketing, etc.

The Government helps small businesses under the National Small Industries Corporation Subsidy with a focus on two financial benefits i.e. Marketing Assistance and Raw Material Assistance. The benefits of the scheme are as follows:

• Cost-free tenders:  The Small-Scale Industries will have access to the tenders without any costs under the marketing assistance program. 
• No security deposit required: The Small Scale Industries are exempted from paying any security deposit for availing of finances
• Land & Building Financing: Small Scale Industries with a project cost up to Rs. 25 Lakhs, get a financial facility under this scheme, for the land and building department.

Below is the list of banks that offer credit facilities under the Bank Credit Facilitation Scheme from NSIC:

• HDFC Bank
• ICICI Bank
• Axis Bank
• Kotak Mahindra Bank
• State Bank of India
• Tata Capital
• Yes Bank
• AU Small Finance Bank
• Bank of Baroda
• Canara Bank
• Central Bank of India
• Bank of Maharashtra
• IndusInd Bank Ltd.
• Federal Bank
• Karnataka Bank
• Union Bank of India

4. Credit-Linked Capital Subsidy Scheme (CLCSS)

This government subsidy loan for businesses is a perfect match for those who are looking for finance to fund technological advancements in industries including marketing, supply chain, manufacturing, etc.

Be it a partnership firm, private/public limited company, sole proprietorship, or cooperative company, all can avail of loans under the CLCSS. This scheme offers an up-front capital subsidy of 15% to the beneficiaries.

5. Small Industries Development Bank of India (SIDBI) Loan

SIDBI is one of the oldest entities to offer government business loans. It primarily offers financial assistance to MSMEs that are in dire need of funds. SIDBI provides direct loans. However, it offers indirect loans to NBFCs and SFBs.

It offers loans between Rs. 10 Lakhs to Rs. 25 Crores for repayment period up to 10 years. Also, a loan of Rs. 1 Crore without any collateral can be taken via SIDBI.

Following are the MSME loan schemes offered under SIDBI:

• Assistance to Re-Energize Capital Investments by SMEs (ARISE)
• SIDBI and Google Partnership for Assistance to Micro Enterprises (SANGAM)
• SIDBI Assistance to Export Oriented MSMEs under UBHARTE SITAARE PROGRAMME
• SIDBI’S Term Loan to enhance the production of MSMEs (STEP) Scheme
• SIDBI Thematic Assistance for Purchase of Capital Assets in New Enterprises (STHAPAN)
• General Purpose Term Loan
• Secured Business Loans for MSMEs
• SIDBI Term-Loan assistance for Rooftop Solar Photovoltaic (PV) Plants (STAR)
• SIDBI – Loan for Purchase of Equipment for Enterprise’s Development (SPEED)
• SIDBI – Loan for Purchase of Equipment for Enterprise’s Development Plus (SPEED PLUS)
• TOP Up Loan for Immediate Purposes (TULIP)
• Working Capital (Cash Credit)