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New Business Loan Schemes for SMEs

By Finserv MARKETS - Jun 3,2019
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New Business Loan Schemes for SMEs

In India there are plenty of government business loan schemes developed with the aim of helping small and medium business enterprises. These schemes are on both central and state level. These schemes help entrepreneurs to grow and flourish as SMEs are considered the backbone of Indian economy.

The Credit Guarantee Fund Scheme for Micro and Small Enterprises

This business loan scheme was launched by the government of India in the year 2000 to provide monetary assistance to SMEs. The loans are collateral-free and both existing and new enterprises are eligible for it. Under this scheme, the credit is provided in the form of working capital. The term loans up to INR 100 lakhs per borrowing unit. This amount is contributed by the government and SIDBI (Small industries development bank of India). The ratio in which the contribution is made is 4:1.

NSIC Government Subsidy for Small Business

National Small Industries Corporation (NSIC) provides two basic subsidies for small scale businesses. They are:

  1. Raw material assistance
  2. Marketing assistance

Raw Material assistance helps the SMEs by financing the purchase of Raw Material both indigenous and imported. On the other hand, the marketing support gives the SME’s funds to enhance competitiveness and market value of their products.

Credit Link Capital Subsidy Scheme for Technology Upgradation

The Ministry of Small Scale Industries (SSI) has a scheme for technology upgrades for Small Scale Industries known as the Credit Linked Capital Subsidy Scheme (CLCSS). The scheme aims to facilitate technology upgrade to SMEs by providing them upfront capital subsidy of 15%. The maximum limit of the subsidy is INR.15 lakhs. All partnership firms, cooperative, private and public limited enterprises, and companies are eligible for this scheme. This is also done to incorporate more technological advancements in their business models. This push may also help them go global.

Read more on MSME Registration

Market Development Assistance Scheme for MSMEs

The scheme aims to help Indian manufacturing SMEs to gain momentum in the international markets. The Market Development Assistance Scheme for MSMEs offers fund to the SME’s to participate in the international trade fairs and exhibitions under MSME India stall. The scheme also offers fund for sector-specific market studies by industry associations, export promotion councils, and FIEO. Under this scheme, reimbursement of 75% of a one-time registration fee and 75% of yearly fees (recurring) paid to GSI by SMEs for the first three years for the bar code is conducted.

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Mudra Loan

Micro-Units Development and Refinance Agency Ltd provides low-cost credit/ funding to the MFI (Micro Finance Institutes). MUDRA Loans are primarily responsible for refinancing the financial institutions engaged in the financing of Small Businesses, Trusts Section 8 Companies, Co-operative Societies, Small Banks, Scheduled Commercial Banks and Rural Banks which are indulged in the business of lending to micro or small businesses engaged in manufacturing, trading and services sector.

As per the MUDRA scheme, there are three loan structures:

  1. Sishu-Loan upto INR 50,000/-
  2. Kishore- Loan upto INR 50,000/- to 5,00,000/-
  3. Tarun- Loan from INR 5,00,000/- to upto INR.10 lakhs.

National Bank for Agriculture and Rural Development (NABARD)

This scheme was launched to provide help and support to the agriculture based business enterprises in rural areas. Under this scheme, village and cottage industries are the major beneficiaries.

Below are the facilities provided by NABARD to SMEs:

  1. NABARD is responsible for funding social innovations and social enterprises in the rural areas.
  2. NABARD fills in as a zenith financing office for the establishments giving speculation and creation credit to advancing the different formative exercises in rustic territories
  3. NABARD takes measures towards foundation working for enhancing absorptive limit of the credit conveyance framework, including observing, detailing of restoration plans, rebuilding of credit organizations, preparing of staff, and so forth.
  4. NABARD also coordinates the provincial financing exercises of all organizations occupied with formative work at the field level and keeps up contact with Government of India, state governments, Reserve Bank of India (RBI) and other national level establishments worried about approach detailing
  5. It embraces checking and assessment of tasks renegotiated by it.
  6. NABARD renegotiates the budgetary organizations which funds the country area.
  7. NABARD shares being developed of organizations which help the country economy.
  8. NABARD additionally keeps a mind its customer foundations.
  9. It controls the establishments which give monetary help to the country economy.
  10. It gives preparing offices to the organizations working in the field of provincial upliftment.

How To Register For These Business Loan Schemes

Step 1: Go to the lender’s official online portal associated with the Government loan scheme.

Step 2: Register on the portal and login through the One-Time Password (OTP) verification.

Step 3: Agree to all the terms and conditions of the scheme.

Step 4: Enter your financial details and other required information.

Step 5: Proceed further and upload the required documents.

Eligibility Criteria for These Schemes

  • The applicant should be at least 18 years of age
  • Minimum business existence should be at least 2 years
  • The credit score should be 650 or above
  • There are various other factors such as the type of business, annual turnover, capital invested, etc. that determine that loan eligibility of the applicant.

Documents Required For these Schemes

The documents required may vary from one business loan scheme to another. Some of the common documents are mentioned below:

  • Business plan
  • Identity, Age, Address and Income Proofs
  • GST Identification number
  • Details of income tax paid over the last 3 to 5 years
  • Bank statements of last 6 months
  • Business address proof
  • ITR returns for last 2 years
  • Details of the type of loan that you wish to avail

As mentioned earlier, SMEs contribute largely towards the Indian economy. So, the civic bodies are always willing to provide any kind of assistance that is needed for their growth. Should any SME owner be interested in any of these business loan schemes, they can contact them directly or visit these institutions to learn more about the application process.

With us, at Finserv MARKETS, applying for a business loan is quick, easy, and can be processed in no time. In fact, we provide bespoke services that can be customized to your business needs. So, why look elsewhere? Apply for Bajaj Finserv Business Loan with us, today!

You can also read about the different types of business loan schemes for women.

Read more about Government Loan Schemes in India

Read more on MSME Databank

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