There is no doubt that India is slowly but surely becoming home to a large number of promising businesses, with as many as 1.26 million companies having been registered by September 2020. This promise was put to a grinding halt last year due to the impact of the pandemic, but the resilience of the Indian business landscape is such that many businesses are finding new ways to bounce back. It also certainly helps that the Indian government is offering additional assistance to a wide variety of enterprises across the country to help in this endeavour.
Of the many forms of assistance being offered by the government to help businesses get back on their feet were the business loans mentioned in a recent announcement by the Delhi government. Here is what you need to know about this initiative:
Free Loans and Assistance by Delhi Govt
As per the recent announcement made by the Delhi government during the IndUS Entrepreneurs (TiE) Global Summit, there will soon be provisions of collateral-free business loans for start-ups and small businesses. The efforts are being directed primarily at Delhi-based startups. Delhi is currently home to more than 7000 promising startups and the intention of this initiative is to transform the city into a new, global-standard startup capital. The details of the business loan interest rates and business loan eligibility criteria for these loans are yet to be made public.
However, what is known is that these government-backed business loans will do away with any requirement of collateral or security from the business owner’s end. To accompany these initiatives of business loans for startups, the government is also planning to establish a high-tech, multistoried business park with amenities and facilities for the modern entrepreneur.
More importantly, this initiative will also focus on connecting business owners with the right set of professional expertise that they might require in their initial stages. This means providing easy access to a network of chartered accountants (CAs) to help set businesses set up registration, taxation, and financial plans. These startups will also have access to professionals in the legal and marketing industries as well as a dedicated helpline for their regular queries. Also read about Funding E-commerce business.
Other Useful Government Initiatives for Businesses
While these initiatives are directed primarily at startups and small businesses based in Delhi, entrepreneurs across the country can make use of a wide range of government-backed initiatives to start off or grow their own ventures. All of these initiatives offer lucrative business loan interest rates and have different business loan eligibility criteria. Some of these government-backed initiatives that you as a business owner can consider:
1. MUDRA Loans:
MUDRA loans are a specific type of business loans offered to non-corporate, non-farm, small/micro-enterprises, by the Micro-units Development and Refinance Agency (MUDRA), an organization established by the government of India. The prime objective of these loans is to provide funding to what has traditionally been an underfunded sector of India’s business industry, such as various micro or small businesses and NBFCs. These business loans can be easily approved and disbursed through private financial institutions and NBFCs.
2.The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE):
The scheme was launched in the year 2000 as a means to financially support various micro and small enterprises across the country. The loans under the CGMSE scheme come with low business loan interest rates and are collateral-free for loan amounts of up to Rs. 10 Lakhs as long as the enterprises fulfill their specific business loan eligibility criteria.
3.National Small Industries Corporation Subsidy:
The National Small Industries Corporation (NSIC) is a government-backed organisation that aims to provide financial support to various Micro, Small, and Medium Enterprises (MSMEs) across the country. The subsidies provided by the NSIC are offered to these aforementioned businesses for the purposes of -
a) Raw Material Assistance - offering assistance for the procurement of indigenous as well as imported raw materials for the purpose of business operations.
b) Marketing Assistance - offering financial assistance and support to businesses so that they can market themselves effectively and establish their value in a competitive market