With the rise in the number of small businesses across India, the Government of India decided to roll out government schemes for startups. These government loan schemes for new businesses provide financing and further promote MSMEs and startups.
Here are some of India's most notable government schemes that offer finance for startups and new businesses.
The revenue generated from MSME sectors contributes to about 30% of the overall GDP of India. In addition to this, it serves as the largest job creator for the citizens of India. Hence, to financially strengthen this sector, there are government schemes for starting new business available.
These government funding schemes for startups enable a constant inflow of cash that can escalate the growth of these businesses. Entrepreneurs can use this money to fund existing activities, expand their ventures, and monetise new ideas to generate more profit.
Below we have provided the best Indian Government schemes for starting a new business:
National Bank for Agriculture and Rural Development (NABARD)
Credit Guarantee Scheme (CGS)
Pradhan Mantri Mudra Yojana (PMMY)
Stand Up India Scheme
Coir Udyami Yojana
Bank Credit Facilitation
Market Development Assistance (MDA)
NABARD is a development bank whose primary focus is the rural sector of India. It is one of the most critical financial institutions in the country. NABARD is responsible for developing small-scale industries, cottage industries, and any other such rural projects.
The National Bank for Agriculture and Rural Development was established on 12th July 1982, with an initial capital of ₹100 Crores.
Besides meeting the rural sector's financial requirements, NABARD also provides for social innovations and projects by partnering with various organisations. These include many innovative projects and schemes for water and soil conservation.
The government launched the Credit Guarantee Scheme (CGS) to strengthen the credit delivery system and facilitate financing to the MSME sector.
New and existing MSMEs in manufacturing or service activities, excluding retail trade, agriculture, self-help groups (SHGs), training institutions, etc., can apply for CGS.
The lending institutions that offer this scheme mainly include public, private sector banks, foreign banks, regional rural banks, the SBI, and associate banks.
This MSME scheme for entrepreneurs comes with several benefits, including term loans and working capital loan facilities of up to ₹1 Crore per borrowing unit.
The Micro Units Development and Refinance Agency (MUDRA) was launched in 2015, and this government loan scheme for businesses aims at offering loans to all kinds of manufacturing, trading, and service sector activities. PMMY provides loans under three categories – Shishu, Kishor, and Tarun loans.
Anyone, from artisans to shopkeepers to machine operators, can avail of a Mudra Loan. MUDRA loan scheme offers incentives through these interventions:
Shishu: Loans up to ₹50,000
Kishor: Loans above ₹50,000 and up to ₹5 Lakhs
Tarun: Loans above ₹5 Lakhs and up to ₹10 Lakhs
The Stand Up India scheme is a government entrepreneur scheme which grants access to financing between ₹10 Lakhs and ₹1 Crore to SC or ST individual, at least one, and woman borrowers, at least once, per branch to build their business.
Businesses that fall under the trading, manufacturing, or service industry can apply for the standup scheme. For non-individual enterprises, at least 51% of the shareholding needs to be held by an SC/ST or a woman entrepreneur.
The applicant should have a good credit history and not have default payments with any bank or financial institution.
The Coir Udyami Yojana is a government entrepreneur scheme aimed at supporting the establishment of coir units. Banks will finance capital expenditure in a term loan to meet the working capital requirements. The bank can also fund projects in the way of composite loans consisting of Capex and working capital.
All coir processing MSME startups registered under the Coir Industry (Registration) Rules, 2008, are eligible for this scheme. Banks will Finance projects that cost up to ₹10 Lakh for one cycle of working capital, which should not exceed 25% of the total project cost.
This amount should be exclusive of the ₹10 Lakh limit. Moreover, the credit amount will be 55% of the total project cost after deducting 40% margin money and the owner's contribution of 5% from beneficiaries.
The National Small Industries Corporation (NSIC) is targeted at fulfilling the credit requirements of the MSME units. The NSIC scheme has partnered with various banks to provide loans to the MSME units.
The loan repayment tenure varies depending on the income generated from the startup and generally extends from 5 to 7 years. However, in exceptional cases, it can extend up to 11 years.
The Ministry of Commerce currently operates a Market Development Assistance Scheme to encourage exporters (including MSME exporters) to access and develop overseas markets.
This scheme provides funds for participation by manufacturing SMEs in International Trade Fairs/ Exhibitions under the MSME India stall. Funding for sector-specific market studies by Industry Associations/ Export Promotion Councils/ Federation of Indian Export Organisation.
To avail of government funding schemes for startups, you must meet the following eligibility criteria:
Must be an Indian citizen
Must be self-employed
Age must be between 25-65 years
Must have a minimum business vintage of 3 years
You will have to furnish the following documents when applying for a loan under startup schemes by the government:
Aadhaar card/passport/driving license
Any business proof like a certificate of business existence, tax filings from the previous financial year, profit and loss statements from the last 3 years, etc.
Wondering how to get a loan under a startup government scheme? Here, we have provided simple steps to apply for a loan on Bajaj Markets.
Fill in your personal details, including your name, mobile number, occupation, residential address, etc.
Choose a suitable loan amount and repayment tenure.
Get instant approval in 2 minutes and the loan amount without delay.
Here are the factors that you must consider before applying for a government scheme for startups:
Prepare a detailed business plan that you want to fund using the loan amount
Summarise the potential growth and financial returns expected with the venture
Submit a clear plan on how you will raise funds to repay the loan
Individuals have yet another option to get instant business financing by applying for a business loan on Bajaj Markets. Based on their profile, one can get loans of up to ₹50 Lakhs without any collateral.
Whether you are planning on getting a business started or are looking to upgrade your SME business with the latest technology. You can get a business loan tailored to your requirements on Bajaj Markets.
The online business loan application process is quite convenient with flexible loan repayment tenures. The business loan disbursal process takes just a few minutes, along with access to exclusive offers on loans.
Stand Up India Scheme grants access to bank loans to scheduled caste (SC) or Scheduled Tribe borrowers, at least one, and at least one woman per bank branch. The sanction offered is between ₹10 Lakhs and ₹1 Crore. This enterprise may be in greenfield projects, manufacturing, services, or the trading sector.
As a business owner, you can avail yourself of a variety of government schemes for startups and government schemes for starting new businesses. These include the MSME government business loan scheme, the MUDRA business loan, the Credit guarantee fund government business loan scheme, etc.
Entrepreneurs can now avail themselves of a distinct type of funding for their startup from the banks. Many banks and financial institutions offer loan schemes that are specifically designed to fund startups and their special needs.
A flagship initiative, Startup India’s mission is to build a strong entrepreneurial ecosystem. This intent is to be an initiative that drives economic growth, prosperity of startups, sustainability, and large-scale employment across sectors.
It is essential to know about government schemes for startup business loans to meet the emergency fund requirements of your venture. With adequate knowledge, you can accurately apply for credit, thereby minimising the chances of loan rejection.
You can get a maximum of ₹1 Crore under the Credit Guarantee Scheme (CGS) for business loans.
Yes, a credit score matters for a government scheme business loan as it reflects your credit history. So, if you have a good score, there are high chances of qualifying for government schemes for starting new businesses at affordable rates.
To apply for the Startup India scheme, a company needs to be a partnership or private limited firm with a minimum business vintage of 5 years. Moreover, the company should not have an annual turnover of more than ₹25 Crores.
NITI Aayog’s Atal Innovation Mission (AIM) provides financial assistance of up to ₹10 Crores to chosen funds for a period of five years. You can also search for other govt. loan scheme for new business establishments to secure the finances you need.