Government Loan Schemes For Businesses:

Top Government Loan Schemes For Business:

Several schemes have been launched over the years for business owners to meet specific company-oriented goals. 

The following are some of the most popular government loans for businesses –

• MUDRA Loan:

Micro-Units Development and Refinance Agency or MUDRA loan works on the principle of ‘funding the unfunded’. Under this scheme, non-corporate and non-farm MSMEs engaged in trading, service sector and manufacturing can avail funds and meet their business’s financing needs quickly. 

Eligible applicants can avail a loan amount of maximum Rs. 10 Lakh which accompanies a repayment period of 5 years. Such a loan is extended by financial institutions like – commercial banks, private and public sector banks, small finance banks, regional rural banks and corporate banks. One can either approach these financial institutions directly or apply online to avail the required financial assistance. 

Typically, a loan is extended under 3 distinct categories, namely –

• MSME Business Loans In 59 Minutes:

It is one of those loan options that can be availed by existing businesses. Typically, MSME business loan is an unsecured credit option and comes with instant approval. Financial institutions take a maximum of 59 minutes to approve a loan application and disburse the amount within a week.

Under this scheme, MSMEs can avail funds to meet the operational expenses. Eligible applicants can avail a minimum Rs. 10 Lakh and a maximum Rs. 1 Crore as loan. Usually, the rate of interest applicable to the availed loan value depends on the applicant’s credit score among other eligibility criteria. 

• Credit Guarantee Fund Scheme For Micro And Small Enterprises:

This government loan for businesses can be availed by enterprises that are in their start-up phase or are looking to expand their base of operation. Individuals can access up to Rs. 10 Lakh without pledging any collateral. However, to secure a loan amount over Rs. 10 Lakh, one must mortgage land or property. 

CGS is designed to help the small and micro-enterprises involved in manufacturing and service sectors to meet working capital requirements. However, retail trade, educational institutions and agriculture are not eligible to benefit under this scheme. 

• Credit Linked Capital Subsidy Scheme For Upgrading Technology: 

This credit-linked facility enables small businesses to improve their quality of operation through technological upgradation. Companies can upgrade facilities related to various processes within their firm such as – marketing, manufacturing, and supply chain, among others, by purchasing advanced technology and machinery. 

Since its inception, over 22380 enterprises have benefited under this scheme, and a total of over Rs. 1349.63 crore has been disbursed. With the help of this scheme, the government hopes to lower the cost of production of goods services for both small and medium firms. In turn, the government tends to maintain competitive pricing in local as well as international markets. 

Under this scheme, businesses can avail 15% subsidy on credit for up to Rs. 15 Lakh. It must be noted here that sole proprietorships, co-operative, partnership firm, private and public limited companies are eligible for this loan facility. 

• National Small Industries Corporation Subsidy:

National Small Industries Corporation Subsidy or NSIC subsidy is aimed at small businesses, and it extends two distinct financial benefits, namely –

• Raw material assistance
• Marketing assistance

In the case of the raw material scheme, the cost of both indigenous and imported materials is covered. On the other hand, the marketing assistance extends funds to improve the competitiveness and market value of finished goods and services produced by SMEs. It is one of those government loan schemes that are directed at small and medium enterprises and come in handy for improving the quality and quantity of manufacture, thus boosting growth. Under this particular scheme, the small scale industries do not have to pay a security deposit to access funds. 

Depending upon one’s need, eligibility and operational sector, a business owner must pick a funding option that is most suitable for their requirements. It will not only help to meet their needs efficiently but will also streamline the process of application and repayment more effectively. 

Eligibility Criteria For Government-Backed Schemes:

It must be noted that applicants who meet the specific eligibility criteria accompanying a particular scheme can avail funding under it. Notably, the requirement and eligibility criteria tend to differ from one scheme to another. One must check the same before proceeding with the application.

These following pointers focus on those factors which influences applicant’s eligibility for a government loan for businesses –

• Applicant’s age
• Credit score
• Loan amount
• Business type
• Annual turnover of the business 
• Capital invested in the business

Typically, such loans are extended to eligible individuals, sole proprietorship, business owners, start-ups, SMEs, MSMEs, etc. Applicants must also submit a required set of documents to back up their application and loan eligibility.

This table offers a fair idea about the documents required to apply for government loan schemes.

In case individuals fail to qualify for government loan schemes, they can look for alternative funding options. For instance, they may consider opting for funds against their unpaid invoices . 

KredX’s invoice discounting platform  helps businesses meet their working capital requirements at attractive terms. We are a leading integrated cash flow solution provider in India and offer instant funding solutions for businesses with outstanding invoices.