As a continuation article
How to search for and get startup
funding?
, I am about to elaborate & discuss in detail the five types of government
loans for small business in India.
5 government loans
for small business in India
Here are the top
five government loan schemes offered by Government
of India (here after mentioned as GoI)
for small businesses:
1. The
Credit Guarantee Fund scheme.
2. Small
business loans from website
(psbloansin59minutes)
3. Micro
Units Development and Refinance Agency (MUDRA).
4. Credit
Link Capital Subsidy scheme for technology upgradation (CLCSS).
5. Stand-Up
India scheme (cast oriented).
Whether you’re just
starting a business or need funds to grow, consider one of these loans.
1.
The Credit Guarantee Fund scheme (dcmsme.gov.in):
Small business faces
two major hurdles while availing business loans
A. Non-availability of
adequate credit
B. Inability to
provide collateral security for the loan
The Credit Guarantee Fund
Scheme for Micro and Small Enterprises was launched by the GoI in the year 2000 to address both
of the above-mentioned issues.
This scheme is good
for small scale business as they don’t require properties document as security.
Under this scheme, small businesses are eligible for both working capital and
term loans of up to Rs. 1 crore. The scheme extends collateral-free credit to the
small and micro businesses which has few employees.
The business loans
under this scheme are financed by different public and private sector banks.
The scheme covers both existing as well as new enterprises.
2.
Small business loans from website (psbloansin59minutes):
In 2018, Government
of India enabled a website that allows
micro, small and medium enterprises (MSME) to get approval of loans in only 59
minutes.
It generally takes eight
to 10 working days from the day of submission of the required documents to
receive the loan fund.
This GoI initiative
saves small businesses from the:
A. Lengthy approval
processes of banks
B. Complicated
documentation
C. Frequent visits to
lenders’ offices
There is no mandatory
requirement for any collateral.
3.
Micro Units Development and Refinance Agency (MUDRA):
MUDRA is a
non-banking financial company that supports the growth of small and micro
businesses in India.
This method is useful
for traders, for purchasing equipment or vehicle. MUDRA loans are structured
under the name of ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth
and funding needs of the borrower. Loans range from Rs. 50,000 and up to Rs. 10
lakhs.
MUDRA funds banks and
other institutions that provide loans to small businesses. While it doesn’t
lend directly, it encourages other lenders to provide loans to small businesses
by the way of refinancing.
4.
Credit Link Capital Subsidy scheme for technology upgradation (CLCSS)
This scheme
http://www.dcmsme.gov.in/schemes/sccredit.htm is governed by the Ministry of
Small Scale Industries. CLCSS enables technology up gradation through up-front
subsidies of 15% to eligible businesses.
Businesses need
technological upgrading for:
A. Improved efficiency
B. Better quality of the
product
C. Improving
environmental conditions (including working & surrounding environment)
Loans are granted in
cases where the new technology is a very important thing to improve
productivity as compared to the present technology. By keeping in mind that it
is worthy to invest on.
The eligible plant
and machinery can avail a subsidy of a maximum of Rs. 15 lakhs to 1 Crore. The
eligible beneficiaries under the scheme include sole proprietors, partnerships,
cooperatives, as well as private and public limited companies.
5.
Stand-Up India scheme (cast oriented):
Through Stand Up India scheme, GoI
aims to sanction loan to the one who is eligible under this cast category.
A. Scheduled Caste (SC)
or Scheduled Tribe (ST) borrower per bank branch
B. Woman borrower per
bank branch
In the case of
non-individual enterprises, at least 51% of the shareholding and controlling
stake should be held by either an SC/ST or woman entrepreneur.
The purpose of this loan is to support green-field projects in the
manufacturing, trading or service sectors. You may apply for the loan directly on the Stand Up India
portal, through any branch of Scheduled Commercial Banks or through your lead
district manager.
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