Governemnt Credit schemes for MSMEs

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Micro, Small, and Medium Enterprises are the backbone of the Indian economy. Apart from their massive role in the Indian GDP, they also offer employment to a large section of Indian society. Unfortunately, these enterprises, especially the Micro and Small ones, regularly face cash inflow problems that impact their business operations. 

To solve these problems and help these MSMEs grow, India’s Government has initiated various credit schemes. In this blog, we will explore all these major credit facilities offered by the Government of India. 

So let’s get started.

PSB loans in 59 minutes

PM Narendra Modi launched this initiative to help Medium and Small Enterprises provide loan facilities of up to INR 5 crore within 59 minutes. Under this scheme, a dedicated portal enables the credit-seekers to avail of necessary funds within 59 minutes.

Distinctive features of PSB loans in 59 minutes scheme:

  • If you go for regular credit facilities, the process will take atleast ten working days. This situation is not ideal for those who need instant access to the fund.
  • PSB loans in 59 minutes solve this problem as all the process is wrapped up within 59 minutes without wasting any time.
  • You can avail of the loan anywhere between INR 1 lakh to INR 5 crore. So this scheme is ideal for everyone with varied Credit needs. 
  • Once your loan is approved within an hour, the fund will be credited into your account within 7 to 10 working days
  • The Rate of Interest for these schemes starts from 8.5%.

Stand-up India

Under this scheme, credit facilties are provided to the individuals from the SC/ST category and any women entrepreneurs. Stand-up India is governed by SIDBI (Small Industries Development Bank of India) and offers bank loans ranging from INR 10 lakh to INR 1 crore. If any other non-individual enterprise wants to avail of this facility, and SCT/St or women entrepreneurs should hold a minimum of 51% stakes in that enterprise. 

Distinctive features of the Stand-up India scheme:

  • Under this scheme, a borrower can avail loans from 1 lakh to 1 crore, but a maximum of 75% of the deemed project. This amount includes term loans and working capital too.
  • If the borrower’s contribution with the help of other schemes is more than 25%, the borrower is not eligible for the loan. 
  • For these loans, the rate of interest will be MCLR + 3%.

Mudra Yojna

This is one of the most revolutionary and efficient Government credit schemes. Commercial Banks, RRBs, Public Sector Banks, NBFCs, and other certified financial institutions offer finance to non-farm and non-corporate small and micro-enterprises under this loan. 

These loans are excellent credit options for budding entrepreneurs and start-ups in India.

Distinctive features of Mudra loan Scheme:

  • This loan can be availed in three categories.

Shishu: Funding up to INR 50,000

Kishor: Funding up to INR 50,000 to 5 lakh

Tarun: Funding up to INR 5 lakh to INR 10 lakh

  • Any non-farm business like traders, transporters, shopkeepers, garage owners, salon and boutique owners, small industries and manufacturers, artisans, food-service units, and numerous similar businesses can avail of this loan.
  • The rate of interest on these loans will be as per the MLR (Minimum Lending Rate)

Credit Guarantee Scheme 

The government launched the Credit Guarantee Fund Trust for Micro & Small Enterprise to revamp the credit delivery system to help the MSME sector. This scheme is backed by various financial institutions like SBI, RRBs, foreign banks, and Private sector banks. 

This scheme is designed to benefit new or existing businesses that are indulged in various Business activities like manufacturing, Self Help Groups, educational institutions, training institutes, and retail traders. 

Some distinctive features of the Credit Guarantee Scheme:

  • Under this scheme, MSMEs can avail of up to INR 2 crore loans in the form of term loans or working capital.
  • The maximum Credit offered to the micro sector is 85% of the total project but not exceeding INR 5 lakh.
  • For the Credit of up to INR 1.5 crore, the government offers up to 75% guarantee on these loans.
  • For MSME involved in Trading activities, the government offers a guarantee of up to 50% but not exceeding INR 50 lakh.

SMILE (SIDBI make in India Soft Loan Fund for MSMEs 

The government launched this scheme to help existing MSME and establish new ones via credit facilities. Various manufacturing units and service sectors can avail the benefits of this scheme. Credit can be availed for upgrading the existing business or starting a new one.

Distinctive features of SMILE:

  • The minimum loan under this scheme is INR 25 lakh. 
  • Although there is no upper limit for the loan, the final decision on the amount of Credit to be disbursed is in the banks’ hands.
  • These loans’ repayment schedules can be extended upto 10 years, along with the moratorium of 36 months.

Final thoughts

 Government offers a variety of loans & credit facilities to help budding entrepreneurs and established businesses. Apart from these schemes, there are other funding options too that you can avail for establishing or expanding your business.

Depending on your business needs and goals, you can choose any of them. Generally, the process of applying for credit facilities is lengthy, tedious and time-consuming. Although the Government is trying to simplify business processes, it’s still a long way to go. Meanwhile, it’s better to get assistance from Funding experts like Probal who can help you avail of funding in the shortest possible time.

Our experts are well-versed with the whole process, and they know exactly what documents are necessary for specific Government Credit schemes. They will handle all the legal formalities so you can focus on your core business.

If you want to explore your various funding options, feel free to reach us.

We will help you out quickly and easily.

Probal Consulting Group is a leading Taxation, Accounting, and Compliance firm that helps individuals, MSMEs, and other businesses manage their accounting, taxation regulatory compliance affordably.

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