Micro, Small, and Medium Enterprises (MSMEs) are considered the backbone of the Indian economy, contributing significantly to the nation’s growth and development. However, one of the major challenges faced by MSMEs is the lack of adequate finance, which hampers their growth and expansion.
To address this issue, the Government of India, in collaboration with various financial institutions, has launched several loan schemes. An MSME Loan scheme provides easy access to funds for MSMEs in the country and is an excellent source of financial support for such businesses.
Here are Some of the Popular Loan Schemes for Financing MSME Businesses:
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) – CGTMSE is a collateral-free MSME Loan scheme that provides credit guarantees to MSMEs for loans up to ₹2 Crore. Under this scheme, MSMEs can avail of loans from banks and financial institutions without providing any collateral or third-party guarantee. The guarantee cover under CGTMSE ranges from 50% to 85%, depending on the loan amount and the category of the enterprise.
- Pradhan Mantri Mudra Yojana (PMMY) – PMMY is a loan scheme launched by the Government of India to provide financial assistance to micro-enterprises. Under this scheme, loans up to ₹10 Lakh are provided to micro-enterprises in the form of three categories, namely Shishu, Kishor, and Tarun, based on their stage of growth. The loans under PMMY are collateral-free and can be availed of from banks, non-banking financial companies (NBFCs), and microfinance institutions (MFIs).
- Credit Link Capital Subsidy Scheme (CLCSS) – CLCSS is a subsidy scheme launched by the Ministry of Micro, Small, and Medium Enterprises (MSMEs) to provide financial assistance for upgrading technology in MSMEs. Under this scheme, a capital subsidy of 15% is provided on the total investment made in plant and machinery, subject to a maximum of ₹15 Lakh. This scheme applies to MSMEs in the manufacturing sector.
- Stand-Up India – Stand-Up India is a loan scheme launched by the Government of India to provide financial assistance to women and SC/ST entrepreneurs. Under this scheme, loans ranging from ₹10 Lakh to ₹1 Crore are provided to eligible entrepreneurs to start new ventures in manufacturing, services, or trading sectors. The loans under Stand-Up India are collateral-free and can be availed of from scheduled commercial banks.
- National Small Industries Corporation (NSIC) Single Point Registration Scheme (SPRS) – NSIC SPRS is a scheme launched by the Government of India to provide a platform for MSMEs to participate in government tenders. Under this scheme, MSMEs can register themselves with NSIC and get a unique registration number, which can be used to participate in government tenders. The registration fee for NSIC SPRS is ₹1,500, and the validity of registration is three years.
- Prime Minister Employment Generation Programme (PMEGP) – PMEGP is a subsidy scheme launched by the Ministry of Micro, Small, and Medium Enterprises (MSMEs) to provide financial assistance for setting up new micro-enterprises. Under this scheme, loans up to ₹25 Lakh are provided to eligible entrepreneurs, along with a subsidy of 15% to 35% of the project cost. The loans under PMEGP are collateral-free and can be availed of from banks, NBFCs, and MFIs.
- Online Small Business Loans – Apart from the aforementioned
What are the MSME Loan Eligibility Criteria?
While the MSME Loan eligibility criteria vary between lenders, the basic requirements by some NBFCs can include the following:
- Age: The applicant’s age must be a minimum of 24 years and a maximum of 65 years
- Business Vintage: Applicants must have a business vintage of at least 2 years
- Annual Turnover: The applicant’s business must have an annual turnover of a minimum of ₹6 Lakh
As previously stated, do note that the above-mentioned eligibility criteria for MSME Loans are indicative, and can vary between different lending institutions.
The MSME industry in India is one of the fastest growing in the nation and is responsible for generating employment opportunities for countless people. So, it only seems natural that the government and other financing institutions lend their support to help this sector grow.
Also Read: Strategy to Get Loan for Small Businesses
The loan schemes mentioned in this article provide easy access to finance for MSMEs and help in promoting their growth and expansion. MSMEs should carefully evaluate these schemes and choose the one that best suits their business requirements. Apart from these schemes, small businesses can also apply for Small Business Loans online to fulfil various business requirements without worry.