10 Business Loans For Startups And Msmes By Indian Government
The Indian startup ecosystem is creating unicorns twice as quickly as it did previously, receiving multi-billion dollar investments from foreign capitalists, and enjoying high-profile exits like the $16 Bn Walmart-Flipkart deal last year. Meanwhile, the nation's 577 Cr micro, small, and medium-sized businesses (MSME) sector is overcoming obstacles like starting up and expanding their customer base. In the recent years, a number of additional government starting loans and programmes for business owners in India have been created. Below is a list of a few of India's most well-known and well-known government programmes that provide startup and MSMEs with business loans.
4E (End to End Energy Efficiency)
India SME Technology Services Ltd (ISTSL) and the World Bank together created this MSME programme for business owners. The major goal is to fully adopt energy saving techniques throughout all Indian sectors. Additionally, it wants to assist entrepreneurs in financing purchases of used machinery and equipment.
Eligibility
- There shouldn't be any bank or financial institution defaults for the startup.
- It need to have completed a process of comprehensive energy audit (DEA) by a technical agency or consultant who is a qualified energy auditor by the Bureau of Energy Efficiency (BEE).
- The Energy Efficiency Cell (EEC), SIDBI, should have reviewed the technical agency's or consultant's detailed project report (DPR).
- The unit should have complied with the Environment and Social Management Framework and not received a performance-linked grant under the World Bank-Global Environment Facility (WB-GEF) Project for the planned energy efficiency (EE) Project.
Time period
The payback time for loans up to Rs. 100 Lakh and 60 months for loans beyond INR 100 Lakh must not exceed 36 months and 60 months, respectively, after the first moratorium period of up to six months.
Bank Credit Facilitation Scheme
The programme attempts to satisfy the MSME units' credit needs. To do this, the NSIC and a number of nationalised and private sector banks have signed a Memorandum of Understanding. The NSIC facilitates for bank credit assistance (fund- or non-fund-based limitations) through syndication with these banks at no cost to MSMEs.
Eligibility
- MSMEs with Indian registrations
Time period
The payback period typically lasts between 5 and 7 years but can be longer or shorter depending on the startup's profitability. It may, however, last up to 11 years in extreme circumstances.
Credit Guarantee Scheme (CGS)
The government created the Credit Guarantee Scheme to improve the way credit is delivered and to make it easier for credit to reach the MSME market. Regional rural banks, public, commercial, and international banks, as well as the SBI and its affiliate banks, are among the lending institutions covered by this plan.
Eligibility
- The programme is open to new and current MSMEs involved in manufacturing or providing services, but it is not relevant to businesses engaged in retail, agricultural, self-help groups (SHGs), educational institutions, or self-help organisations.
Time period
When term loans or composite loans are extended to borrowers only as working capital facilities, the credit guarantee will start on the date the guarantee fee is paid and continue for the agreed-upon term credit duration as well as for a period of 5 years, or for such other duration as the guarantee trust may specify.
Credit Linked Capital Subsidy for Technology Upgrades
By providing upfront capital subsidies to SSI units, such as khadi, village, and coir industrial units, on institutional finance (credit) they have accessed for the modernization of their production equipment (plant and machinery), techniques, and methods, this business loan for startups aims to facilitate technological upgrades.
Eligibility
- Either with or without growth, small-scale industry (SSI) startups that have already been operating and are registered with the State Directorate of Industries and have improved their current equipment with cutting-edge technology are eligible for this programme. Additionally, new SSI units that are registered with the State Directorate of Industries and employ the proper, eligible, and proven technology will be eligible if they have received the proper approval from the Governing and Technology Approval Board (GTAB)/Technical SubCommittee (TSC).
Time period
NA
Coir Udyami Yojana
The programme aims to aid in the development of coir units. To satisfy the need for operating capital in the form of cash credit, banks will fund capital expenditures in the form of term loans. The bank can also provide composite loans for projects that include both working capital and capex.
Eligibility
- Individuals, businesses, self-help groups, NGOs, organisations registered under the Societies Registration Act of 1860, production co-operative societies, joint liability groups, and charity trusts will all be eligible for assistance under the programme.
- Startups are not allowed to claim a subsidy if they have already received one through another government programme run by the Indian government or a state government for the same reason.
Time period
The interest rate that can be charged on beginning company loans must be equal to the base rate. Following a preliminary moratorium, the repayment plan may not be longer than seven years, as determined by the relevant bank or financial institution.
MSME Business Loans For Startups In 59 Minutes
When he unveiled the MSME sector's 12-point action plan last year, Prime Minister Narendra Modi discussed this project. The programme intends to automate several loan assessment processes so that one may pick their preferred bank and receive an eligibility letter and in-principle approval in less than 60 minutes, making it easier for small and micro businesses to acquire financing. The amount of time it takes to issue a business loan after receiving in-principle approval relies on the information and supporting documents submitted to the banks and the platform. In general, the loan is anticipated to be sanctioned or released in 7-8 working days following the in-principle approval.
Eligibility
For already running businesses: The borrower must have a six-month bank statement facility and be GST and IT compliant. A company's eligibility for a business loan is decided by: Income or revenue, repayment ability, already-existing loan facilities, and any other criteria established by lenders (banks)
Time Period
NA
Pradhan Mantri Mudra Yojana (PMMY)
MUDRA offers banks and Micro Finance Institutions (MFIs) refinancing help for lending to micro units with credit requirements up to INR 10 lakh. Recent media sources state that overall business loans of INR 2.54 lakh crore were categorised as Mudra loans in the financial year 2017–18, a 41% increase over the INR 1.80 lakh crore loans sanctioned in this category in the previous financial year.
Eligibility
The loan is available to proprietorship and partnership businesses in both urban and rural locations that fall under the non-corporate small business sector (NCSB).
Time period: NA
SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)
This program's objective is to offer MSMEs with soft loans in the form of quasi-equity and term loans with relatively lenient conditions in order to help them fulfil the necessary debt-to-equity ratios for both starting new MSMEs and expanding already existing ones.
Eligibility
Both new manufacturing and service businesses may apply for this programme. Enterprises already in operation that are increasing their company through growth, modernization, technology improvements, or other initiatives will also be addressed.
Time period
After three years have passed since the first disbursement, the outstanding soft loan and any arrears on it must be converted into a secured term loan, with the full loan carrying an interest rate based on the borrower's internal rating. With the moratorium of up to 1.5 years for term loans and up to 2 years for soft loans, the payback duration is often up to seven years.
Standup India
Through this programme, the Indian government makes it possible for at least one SC or ST borrower and one women borrower each bank branch to obtain bank loans between INR 10 Lakh and INR 1 Cr for starting a new business. Through the Standup India platform, 3457 online business loans for entrepreneurs have so far been approved.
Eligibility
businesses engaged in manufacturing, services, or trade. In the event of non-individual businesses, a SC/ST or women entrepreneur must possess at least 51% of the stock and the controlling interest. There shouldn't be any bank or financial institution defaults involving the borrower.
Time period
This government loan for new businesses has a maximum moratorium of 18 months and is repayable over seven years.
Sustainable Finance Scheme
The goal of the government's startup programme is to support projects along the entire value chain of energy efficiency (EE), cleaner production (CP), and sustainable development that significantly improve EE, CP, or sustainable development in MSMEs and are currently not covered by the sustainable financing lines of credits.
Eligibility
- For captive or non-captive usage (i.e., electricity generated is sold/supplied to the grid/off-grid), renewable energy projects such as solar power plants, wind energy generators, micro hydel power projects, biomass gasifier power plants, etc.
- Any prospective expenditures in cleaner production (CP), such as waste management
- A suitable support programme for original equipment manufacturers (OEMs) of energy-efficient, cleaner-producing, and environmentally friendly gear and equipment
- The OEM should either provide its goods to a sizable number of MSMEs or be an MSME itself.
Time period: NA