Stand-Up India – Bada Business

5 Types Of Small Business Loans Entrepreneurs Can Take At Low Interest!

Summary: Finding the right source of funding for your business? These government schemes can help you to take your business to new heights of success.

When starting a small business funding is crucial. What makes it a daunting process is finding the right source. There are many banks and schemes through which entrepreneurs can take small business loans. Entrepreneurs can take small business loans in two ways: they can either take loans through government schemes or they can take loans from private players.

The government of India also offers relief in the form of collateral-free loans, subordinated debts, and equity infusion through its Fund of Funds (FoF) scheme, which proposes to buy up to 15% growth capital in high-credit MSMEs.

Many government schemes are made to empower SMEs. Among various schemes, the key government schemes include MSME Business Loans for Start-ups in 59 minutes, Pradhan Mantri Mudra Yojana, and SIDBI Make in India Soft Loan Fund for MSMEs.

Here is a list of other government schemes for small scale businesses:

1. Loans for Startups in 59 Minutes

Launched in 2018 this central government-backed small-scale industrial loan is famous for the loan eligibility that is conveyed to the applicant in just 59 minutes. Though, the actual process might take eight to 12 days.

A loan via this scheme attracts an interest rate starting from 8.50%. Also, the interest rates are based on the nature of your business and your credit rating. This scheme offers loans ranging from a minimum of INR 1 lakh to a maximum of INR 5 crore. A 3% reservation for such loans is available for women entrepreneurs.

2. Pradhan Mantri Mudra Yojana (PMMY)

To provide business finance to micro-businesses the Government of India established the Micro units’ development and refinance Agency (MUDRA). The Pradhan Mantri Mudra Yojana (PMMY) administered by MUDRA is a small-scale industry loan by the central government with the intent to “fund the unfunded”.

This scheme offers a wide range of sectors and business activities. MSMEs can take up to INR 10 lakhs without collateral. This scheme is called MUDRA loans. All types of trading, manufacturing, and service businesses can apply to this scheme.

3. SIDBI Make In India Soft Loan Fund For MSMEs (SMILE)

SMILE is a government loan scheme by the Government of India that offers loans with below-market interest rates, also known as soft loans. This small business lending scheme is governed by the Small Industries Development Bank of India (SIDBI). The minimum loan amount under this scheme is INR 25 lakh. The interest rate starts at 8.36%, the scheme comes with a moratorium period of 36 months. The maximum repayment tenure is 10 years. New MSMEs, along with existing service and manufacturing sectors, can apply for this scheme.

4. Credit Guarantee Fund Trust for Micro And Small Enterprises (CGTMSE)

This government loans scheme offers central government small-scale industries loans to the MSME sector. This scheme provides working capital loans of up to INR 10 lakh without any collateral. Credit facilities up to INR 1 crore can be availed after mortgaging your business land or assets.

New or existing MSMEs in service or manufacturing activities, agricultural and educational institutions, and self-help groups are eligible for this scheme.

5. Stand Up India

The Stand-Up India initiative seeks to provide government small business loans to women entrepreneurs and individuals under the scheduled caste or scheduled tribe category. It was launched by the Small Industries Development Bank of India (SIDBI) and it provides loans to small businesses between INR 10 Lakh to INR 1 crore. The amount will cover around 75% of your business project and its interest rate is calculated as the bank’s marginal cost of funds-based lending rate (MCLR) + 3% + tenure premium.

These are the government schemes that entrepreneurs can use to raise funds for their small businesses. We know what you are thinking! The idea of managing a business is easier said than done and we completely agree with you. This is why to help you move forward with your business goals, we at Bada Business Problem Solving Courses & LFP Bada Business (Leadership Funnel Program).

With an aim to promote entrepreneurship among women, the government announced that banks have sanctioned Rs 25,586 crore to about 1,14,322 beneficiaries under the Stand Up India Scheme in the last five years. There is a large group of potential entrepreneurs particularly women and Scheduled Caste (SC), Scheduled Tribes (ST) who want to set up an enterprise of their own, which allows them to grow and thrive. Such entrepreneurs are spread across country and are bubbling with ideas on what they can do for themselves and their families.

Aspiring SC, ST, and women entrepreneurs are energetic and enthusiastic but may face challenges in converting their dream to reality. Recognizing these challenges, the Stand up India Scheme was launched on April 5, 2016. The scheme aims to promote entrepreneurship at grassroot level focusing on economic empowerment and job creation. This scheme has been extended up to the year 2025.

The objective of Stand-Up India is to promote entrepreneurship amongst women, Scheduled Castes (SC) & Scheduled Tribes (ST) categories, to help them in starting a greenfield enterprise in trading, manufacturing and services sector, by both ready and trainee borrowers.

About Stand Up India Scheme:

Under the scheme, bank loans between Rs 10 lakh and Rs 1 crore are provided to at least one Scheduled Caste/ Scheduled Tribe borrower and at least one woman borrower per bank branch of Scheduled Commercial Banks.
Started in April 5, 2016, the scheme has benefited 93,094 women entrepreneurs with outstanding loan of Rs 21,200 crore as of March 23.
This scheme, which has been extended up to 2025, covers SC/ST and/or women entrepreneurs, above 18 years of age.
In case of non-individual enterprises, 51 percent of the shareholding and controlling stake should be held by either SC/ST and/or Women Entrepreneur and borrowers should not be in default to any bank/financial institution.