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Top Government Loan Schemes for Small Business in India

Loans given by the government and banks for business in India

Different Types of Small Business loans through bank and Government in India

Top Government Loan Schemes for Small Business in India

According to the World Economy Report for the first quarter of 2020, the International Monetary Fund (IMF) has indicated that India is one of the fastest growing economies in the world and a large proportion of India's GDP is contributed by SMEs. Contributed by. Hence it is important to promote Micro, Small and Medium Enterprises (MSMEs). For this the government has introduced loans for small businesses through which business owners can get financial assistance to grow their business. This assistance is in the form of subsidy by the government and also through formulating schemes for banks to provide effective credit to upcoming business ventures.

Top Government Loan Schemes for Small Business in India

It can be in the form of working capital, term loan, purchase of raw material, bill discounting, technology upgradation scheme, help in marketing, which the government wants to enrich. The government may create special trust funds or set up institutions or departments to look after the operation of such schemes. It becomes very important that small businesses should be aware of these schemes of the government, so that they can take advantage of it and contribute to the economic value addition of the nation.


Recently, India was declared the only truly emerging market in the world. Micro, small and medium enterprises of the country have contributed a lot in speeding up this development. The SME sector accounts for 40% of the total GDP and is an important source of employment for India's growing population. In the post-demonetisation era, the government, recognizing the importance of SME development, has introduced some new business loan schemes and improved upon the earlier ones. Here we will tell about the 5 best loan schemes launched by the Government of India, using which you can take advantage of financing small business.


When you start a business, you need certain things like space, raw material, machinery, finance etc. But let us tell you that the first thing that is needed out of these is loan, yes when you have to start a business, then you have to take loan for it from bank or other resources. Now it comes to the point that what is a loan, after all which types of loans can be used to start a business. So let us provide you the answers to all your questions through this article.


If you are planning to start a new business and you do not have money for it and at the same time you are struggling with the problem of taking a loan, then you do not need to worry. You can take a government business loan to start a new business. In the government business loan scheme, loans are given primarily to micro / ultra-small, small / small and medium / medium businessmen and other important organizations.


There are a variety of government business loan schemes and modern business owners can avail the loan that best suits them through various online portals. Let us further tell you what are the types, features and eligibility of taking a business loan by the Government of India.


What is loan? (What is loan?)

When a person or a company needs finance for any of his work, he borrows money from banks, commercial lenders or personally, which he has to repay within the prescribed limit and with interest. It is called loan. But there are many types of loans, depending on the purpose for which you have to take the loan. Along with this, whichever institution you take a loan from, it has its own criteria, which you have to fulfill and then you get the loan.


How many types of loans are there (Type of Loans)

There are many types of loans, which you can take for any of your work. For example, if you take a loan for any of your personal work, then we call it a personal loan, a loan taken to build a house is a home loan, a loan taken for education is called an education loan. education loan). Similarly, when you take a loan to start any type of business, it is called a business loan.


What is business loan? (What is Business Loan?)

Business loans are obtained from banks or various financial institutions. But let us tell you that there are many types of business loans, which you can get from the government apart from the bank.   


Types of Business Loan

Business can be started in any form, small or big, you need some finance, then from where you can get finance, this idea comes in your mind, then let us tell you for this. , that you can start your business by taking any type of loan from the following types of loans –


  1. government loan schemes

  2. direct bank loan

  3. Other Business Loan




Loans received by the government (Government Loan Schemes for Small Businesses India)

government loan schemes

There are more than 10 popular business startup loan schemes that the government offers to new businesses. Following are the features and benefits of the best government loan schemes to start a business:

To start any new business or startup business, the government comes up with some schemes to help the people, so that they can get financial help to start their own business. Here we are giving information about some schemes, under which businessmen can do business by getting loans. 




1. Pradhan Mantri Mudra Loan Yojana (PMMY)

Micro Unit Development and Re-finance Agency (MUDRA) is an organization set up by the Government of India to provide business finance to micro business units. Loans given under this scheme are given under the policy of “financial assistance to the needy”. Many times small companies and start-ups have to find their own ways for finance, so the government has come out with low credit schemes. Mudra loans are also refinance business loans, which are sanctioned and disbursed by public sector banks, private sector banks, co-operative societies, small banks, scheduled commercial banks and rural banks covered under this scheme. These loans are generally given to micro or small business owners, especially those involved in manufacturing, trading or service sector. The classification of Mudra loan is as follows:


  1. Shishu :- Beneficiaries can get loan up to Rs.50 thousand in this category, which they have to pay after 5 years on the basis of 1% interest rate per month.

  • Shishu Loan – up to ₹50,000/-



  1. Kishore: – In this category, the beneficiary can get a loan ranging from Rs 50 thousand to Rs 5 lakh.

  • Kishor Loan – up to ₹5,00,000/-



  1. Tarun :- In the last ie Tarun category, the beneficiary gets a loan ranging from Rs 5 lakh to Rs 10 lakh.

  • Tarun Loan – up to ₹10,00,000/-



The full name of Mudra Loan Yojana is Pradhan Mantri Mudra i.e. (Micro Units Development and Refinance Agency Limited) Loan Yojana, which has been started with the objective of providing business loans to micro units and small business in non-agriculture sector. In this scheme, you do not need collateral to take a loan. Beneficiaries can get this loan from Commercial Banks, RRBs, Small Finance Banks, Cooperative Banks, MFIs and NBFCs. Those joining the scheme can avail loans on the basis of 3 categories (Shishu, Kishor and Tarun), which reflect the stages of enterprise development and funding needs.


Pradhan Mantri Mudra Yojana (PMMY) works on the theme of "Fund the Unfunded". The Government of India has set up a Micro-Units Development and Refinance Agency (MUDRA) organization to provide loans to micro businesses. With the low cost and price of the loan, these loans have proved to be of great help to the businesses.


Loans under MUDRA are provided without any collateral in the agriculture, manufacturing, retail and service sectors.


Who is eligible :

  • Small business owners in rural and urban areas.

  • Non-Corporate Small Business (NCSB). For example small scale industries, service sector units.



The government has established this scheme to provide financial assistance to non-corporate, non-agriculture small and medium businesses. Mudra loan can be availed from private and public sector banks, commercial banks, regional rural banks (RRBs), small finance banks and corporate banks. Interested applicants may approach any of the above institutes or apply online through the official website of MUDRA.


Eligibility: Proprietorship / enterprise firms in rural and urban areas that are non-corporate small businesses can apply for this loan. The following are some examples of NCSBs:


  • small manufacturing units

  • service sector units

  • Shopkeeper

  • Fruit/Vegetable Seller

  • truck operator

  • food-service establishments

  • repair shops

  • machine operator

  • small scale industry

  • craftsmen

  • Food Processors and more


All types of manufacturing, trading and service sector units can avail MUDRA loan.


Fiscal Incentives:


MUDRA provides incentives through:


Shishu: Loan: Rs.50,000/- until

Kishor: Loan: Rs.50,000/- 5 lakh to Rs. until

Tarun Loan: Rs.5 lakh 10 lakh to Rs. until



2. Standup India Scheme :-

Standup India Scheme is a special scheme launched by the Government of India, under which loan facilities are provided to Scheduled Castes, Scheduled Tribes and women to empower them financially. In this scheme started for scheduled castes, tribes and women, they are eligible to get financial assistance of Rs 10 lakh to Rs 1 crore from the government to start their new manufacturing, trading or any service unit. They are given a time period of 7 years to return the amount taken as this loan. Through this scheme, the government encourages and helps the beneficiaries of the scheme to set up a new venture.


Stand Up India, governed by the Small Industries Development Bank of India (SIDBI), was launched to provide funding to SC/ST categories and women entrepreneurs. Under this scheme, at least one SC / ST entrepreneur and one woman entrepreneur per bank branch will get Rs. 10 lakh. 1 crore to Rs. Provides loan up to.


Who is eligible:


  • The borrower must be a Scheduled Caste or a Scheduled Tribe or a female of 18 years and above.

  • The finance will be on loan for the green-field project. This means that the borrower should be a first time enterprise of the beneficiary in any sector of trade, agriculture, allied activities, manufacturing, or services.

  • The borrower should not be in default with any other financial institution.


In the case of non-individual enterprise, at least 51% of the stake should be held by a Scheduled Caste or a Scheduled Tribe or a woman.


Eligibility: Business, manufacturing or service sectors are considered eligible for this scheme. In businesses where the ownership rights are with more than one person, at least 51% stake should be held by an SC / ST or a woman entrepreneur.


Fiscal Incentives:


  • Under this, 75% of the project is covered under term loan and working capital, for which Rs.10 lakh. 1 crore to Rs. Loan is given.

  • The lowest applicable rate of interest will be – (Base Rate (MCLR)) + 3% + Tenure Premium



Stand-up India is a scheme of the Government of India, which has been established to provide financial facilities to SC, ST and women entrepreneurs. It is established by SIDBI Bank. As per the scheme every bank or every branch of the bank shall provide at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower in any of the manufacturing, services, trading activities or agriculture and allied activities. Finance or lending is necessary to set up an enterprise for the first time in the area. 

In case the borrower is a non-individual, such borrower needs to hold at least 51% equity in the venture to finance it. The loan provided ranges from Rs 10 lakh to Rs 100 lakh which can be in the form of both term loan and working capital finance.


The loan will cover 85% of the project cost including working capital. However, if the owner's contribution is included with other borrowings, the Stand-up India scheme exceeds 15% of the project cost. In this case, estimated loan will not be applicable. In this case the borrower has to bring in a minimum of 10% of the project cost as own contribution.


Rate of interest is the lowest applicable rate for the bank concerned, not exceeding MCLR (Marginal Cost of Fund-based Lending Rates i.e. minimum rates below which banks are not allowed to lend) plus 3% plus tenor premium and 18 Repayable in 7 years with a maximum moratorium period of 10 months. The loan requires security or collateral or guarantee as decided by the banks. 




3. PSB Loan in 59 Minutes

MSME Business Loan in Just 59 Minutes 

MSME loan in 59 minutes 

Perhaps, the most popular loan scheme at the moment is the 'MSME Business Loan in Just 59 Minutes', which was first announced in September 2018. Loans given under this scheme are given to provide financial help and to promote MSME development. Both new and existing businesses can take advantage of this type of loan by availing financial assistance of up to ₹ 1 crore. The processing time for this loan is up to 8-12 days, but the decision on whether the loan will be approved or not is made within 59 minutes of applying for the loan. This is a kind of re-financing scheme, in which 5 authorized public sector banks will provide funds for the loan. The rate of interest depends on your business and credit rating. No information has been given on giving subsidy on principal amount or interest.

To apply for a business loan under this scheme, you will need GST verification, income tax verification, bank account statements for the last 6 months, business ownership documents and KYC details. You can find other information related to applying and approval of this business loan on the SIDBI portal.


Quick business loans in India are provided through a portal provided by the Government of India, with loan amounts ranging from 1 lakh to 5 crores approved in just 59 minutes and processing takes 8-10 days. The interest rate on this loan is 8.5%. It gives loan facility to new and existing businesses.


Who is eligible:


  • salaried person

  • all business like 

-Proprietary Concern

-Partnership Firm

-Private Limited 

-public limited 

-Other legal entities


Required Documents:


  • borrower's income

  • existing credit facility 

  • Borrower's repayment capacity

  • GST Verification

  • income tax verification

  • Bank Account Statement for the last 6 months.

  • KYC details

  • Other details as prescribed by the financial lender.


5 crores by Prime Minister Modi for startup business and MSMEs in just 59 minutes. Launched a web portal named psbloansin59minutes, a digital platform to provide loans up to Rs. The government had launched this business loan scheme to provide financial assistance to the Micro, Small and Medium Enterprises (MSME) across India. Following are some of the features of this facility:


  • Quick access to finance: Usually it takes around 7-10 days to complete such loan procedures. However, the loan approval process takes only 59 minutes

  • Loan amount: The loan amount offered under this loan ranges from Rs 1 lakh to Rs 5 crore

  • Interest Rate: The interest rate applicable under this scheme is 8.50%

  • Quick disbursal: Once the loan is approved within an hour, you can expect the funds to reach your bank account in 7-8 working days


Guarantee-free loan: For availing the loan, no guarantee is mandatory as the online portal is directly linked with the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme.



4, Subsidy of National Small Industries Corporation (NSIC)

National Small Industries Corporation Subsidy

National Small Industries Corporation Subsidy (NSIC)

The NSIC subsidy provides two types of economic benefits to small businesses – assistance in procuring raw materials and assistance in marketing. Both indigenous and foreign raw materials come under NSIC's assistance in purchasing raw materials scheme. Funds are given to SMEs under the help of marketing, so that businesses increase the market value of their product and service and competition in the market. NSIC specifically focuses on funding small and medium enterprises who want to improve/increase the quality and quantity of their manufacturing.


NSIC is a Government Enterprise under MSME, certified by ISO. It aims to support the development of MSMEs across the country by providing services including finance, marketing, technological advancement and other business related services. NSIC has launched two schemes to promote the growth of MSMEs, which are:


Marketing Support Scheme -

The scheme supports the development of any business by creating plans for areas such as consortia and tender marketing, single point registration, infomediary service, marketing intelligence, space marketing, sale of machines and equipment, and other digital services. Such a scheme is important, as it should assist the MSMEs to grow in the current competitive market.


Credit Support Scheme -

NSIC aims to support MSMEs by way of assistance for procurement of raw material, which helps MSMEs to focus on their core manufacturing activities. The credit backed is up to 180 days and security is required in the form of bank guarantees from approved banks.

The interest rates for the Credit Support Scheme are given below:


Government two financial help –

The National Small Industries Corporation (NSICS) provides assistance to small businesses under subsidies with a focus on marketing assistance and raw material assistance. Following are the benefits:


Cost Free Tenders: 

Under the Marketing Assistant program, small businesses (SSI) will have access to tenders at no cost


No Security Deposit Required: SSI (small businesses) do not need to put up any collateral or collateral to avail the loan.


Land and Building Finance: Project cost for SSI (Small Business) Rs.25 Lakhs. Should not be more than This scheme provides economic facility for the Department of Land and Building.




5. SIDBI Make in India Soft Loan Fund (SMILE) for MSME

MSME (MSME Loan) :-

The full name of MSME is Micro Small and Medium Entrepreneurs, under which the loans are provided by the government to the enterprises. For this, only small scale industries can be started by the beneficiaries. Along with this, all eligible entrepreneurs can get loans ranging from Rs 10 lakh to Rs 1 crore. And let us tell you that the application for this is also done online, the process of which takes only 59 minutes. Yes, within 59 minutes, you can apply for a loan by joining the MSME loan scheme. In this scheme, the interest rate for the return of loan has been started from 8 percent. Collateral coverage is not mandatory in this scheme, as these loans are linked to Credit Guarantee Fund Trust for Micro, Small and Medium Enterprises Scheme.

Launched in the year 2015, SMILE is operated by Small Industries Development Bank of India (SIDBI). The objective of the scheme is to provide soft loans for setting up of new MSMEs to meet the required debt-equity ratio and for existing ones for growth. The interest rate applicable under this scheme is 8.36%.


Ability :

Existing and new businesses in the manufacturing and service sectors can apply for this scheme. This loan can be availed for expansion of your business, upgrade or for starting other projects. The maximum loan tenure is 10 years including a moratorium period of 36 months.


Fiscal Incentives:

  • The minimum loan amount given under SMILE scheme is Rs.25 lakh. Is.




6. Credit Guarantee Scheme (CGS)

Credit Guarantee Scheme (CGS)

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme was launched by the government to strengthen and facilitate the loan delivery system to the MSME sector. Public, private and foreign banks as well as Regional Rural Banks (RRBs) and SBI along with their associate banks are among the lending institutions under the scheme.


Who is eligible:


  • manufacturing industry


All service providing organizations except educational institutions, self-help groups and training institutions.

Eligibility: Manufacturing or service sector and existing MSMEs, training institutes except retail trade, educational institutions, agriculture, self-help groups (SHGs) are eligible for this scheme.


Fiscal Incentives: 


Following are some of the features of this scheme:


  • 2 crore in this scheme of MSME for entrepreneurs. There is a facility of term loan and working capital loan up to Rs.

  • The guarantee cover provided is up to 75% subject to a maximum of Rs.1.5 crores. Till then

  • Small businesses are provided with a cover of up to 85% which is Rs.5 lakh. Till then

  • For MSME retail trade, the guarantee cover is default 50% subject to a maximum of Rs.50 lakhs. Is


The Credit Guarantee Scheme (CGS) provides collateral-free finance to MSMEs on payment of a guarantee fee to the bank. The scheme is implemented by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which in turn is set up by the Ministry of MSMEs and the Small Industrial Development Bank of India (SIDBI). The maximum loan amount is 200 lakhs and special preference is given to women.


The maximum amount of loan guarantee cover is equal to the sanction amount mentioned below,


1. 75% for credit up to Rs.500 lakhs.

2. 85% for credit up to Rs.100 lacs.


Up to 1% of the sanction amount is charged as fee per annum.


Credit Guaranty Fund Scheme :- Credit Guarantee Scheme or Credit Guarantee Fund Scheme is a scheme launched by the Government of India, under which people starting micro and small scale industries were provided loan facility without any collateral. She goes. If your business is new or old, both are included in this plan. Through this scheme, micro and first generation enterprises will get small business loans at cheap rates. In this scheme, considering the eligibility of the applicants applying for the loan and the success of their business, the loan amount is provided. In this scheme also, applicants can get a maximum loan of Rs. 1 crore. This scheme has been started by the government in collaboration with the Small Industries Development Bank of India.


Credit Linked Capital Subsidy Scheme for Technology Upgradation

The scheme provides an opportunity to small businesses to upgrade their processes by financing technology upgradation. This technological upgradation can be related to many processes within the organization such as manufacturing, marketing, supply chain etc. Through the CLCSS scheme, the government wants to reduce the cost of production of goods and services for small and medium enterprises, so that they can compete with the domestic and international markets in terms of prices. This scheme is run by the Ministry of Small Scale Industries. CLCSS provides upfront 15% capital subsidy to eligible businesses. However, a maximum amount of ₹15 lakh can be availed as subsidy under this scheme. Sole proprietorships, partnership firms, cooperatives, private and public limited companies are covered under this business loan scheme.


The objective of this scheme is to provide technology upgradation in MSEs. This means that upfront subsidy of 15% is provided in the approved 51 sub-sectors. It helps businesses to set up technology driven systems and plant and machinery with proper technology. 


Who is eligible:

  • Micro and Small Enterprises (MSEs) having valid UAM number.




PMEGP (Prime Minister Employment Generation Program)

This scheme works at two levels. It is approved at the national level with the Khadi and Village Industries Commission (KVIC) acting as the nodal agency. This sanctioned loan is disbursed to the account holder through State Level Agency, State KVIC Directorate, State Khadi and Village Industries Boards (KVIBs), District Industries Centers (DICs) and Bank.


The maximum project cost in the eligible sector is Rs 25 lakh and in the business sector it is Rs 10 lakh. The loan is provided in the form of subsidy on the following percentage of the project cost while the balance loan is provided by the banks.


Categories

urban 

Rural 

General 

15%

25%

Special 

25%

35%



Who is eligible:


  • Any person over the age of 18 years.

  • For projects costing more than Rs 10 lakh for manufacturing and more than Rs 5 lakh for business or service sector, the minimum qualification is 8th class pass.

  • The subsidy is available only for new projects.

  • Units already receiving subsidy from any other government scheme are not eligible.




Credit Guarantee Fund Scheme for Micro and Small Enterprises

CGMSE was first launched in the year 2000 to provide financial help to micro and small enterprises. It provides collateral-free credit to all new and existing businesses that meet its scale. Through this scheme, working capital loan loans up to ₹ 10 lakh can be given without any collateral (mortgage). However, for loans above Rs.10 lakh and less than Rs.1 crore, you will need to hold land or building as mortgage or primary security and such eligible accounts are covered under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) Let's go If the loan amount exceeds ₹10 lakh, the property attached to the business unit created out of the loan facility is also considered as security.


These business loans are financed by the public and private sector banks that are covered under this scheme.




NABARD :-

NABARD ie National Bank for Agriculture and Rural Development (NABARD) is such a development bank, which mainly provides loans to agriculture, farmers and cottages on behalf of the government. It has been established with the objective of development of small industries and industry present in the village. In this, the beneficiaries are mainly from rural areas and they have to repay it with only 4.5% interest rate.





Banks offering easy loans to business entrepreneurs

The business loans provided directly by the bank are mainly given for businesses like small, medium and large industries, which are as follows –


Machinery or Equipment Loan :-

These types of loans are mainly for manufacturing businesses wherein you need money to buy equipment and machinery. Because it is available in the market at a higher price. Most of the banks have special loan products for the purchase of these equipments or machines and to meet its requirement, and these are on the upper limit of Rs.25 crores. However, some banks are known for equipment and machinery financing products for more than Rs.100 crores. A fixed tenure is also prescribed for this loan, and it can be of 4 to 5 years duration. In this, the rates of interest can be less as compared to term deposits. And equipment or machinery can usually be taken as collateral with some additional security.   



Business Term Loan :-

If you need money for long term assets like building, land, machinery etc., then you can go with term loan. A term loan is a common form of business financing. In this, you get a cash amount, which varies according to the requirement and eligibility of the borrower. You have to repay it with interest in a predetermined period. There are two types of term loans, one secured and one unsecured. In secured term loan you have to provide collateral. Whereas in unsecured term loan you do not have to provide any collateral. Generally the maximum tenure for term loan is 3 years in case of unsecured term loan and 15 years in case of secured term loan. Secured term loans have lower interest rates, while unsecured term loans have higher interest rates. It has high borrowing volume, and fast funding. You can see this for the expansion of business.


Invoice Financing :-

Invoice discounting and financing is a powerful tool for raising capital. This can provide a great way for small businesses to find working capital. There is often a time lag between when a business raises the invoice and when it is finally paid. In such a situation, you can approach any one bank or any one financial institution to provide loan against challan. Around 80% of the invoice amount is given as loan, and the remaining percentage is available when the invoice is paid in full by the customer. The lender deducts processing fee and interest from this amount, which is usually very less.



Working Capital Loan :-

Working capital is the money you need to meet day-to-day business expenses like your monthly electricity bills. All your operational costs are covered under working capital and some loans are tailored around your working capital needs. You can get a working capital loan of up to Rs.30 lakh. In this, the loan is usually offered for a tenure of 6 to 12 months, and the rate of interest in it ranges from 12% to 16%. These can be either secure or unsecured. In this, manufacturers, service providers, retailers or wholesalers or traders engaged in import and export can apply for working capital loan.



Some Other Business Loan through Bnak

Some different types of loan facilities are also provided by the bank, which may be necessary for different types of business, the information about which is as follows –



SME Loan:

 As the name suggests, SME loans are offered to small and medium enterprises to meet their financial requirements and for business expansion purposes. SME loans are mainly availed by startup enterprises, small and medium enterprises and business owners. In this, each bank or NBFC can charge different interest rates for providing loans to SMEs. The lowest interest rate offered is 8.50% and can go up to 24% per annum. The interest rate charged for SME loan will depend on various terms such as provision of collateral, loan amount and loan tenure. Although some subsidy is also provided by the government for small scale industries in India. 


Overdraft :-

Overdraft is the facility provided by the bank, when there is no money in your current account or savings account, i.e. it runs out but you need money, then the bank allows you to withdraw more than your deposit amount. . However, for this you will need to provide collateral. That's why it is also called a type of short term loan. Because in this the customers also have to return the money to the bank with a fixed limit and a fixed interest rate. In this, interest is charged only on that amount, as much as you have taken extra money from your deposits from the bank.    

Collateral Free Loan :-

Collateral free loans or unsecured business loans are especially useful for small businesses, as their owner is not required to surrender any business or personal assets as collateral against the purchase of the loan. In this, usually small businessmen can apply for financial assistance in startup and small business and to establish it adequately.



Line of Credit :-

Line of credit is one of the most popular working capital loans, also known as credit instruments. It is given by banks, financial institutions and NBFCs to individuals, businesses, enterprises and the government. A credit line is a loan credit extended to borrowers, in which they can access an amount smaller than the total sanctioned line as per their requirements. It is not mandatory to take the loan amount in full, as is the case with other loans. Enterprises and consumers have to pay only the borrowed amount. It is like a permanent loan arrangement that a business owner has with his bank or lending company.


Letter of Credit :-

A letter of credit is a payment instrument used primarily in international business, in which a bank provides monetary guarantees to enterprises that deal in the import and export of goods. That is, a bank provides a letter of credit to the seller, which guarantees that the payment to the buyer will be received by the seller on time. It is used for both import and export purpose. Enterprises doing business overseas have to deal with unknown suppliers, and they need assurance of payment before making any transactions. Therefore letters of credit are important to provide payment assurance to suppliers or exporters. While it requires you to pledge inventory and capital assets with the lender,


Professional Loan :-

Professional loans are primarily based on the personal credit history of self-employed professionals such as doctors, chartered accountants and lawyers. It can be different for every bank, how much loan they can give to that person, depending on the relationship that person has with the bank. It usually grows on the basis of personal coordination, and in many instances banks or financial institutions provide loans to them by taking collateral for non-agricultural land, national savings certificates, government bonds, bank term deposits and assignments of life insurance policies, etc. does. However, this collateral is taken on giving them a large loan amount of around Rs 15 to 20 lakhs.  


   

Shree Shakti Package for Women Employee :-

Such women entrepreneurs who have up to 50% ownership rights in a small business, this scheme is only for them. For this, an entrepreneurship development program is organized by the state agency in which women enterprises are asked to participate. In this, loans are provided to women enterprises. This is a scheme in which a rebate of 0.05% in the interest rate is provided to women enterprises for taking loans above Rs 2 lakh.



How to register for loan schemes

how to apply?

You don't have to break much sweat to get government loans for small scale businesses. Since most government loans are disbursed through banks and financial institutions, you can approach them directly to avail the loan. You can visit the nearest branch of the bank or financial institution who will walk you through the loan application process.


Some lenders will also allow you to apply for a business loan online on their respective websites. You can visit their website, fill the existing application form, upload relevant documents and submit. Once you complete the process and the verification is done by the bank, the loan amount will be directly credited into the bank account provided by you during the application process.


Step 1: Visit the official online portal of the bank linked to the scheme

Step 2: Register on the portal and log-in through One-Time Password (OTP) verification

Step 3: Check in by agreeing to the terms and conditions of the government loan scheme

Step 4: Enter your financial and other required details

Step 5: Fill the form and upload the required documents and continue with the process




Eligibility for Government Business Loan

To be eligible for this scheme, the applicant must have all the information and documents given below:


  • age of the applicant

  • loan amount

  • type of business

  • credit score

  • annual business turnover

  • original investment


Government loans are given to traders, start-up industries, partnership firms, SMEs, MSMEs, private limited companies, large enterprises, etc. The minimum age to apply for Government Business Loan is 18 years. The applicant should have a minimum business experience of 2 years for the loan. A minimum credit score above 650 is required for loan approval. To avail any government loan from banks 


some basic eligibility criteria

Apart from the specific eligibility criteria for the schemes, banks generally provide loans based on the following criteria which need to be fulfilled whether it is mentioned or not. These can vary but the most common are mentioned below. Let's have a look at them:

type of business

All micro enterprises engaged in trading, manufacturing and service sector including professionals like architects, doctors, CAs etc.

Residential Status of Applicant/Beneficiary

Resident of India

Age Range

Generally above 18 years.

Between 25 years to 66 years

business status

new or existing enterprises





Documents Required for Government Business Loan

The documents required for these government schemes may differ from one scheme to another. However, we have listed below the documents required for business loans:


  • passport site photo

  • business plan

  • Identity, Age, Address and Income Certificate

  • GST Identification Number

  • Information about income tax paid in the last 3 to 5 years

  • Bank statement of last 6 months

  • business address proof

  • ITR of last 2 years

  • Loan details of your choice

  • List of Company Directors or Partners of the Company/Partnership Firm

  • KYC: All the documents used for this have to be given by the applicant




Conclusion

In this way, these different types of loans are provided by the government, banks and various financial institutions for all small, medium and large businesses as well as startup enterprises. This helps people financially in doing their business. And they can also run their own livelihood through the medium of their business. If you also want to start your own business and need finance, then you can also avail a business loan from various business loans. and can take advantage.




Related frequently asked questions

Question: How to register for the loan scheme launched by the Government of India?

Answer: The following steps can be followed to apply for the loan scheme:

1. Register on the portal

2. Complete the authentication process for login

3. Agree to the terms and conditions

4. Enter other required information in the portal

5. Upload the required documents.


Question: What is the difference between government subsidy and government loan?

Answer: Subsidy is a type of assistance given to reduce the financial burden on the borrower. This can be in the form of providing funds or reduction in interest rates etc. This also includes government loans. However, a government loan is an amount sanctioned by the government as a loan, which is repaid by the borrower as per the terms of the loan.


Q: What are the minimum and maximum loan available under the schemes?

Answer: There is no minimum limit. However, depending on various other factors, the maximum limit is determined as per the respective schemes.


Question: What are the points considered by the bank for sanctioning the loan?

Answer:

  • age of the borrower

  • capital invested in the project

  • project is new or existing

  • kind of business

  • Estimated Annual Turnover 

  • individual credit score

  • Amount of loan sought and cost of the project.


Question: How many types of business loan are there?

Answer: There are two types of business loans, secured and unsecured loans.


Question: Which bank gives loan for business?

Answer: Apart from Pradhan Mantri Mudra Yojana, there are many other schemes, in which you can take loan from small amount to big loan. At this time, according to the schemes of the Central and State Government, you can take a loan of Rs 50,000 to Rs 10 lakh for your business.


Question: How to get money for doing business?

Answer: From where will you get the money to grow the business? Know 5 ways


  • business loan from bank for business

  • Business Loan from Non Banking Financial Company (NBFC)

  • Raising money through crowdfunding

  • Funding from government schemes

  • Getting money from angel investor is to increase business

  • Business loan is available in 3 days from ZipLoan to increase business


Question: Which is the loan without interest?

Answer: A scheme is being run by the Central Government called Pradhan Mantri Swanidhi Yojana, under which loans are made available to street vendors without interest. So that they can start their work afresh and start their own business.


Question: How to get loan to start a new business?

Answer: Pradhan Mantri Mudra Loan Scheme 2022

Through this scheme, the Government of India provides new business loan to every micro businessman considering the capital of his company. The interest of this micro and small business scheme is much less than that of Anna business loan. Loans from 50,000 to 5,00,000 are available. 50,000 loan can be availed.


Question: What happens if the business loan is not repaid?

Answer: Your credit score will be affected


All banks and NBFCs are expected to report non-payment to credit bureaus like CIBIL and Equifax. Once reported, this will severely lower your CIBIL score and make it difficult for you to get any type of credit/loan in the future.


Question: Can I get loan on Aadhaar card?

Answer: If you want to take loan through your Aadhaar card then you can take loan online from your mobile sitting at home. For this, you have to download an application in your smart phone, through that you can get loan from 1000 to 10000. If you go to the bank to take a loan, then you will have to take a loan of up to 50 thousand.


Question: How much loan can be availed on Aadhaar card?

Answer: You can get loan up to Rs.1 lakh very easily from Aadhaar card, that too sitting at home. However, for this you should also be able to repay the loan, if you are not able to repay the loan then it will be very difficult for you to get the loan. If you are not able to repay the loan then do not apply for the loan.







Question: How to take loan for business?

Answer: Loans are given in three phases under Pradhan Mantri Mudra Yojana (PMMY). The government has divided it into Shishu loan, Kishore loan and Tarun loan scheme. Shishu Loan Scheme- Under this scheme, a loan of up to Rs 50,000 can be taken to open a shop etc. Kishore Loan Scheme- In this scheme, the loan amount has been fixed from Rs 50,000 to Rs 5 lakh.


Question: What is the minimum loan amount available under government business loan schemes?

Answer: The applicant can avail the loan amount up to Rs.50,000.


Q: How many government loan schemes are there for small businesses?

Answer: There are more than ten government business plans. Some of them are Mudra Yojana, MSME Loan under 59 minutes, Credit Linked Capital Subsidy Scheme, National Small Industries Corporation Subsidy, Stand Up India Scheme, Coir Industry Scheme, Credit Guarantee Fund Scheme etc.


Q: How can I get a Government Small Business Loan?

Answer: You can get government small business loan from the banks associated with it by visiting the official website of the schemes launched by the government.


Question: How do I get a loan to start a business?

Answer:  If you need Rs.10 lakh to start a business. If you need a loan amount of Rs.50,000, then you can apply for Mudra Loan Scheme. Any government scheme offering business loans for start-ups will offer a competitive interest rate with easy repayment options. If you have Rs. You can directly approach a bank or NBFC to avail a business loan. The interest rates offered by NBFCs are relatively higher as compared to public or private limited banks.


Question: What is MSME?

Answer: MSME is a micro, small and medium scale ministry, classified on the basis of their annual turnover and investment made in business enterprises. Ministry of Micro, Small and Medium Enterprises (MSME) are basically small scale businesses which are classified on the basis of their investment and turnover. MSME is an enterprise in which minimum equipment in plant and machinery is Rs.1 crore. and a maximum of Rs.20 crores. consists of


Q: How to contact the personnel behind the plans?

Answer: The person behind the schemes can be browsed through their official websites and their 'Contact Us' page.


Question: Which business loan is best for the business?

Answer: : It is difficult to say which is the best loan for business. By the way, it can be best to take a loan given by the government for any small business.


Question: How much interest do banks pay on business loans?

Answer: Different banks set different interest rates for business loans. In whatever bank you will apply for business loan, you will have to pay according to the interest rate fixed there.


Question: How many types of loans are given in India?

Answer: There are 20 different types of loans are provided in India, which are for different purposes.

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