The Women Development Corporation’s Udyogini Scheme provides subsidised loans to budding women entrepreneurs from rural and impoverished areas.

Udyogini, “Women Entrepreneur,” is a recognised non-profit organisation dedicated to women’s economic empowerment. Udyogini Scheme spreads over 200 villages throughout five states: Rajasthan, Chhattisgarh, Jharkhand, Madhya Pradesh, and Uttarakhand.

The program encourages women’s entrepreneurship, financial empowerment, and self-sufficiency by providing financial support.

The initiative intends to promote more micro-firms to emerge and contribute to the country’s overall growth.

The Udyogini Scheme’s primary goals are as follows:

• Encouragement of women to obtain loans from banks and other financial organisations to engage in income-generating activities
• Reduce the cost of financial assistance for women from the SC/ST or special category.
• To make interest-free loans to qualified female beneficiaries without discrimination or bias.
• Ensure the skill development of women beneficiaries through EDP Training.
• Prevent women from contacting private money lenders or other financial organisations for high-interest loans.

What is the purpose of the Udyogini Scheme?

Karnataka State Women’s Development Corporation (KSWDC), Punjab and Sind Bank, Saraswat Bank and a few more private and public sector banks offer the Udyogini Scheme:

• Providing loans with no interest to qualified women entrepreneurs in agribusiness, retail, and small business.
• Offering three days of EDP training for the beneficiary ladies before disbursal of the loan.

Eligibility criteria for loans under the Udyogini Scheme

Loans under the Udyogini scheme are available to ambitious female entrepreneurs that meet the following criteria:

• Age range: 25 to 65 years
• Family income: 1.5 lakhs

The Udyogini scheme excludes women who fall into special categories such as being disabled, widowed, or poor from fulfilling the upper-income requirement.

Documents needed for Udyogini Scheme

1. Aadhar or BPL card
2. Income and Birth Certificates
3. Bank Passbook’s photocopy- with details like account number, name of the account holder, name of the bank, branch, IFSC and MICR codes

Udyogini Scheme – July 2022

Let’s have a look at the Udyogini scheme interest rates for July 2022:

Karnataka State Women’s Development Corporation (KSWDC), Punjab and Sind Bank, Saraswat Bank, several other private and public sector banks, and top NBFCs are the primary providers of the Udyogini Scheme. This programme focuses on planning and implementing skill development training programmes for women and providing financial help.

How to use the Udyogini Yojana

To apply for a business loan under the Udyogini Yojana Scheme, applicants should go to their nearest bank with all the necessary documents and fill out an application form before proceeding with the bank formalities. Applicants can also apply for loans online by visiting banks’ official websites participating in the Udyogini Yojana Scheme.

List of enterprises participating in the Udyogini Yojana

Loans under the Udyogini Yojana are made available at competitive interest rates by various financial institutions, including cooperative banks, Regional Rural Banks (RRBs), and commercial banks. Only female entrepreneurs are eligible for corporation subsidies to manage their businesses. The application form for the Udyogini Yojana Scheme is available on the bank’s official website.

The following is a comprehensive list of the 88 company types available through the Udyogini Scheme:

1. Agarbatti Manufacturing
2. Audio & Video Cassette Parlour
3. Bakeries
4. Banana Tender Leaf
5. Bangles
6. Beauty Parlour
7. Bedsheet & Towel Manufacturing
8. Book Binding And Note Books Manufacturing
9. Bottle Cap Manufacturing
10. Cane & Bamboo Articles Manufacturing
11. Canteen & Catering
12. Chalk Crayon Manufacturing
13. Chappal Manufacturing
14. Cleaning Powder
15. Clinic
16. Coffee & Tea Powder
17. Condiments
18. Corrugated Box Manufacturing
19. Cotton Thread Manufacturing
20. Crèche
21. Cut Piece Cloth Trade
22. Dairy & Poultry Related Trade
23. Diagnostic Lab
24. Dry Cleaning
25. Dry Fish Trade
26. Eat-Outs
27. Edible Oil Shop
28. Energy Food
29. Fair-Price Shop
30. Fax Paper Manufacturing
31. Fish Stalls
32. Flour Mills
33. Flower Shops
34. Footwear Manufacturing
35. Fuel Wood
36. Gift Articles
37. Gym Centre
38. Handicrafts Manufacturing
39. Household Articles Retail
40. Ice Cream Parlour
41. Ink Manufacture
42. Jam, Jelly & Pickles Manufacturing
43. Job Typing & Photocopying Service
44. Jute Carpet Manufacturing
45. Leaf Cups Manufacturing
46. Library
47. Mat Weaving
48. Match Box Manufacturing
49. Milk Booth
50. Mutton Stalls
51. Newspaper, Weekly & Monthly Magazine Vending
52. Nylon Button Manufacturing
53. Old Paper Marts
54. Pan & Cigarette Shop
55. Pan Leaf or Chewing Leaf Shop
56. Papad Making
57. Phenyl & Naphthalene Ball Manufacturing
58. Photo Studio
59. Plastic Articles Trade
60. Pottery
61. Printing & Dyeing of Clothes
62. Quilt & Bed Manufacturing
63. Radio & TV Servicing Stations
64. Ragi Powder Shop
65. Readymade Garments Trade
66. Real Estate Agency
67. Ribbon Making​​
68. Sari & Embroidery Works
69. Security Service
70. Shikakai Powder Manufacturing
71. Shops & Establishments
72. Silk Thread Manufacturing
73. Silk Weaving
74. Silk Worm Rearing
75. Soap Oil, Soap Powder & Detergent Cake Manufacturing
76. Stationery Shop
77. STD Booths
78. Sweets Shop
79. Tailoring
80. Tea Stall
81. Tender Coconut
82. Travel Agency
83. Tutorials
84. Typing Institute
85. Vegetable & Fruit Vending
86. Vermicelli Manufacturing
87. Wet Grinding
88. Woollen Garments Manufacturing

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The Indian government introduced the Mahila Samridhi Yojana (MSY) as a programme to give women working in the unorganised sector financial and social security. The government offers women entrepreneurs from socially and economically disadvantaged backgrounds microfinance.

Features and benefits of Mahila Samridhi Yojana

• It encourages females from diverse ethnic backgrounds, rural areas, and lower socioeconomic backgrounds to adopt an entrepreneurial mindset.
• The initiative helps women from oppressed groups to pursue their dreams despite prevalent social taboos in India, especially those who belong to scheduled castes or scheduled tribes.
• It helps women who are struggling financially start their businesses or careers due to a lack of resources.

This scheme helps women to grow in the following ways:

• Better financial conditions for women in rural areas.
• Women under the “Below Poverty Line” (BPL) receive additional help.
• Increases employment opportunities for marginalised communities.
• Helps women build confidence.

Eligibility Criteria Mahila Samridhi Yojana

The eligibility criteria for the Mahila loan are as follows:

• Only available to Self-help groups (SHGs) and women entrepreneurs from underprivileged areas.
• The minimum age limit for women is 18 years old.
• Available for women under the BPL category.
• Annual income should be less than Rs. 3 lakh.
• No prior criminal history.

Pattern of Finance

According to the plan, up to 95% of the loan amount will go to the applicant, with the remaining 5% coming from State Channelizing Agencies (SCAs) or Beneficiary Contribution. After the loan amount has been allocated, the utilisation period will last 4 months.

Bank and NBFCs Interest Rates

The National Backward Classes Finance and Development Corporation (NBCFDC) will impose a 1% interest on the loan amount on SCA, and SCA will charge a 4% interest rate on the beneficiary.

Documents required for Mahila Samridhi Yojana

These documents are necessary when applying for a Mahila loan:

• Identity proof- Voter id, PAN card
• Residence proof- the electricity bill
• SHGs membership card
• Annual Income certificate
• Caste certificate
• Applicant’s bank statement
• Loan form with passport size photo

Other significant information

Self-Help Groups (SHGs): Economically compatible people collaborate to increase income through savings and project participation.

Member Ratio: The maximum number of women who can join an SHG is 20, and to qualify, an SHG must have 75% members from disadvantaged groups and 25% members from other marginalised groups, such as members of Scheduled Caste or those who are physically disabled.

Channel Partners: Channel partners are professionals who help the group with economic activities and the Mahila loan scheme.

Loan Distribution: Beneficiaries receive loans through State Channelizing Agencies (SCAs), Regional Rural Banks (RRBs), and nationalised banks.

Repayment

Borrowers must repay the loan in four quarterly payments, starting from the day it was distributed into their bank account.

Read more on Loans

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An SME loan is specifically designed for small and medium-sized enterprises (SMEs). These loans help businesses expand, invest in new equipment or machinery, or cover day-to-day operating costs.

For example, you are a small business owner that manufactures and sells furniture. You have been in business for a few years, but you would like to expand your operation by opening a new showroom in a different city. To do this, you might need an SME loan.

However, how does a SME business loan aid in a company’s expansion? Let’s explore the factors of MSME(Micro, small, and medium enterprises) loans that support future growth.

Features of SME Loan

In order to ensure that SMEs can continue to flourish, banks and financial institutions offer SME loans with a host of features that make them inviting and affordable.

Some of the key features include:

1. Flexible repayment plans:

SME loans usually come with flexible repayment terms. This makes it easier for SMEs, small and medium-sized enterprises, to repay the loan without putting a strain on their finances.

2. Competitive interest rates: 

Small business loans have low-interest rates, with some starting as low as 7.65% p.a., making them an affordable option for owners to consider.

3. Collateral-free: 

A collateral-free loan is a loan that does not require the business to put up its assets as collateral. 

Many lenders offer collateral-free loans making it easier for businesses to get access to the funding they need.

4. Speed and convenience: 

As a business owner, you must be worried about the time required to approve a loan. Applying for an SME loan is usually quick and convenient, and the turnaround time for loan approval is relatively fast. This helps businesses get the funding they need in a timely manner.

5. Online account access:

SME loans enable business owners to check account balances and manage EMI online with just a few clicks, eliminating the need to keep a stack of paper documents.

6. Easily manageable

SME loans are much smaller in size than traditional business loans, enabling entrepreneurs to successfully manage them with less hassle.

Benefits of SME Loans

1. Puts strategy into action

You can start working on your plans within days instead of waiting for weeks for SME business loan approval.

2. Let’s you control your business assets

One of the benefits is the loan is unsecured, which means that you don’t have to give any collateral if you can’t make the payments. The company merely works together with you to grow your business to new heights!

3. Improves the company’s capital management

It’s important to have a plan in place before you apply for a loan so that you know how you’ll put the bank’s money to use. Small business loans can help you if you want to upgrade your overall cash flow or plan to buy new equipment.

4. Helps you increase credibility in the market

By putting money into the appropriate strategies, MSME/SME loans help you increase your profitability. This builds trust and credibility among the customers. 

Moreover, credit rating agencies will upgrade your company’s credit standing by noticing these changes, facilitating more investment and financing for your business.

SME Loans Fees & Interest Rates

The details regarding loan fees and interest rates are as follows:

• Interest rate is 7.65% p.a and above
• Loan amounts begin at INR 50,000.
• Loan tenure  may be extended for up to 15 years.
• Processing charge is undefined and dependent on the lender

The above specifications may change depending on the lender.

Eligibility Criteria for SME Loans

To be accepted for an MSME loan, you must meet the eligibility requirements established by your lender. The specifications will change from bank to bank, but here are some general requirements:

1. There are two types of businesses to consider when discussing investment: Manufacturing and Services 

The following business size standards apply to the manufacturing sector:

For the Service sector, the size of the business is as follows:

2. A well-established company that has been operating for more than six months.

3. The company should not be on any blacklists or exclusion lists.

4. The businesses’ real estate shouldn’t be on the list of undesirable locations.

5. SME business loans are not applicable for Trusts, NGOs and charitable organisations.

Documents Required for anSME Loan

A few documents are necessary for an MSME/SME loan:

1. Identity proof: Aadhar Card, PAN card, passport and voter id
2. Business Evidence: business registration certificate.
3. Financial statements: profit and loss statements and balance sheets. 
4. Personal financial statements: personal income tax returns, sales TAX return 
5. Security proof: Photocopies of the lease deeds/ title deeds.

3 simple steps to your SME Loans

1. Fill out and submit the application form.
2. Upload documents for verification.
3. Get approval from the lender within a few days.

Smart ways to use SME loans

1. Inventory management

Keeping track of inventory is imperative to running a business. If you do not have enough of an item, it could tarnish your reputation and put your business at risk of losing clients. SME loans help you purchase equipment to manage the business easily.

2. Invest in equipment

A business will rely on machinery, equipment and tools to get it off the ground. Buying these items can be a big challenge for small businesses because they often cost a lot of money – but SME loans are specifically designed to meet this challenge! 

3. Easily manage the monthly budget

A business needs money to pay its staff and carry out day-to-day operational activities. This can increase the monthly budget leaving financial stress to handle for business owners. A small business can easily utilise SME loans and manage cash flow.

4. Finance marketing

Marketing helps businesses reach out to potential customers and convince them to buy their products or services. SME loans help companies market their products or services by financing the costs of marketing campaigns, hiring marketing professionals, and managing market research costs, which is essential for understanding the needs and wants of potential customers.

Calculating an SME Loan EMI

The following formula is used to calculate the EMI for SME Loans.

E = P x I x (1+I)m/(1+I)m-1

Here,

‘E’ – EMI

‘P’ – loan amount

‘I’ – monthly interest rate

‘m’ – loan’s term

Dos and Don’ts for the Online SME Application Form

Do’s

1. Check eligibility and the credit score before applying for an SME loan.
2. Know the documents required, documents will vary depending on the type of loan and the lending institution. 
3. Prepare a thorough business plan and have a clear understanding of your funding requirements.

Don’ts

1. Don’t apply to multiple lenders because doing so will lower your credit score and turn away potential investors.
2. Avoid defaulting on loans, making late payments, and having a history of poor credit.
3. Pick a lender wisely – choose one that does not demand an upfront payment.

Read more:

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In many instances, one may not have easy access to the funds required to start a business. In such instances, a startup business loan is the best option. Startup business loans change by nature and purpose.

You can obtain a startup loan for a new business from a bank or other financial institution to establish a business or expand an existing one. The bank’s interest rate will depend on how much you borrow and how long you have to repay the amount. 

Business loans for startup companies by the Indian government

There are already over 39,000 startup companies in India with access to several private debts and equity capital funding opportunities. However, securing funding might be challenging when the business is in its early stages. Because the MSME sectors in India have limited access to good loans, the Indian government has chosen to launch startup business loan facilities for MSMEs and new businesses.

SIDBI has started funding directly to entrepreneurs and MSMEs instead of through banks. These loans have interest rates of about 300 basis points cheaper than those given by banks. Some of the most vital and well-known schemes the Indian government offers to startups and MSMEs are as follows. 

Cost of Business Loans in India

Bank credit facilitation scheme

NSIC started this scheme to fund Indian MSMEs. NSIC has collaborated with government-run and private banks and helps MSMEs get free credit support from these banks. The duration of credit payback depends on the amount of income generated. It varies between 5 and 7 years and can exceed 11 years in specific circumstances.

Pradhan Mantri Mudra Yojana (PMMY)

The (MUDRA) Micro Units Development and Refinance Agency started this initiative in 2015 to provide loans to various manufacturing sectors, trading, and services industries. The scheme provides business loans for a startup in three categories – Shishu, Kishor, and Tarun, ranging from Rs.50,000 to Rs.10 lakh. The Mudra loan is available to artisans, shopkeepers, vegetable dealers, machine operators, and repair firms.

Credit Guarantee Scheme (CGS)

This startup business loan is available to both new and existing MSMEs engaged in manufacturing or service operations; however, educational institutions, agricultural, retail trade, Self-Help Groups (SHGs), etc., are not eligible. Under this initiative, administered by the CGTMSE, it is possible to borrow up to Rs.2 crore.

Standup India

This initiative, which was started in April 2016 and is administered by SIDBI, provides loans to manufacturing, trading, and service businesses. This scheme offers business startup loans of up to Rs.1 crore. The maximum moratorium time allowed under this plan is 18 months, and repayment can be completed in seven years. Stand Up India is a government initiative aiming to empower SC/ST and women startups in India economically. It also intends to end License Raj and establish Greenfield enterprises.

Scheme for sustainable finance 

Renewable and non-renewable energy sectors and those dealing with green and renewable energy are the focus of this SIDBI-led initiative. The government started this programme to help projects for cleaner production, better use of energy, and sustainable development along the value chain.

Psbloansin59minutes.com

Using this digital platform, you can apply for a business startup loan. A startup business loan value of up to Rs.10 lakh is available under Mudra Loan Scheme, and Rs.5 crore is available under the MSME Loan Scheme, depending on the eligibility criteria and certain other conditions. In addition, personal loans up to Rs.20 lakh, housing loans amounting to Rs.10 crore, & automobile loans up to Rs.1 crore are also available.

Bank loans for startup businesses

India’s leading banks offer startup loans for new business

• Citi Bank loans for businesses
• Business loans from HDFC Bank
• SBI Loans for Local Businesses
• ICICI loans for businesses
• Bank of Baroda commercial loans

From 1st July 2017, bank products and services will be subject to an 18% GST rate.

Things to consider when applying for a startup business loan

Startups looking for a startup business loan should take the following steps

• Create a clear and comprehensive business plan.
• Specify in your business model how you plan to spend the loan amount.
• Summarise the business’s objectives and goals using a chart showing potential returns and growth.
• Provide an accurate estimate of the funds available.

Eligibility criteria for a business startup loan

A set of requirements must be met before a new business can get a startup business loan. Any startup or business seeking to grow must ensure the following

• The applicant looking for a startup business loan must be at least 21 years old and not more than 65 years old.
• A valid driver’s licence or Aadhaar card is required as proof of identification.
• You should have bank statements from the last six months during the loan negotiations.
• A business plan is required for all applicants.

Required documents for a startup business loan

• Identity proof One can use their driver’s licence, passport, PAN card, voter ID card, and even the Aadhaar card to prove their identity.
• Proof of income Last two years’ bank and financial statements are needed.
• Ownership proof Sole Proprietorship Declarations or certified original copies of Memorandum and Articles of Association are required to verify that the business or startup is raising the funding.

How do you get a startup loan for a new business?

Entrepreneurs can apply for a Startup Businesses Loan through several of the following methods

• Go to the lender’s website, fill out the form, and submit the relevant documents.
• Submit the startup business loan application and documentation at the lender’s branch.
• The lender’s customer service department can assist you with the startup business loan application process.

Features of business startup loan

Most financial institutions offer this type of loan online, as a one-minute application loan, or at their locations. Some of the financial institutions even provide the convenient option of doorstep service.

• A startup loan requires minimum documentation.
• The personal credit history of potential entrepreneurs must be verified.
• Typically, banks do not require collateral or security for business startup loans.
• Interest rates that are competitive but completely dependent on the individual’s credit history
• Ease of repayments and also a flexible repayment schedule
• Banks and other financial organisations provide customers with the added convenience of text messaging, live chats, and other services.

The advantages of a startup business loan

Capital is an essential aspect of every enterprise, so getting a startup business loan can be helpful for a new business or developing business. This also helps everyone, especially women who need a loan to start a business.

• Convenience: Most individuals are familiar with their banking institution and go to the branches regularly. This makes it easier to get startup business loans for new businesses and makes it even more convenient and accessible.
• Interest rate: The interest rate on bank loans is typically lower than that of private equity lenders. There are also tax benefits to choosing a suitable bank loan in India, making it an even more attractive and profitable option.
• Multiple loan options: Larger financial institutions have specific loan options for the new and small enterprises. In addition, banks do not require a share in the business, unlike angel investors. Banks and startup business loan schemes are primarily concerned with credit principles and have no relation to startup or business funding exchange.

Read more:

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If you are an owner of an MSME, you can obtain an MSME business loan to expand your business, purchase assets, machinery, or raw materials for your business, or run operations more efficiently. You can use the loan for other purposes such as fulfilling the working capital requirement, paying rent or salaries of employees, cash flow management, managing monthly expenses, investing in fixed or movable assets, or any other financial requirement of the company.

Many financial institutions offer special rates for MSME business loans. Usually, these business loans have low interest rates and flexible tenure. This is to help small business owners cover their financial requirements without having to feel burdened by the loan. However, each bank has a different interest rate and duration. 

Start-up owners, small business owners, household business owners, and women business owners can apply for and get approved for MSME loans. As these loans are unsecured, the business owners have to fulfil some basic eligibility requirements to apply for the loan. This ensures that the financial organisation or lender is at lesser risk in case of non-payment or default.

MSME Categorization

The following companies fall under the MSME category:

Factsheet MSME Registration

According to the Udyam Registration website, the total MSME Registrations for 2021-22 are:

These figures were updated on the 24th of June 2022.

Estimated Number of MSMEs in India in 2021-22

According to the National Sample Survey (NSS), the estimated number of MSMEs in India in 2021-22 is:

Distribution of MSMEs in Rural and Urban Areas

Here is the distribution of MSMEs in rural and urban areas according to the Ministry of MSME website:

Who Qualifies for MSME Loans?

The businesses that are eligible for MSME loans are sole proprietorships, partnerships, manufacturing units, and service-based small businesses. If your business is of the retail trader category, training and/or teaching institutes, agricultural start-up, or self-help groups, you cannot avail of an MSME loan.

In 2020, the Government of India expanded the meaning of MSME to include both manufacturing and service businesses. The eligibility has also been changed from investment only to investment and annual turnover.

You can avail of an MSME loan according to your business category. When the MSME business loan is approved, the money will be deposited in your business bank account. 

MSME Loan Scheme

Most banks and financial institutions offer MSME business loans at interest rates as low as 7.65% per annum. The business loan amount can be as low as INR 50,000, and the tenure can be up to 15 years. However, you need to talk to your bank before you take out a business loan to understand their terms and conditions. Each bank, financial institution, and lender has a different set of interest rates, tenures, minimum loan amount values, and eligibility criteria.

Features of MSME Loans

MSME schemes offer plenty of benefits to MSME business owners. These MSME schemes allow business owners to expand their business in whichever way they wish.

Here are some of the features MSME schemes and MSME loans offer:

1. Interest rates

Depending on the business owner’s eligibility, every financial institution and bank has different interest rates. These interest rates start as low as 7.65% pa. This is incredibly useful for micro, small, and medium business owners.

2. Loan Amount

The business loan has no minimum amount limit across most banks and financial institutions. MSME owners can get loans for as less as INR 50,000. The maximum limit is usually set at INR 1 crore. This amount can exceed in case of special requirements.

3. Tenure

The business loan has a tenure starting from 12 months to 15 years. It may increase if the business requires it.

4. Collateral

Collateral or security is something that is pledged in return for a loan. If the loan is not paid off, the collateral is to be forfeited. For business loans, however, there is no need for collateral as MSME loans are unsecured.

5. Processing Fee

Processing fees for sanctioning MSME loans are very low. They can be anywhere between 0% to 4% of the sanctioned business loan amount.

6. Foreclosure charges

Foreclosure charges or penalty payment is also very low for MSME loans. You have to pay between 0% to 5% of the outstanding principal amount of the business loan.

7. Part-payment charges

Part-payment or prepayment is when you have some amount in hand which is lesser than the outstanding amount. In the case of part payment, you will be charged between 0% to 4% of the outstanding amount of the business loan.

8. Subsidy

There are certain criteria for subsidies. However, only select financial institutions and banks offer this facility.

9. Credit Facilities

Various other credit facilities, such as working capital loans, overdrafts, bill discounting, term loans, letter of credit, etc., are offered under MSME loans.

You will get all these features when you get an MSME loan scheme in 2022 and apply online. With an MSME loan scheme 2022, you can apply online to get the set of all features your financial institution gives you.

MSME loans can be both secured and unsecured. The choice of type of business loan is made by the business owner applicant according to their financial capacity and the terms offered by the bank or financial institution.

Eligibility Criteria for MSME Loans

To avail of MSME loans, a micro, small, or medium business owner must fulfil the following criteria:

1. Their credit score must be 750 or above.
2. The business vintage must be atleast one year. Business vintage means the age of the business or the time since the business has been operational.
3. The business turnover must be at least INR 12 lakhs. This value differs for different financial institutions.
4. The business owner must be financially stable and must have a good history of repayment.
5. The business owner should not have previous defaults with other financial institutions.

Who Can Apply for MSME Loans?

The following entities can apply for MSME loans:

• Individuals
• MSME business owners
• Women entrepreneurs
• Self-employed individuals
• People under the SC/ST/OBC category
• Private or Public Limited Companies
• Sole Proprietorships
• Partnerships
• Limited Liability Partnerships (LLPs) in the trading, service, and manufacturing industries

Documents Required for Obtaining MSME Loans

1. Application form with all details
2. Passport-size photograph of the applicant
3. KYC documents of applicant and co-applicants including Aadhar Card, Passport, Driving License, PAN Card, Voter’s ID, and telephone or electricity bills
4. Business address
5. Business vintage proof such as ITR, Trade License, Registration, Sales Tax Certificate, etc.
6. Bank statements from the previous six months along with bank details
7. Business Establishment Certificate or Incorporation Letter
8. Proof of SC/ST category or OBC category, if applicable
9. Other documents required by the bank or financial institution 

MSME Business Loan Schemes Provided by the Government of India

MSME business loan scheme was initiated by the Government of India’s Ministry of MSME to give a boost to the micro, small, and medium enterprises (MSMEs) in India. Several banks and financial institutions are a part of this business loan scheme and offer business loans at competitive rates. The various popular MSME business loans offered by banks and financial institutions are:

• CGTMSE – Credit Guarantee Fund Trust for Micro and Small Enterprises
• CLCSS – Credit Linked Capital Subsidy Scheme
• Credit Guarantee Scheme
• MUDRA Yojana offered by PMMY
• NSIC – National Small Industries Corporation Subsidy
• PMEGP – Prime Minister (Pradhan Mantri) Employment Generation Programme
• PMRY – Pradhan Mantri Rozgar Yojana
• 59 Minute PSB Loan
• Standup India
• Startup India

Obtaining MSME Business Loans Without Collateral

MSME business loans may be secured or unsecured business loans. However, most banks and financial institutions offer unsecured loans that do not require collateral. The business owner does not need to submit any collateral or security to the bank.

You can avail a collateral-free MSME business loan for amounts of up to INR 1 crore. These business loans are usually issued on a short-term basis and have a tenure starting from 12 months to 5 years. You can get an unsecured, collateral-free business loan based on your credit score, repayment capacity, and financial standing.

MSME Business Loan Interest Rates

Though MSME business loans offer competitive interest rates, you can avail of lower interest rates on your business loan. Many public and private banks, Non-Banking Financial Companies (NBFCs), Small Finance Banks (SFBs), Regional Rural Banks (RRBs), etc., offer MSME business loans. However, the interest rates of each of these lenders are different. The loan amount, tenure, the annual turnover of the business, the applicant’s profile and credit score, the company’s income, financial stability, repayment history, and creditworthiness all decide the final interest rate on an MSME business loan.

Conclusion

MSME business loans are versatile business loans that can be used to fill the financial gap in micro, small, and medium enterprises. As they come with low interest rates and flexible tenures, they are accessible to MSME business owners.

Read More:

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The PMEGP full form is nothing but Prime Minister’s Employment Generation Programme (PMEGP) which is a credit-linked subsidy program operated by the Ministry of Medium, Small, and Micro Enterprises, Government of India. KVIC (Khadi & Village Industries Commission) is responsible for the implementation of the PMEGP loan scheme which is the nodal agency at a national level. However, the scheme is implemented at the state level through the District Industries center, KVIB, and KVIC.

PMEGP Loan Details

Below you can see various aspects of the PMEGP scheme of loan right from interest rate and tenure to percentage share of each party in the allotment of funds. 

PMEGP Loan Allotment: Check out the breakup of the money that is mentioned under a PMEGP loan. 

1. The bank allows 90% of the project cost (for general applicants) and 95% (for weaker sections of society) once the allotment is approved.

2. From the above-given percentage, 15% to 35% is the subsidy or margin money rendered by the government. The amount of margin money that banks would accept will be proportionate to the actual capital expenditure used by the applicant. The remaining margin money that is proportionate to the amount not used would be given back to the Khadi and Village Industries Commission-KVIC. 

3. The remaining money (i.e., 90%/95% of money allotted less than 15%-35% subsidy) is offered by the bank as a PMEGP loan or term loan. 

Subsidy/Margin Money: The margin money is placed in a separate savings account connected to the loan account and gets locked for three years, after which it is adjusted with the released or PMEGP loan. 

Rate of Interest: The PMEGP loan’s rate of interest would be at a normal rate as applied to the sector of MSE.

Requirements of Working Capital: The PMEGP loan requires that the working capital expenditure should be equal to the limit of cash credit at least once in the three years after the locking of margin money. In addition, it should not be below 75% utilization of the sanctioned limit. 

PMEGP Loan Tenure: The bank might offer a repayment schedule of three years for the borrowers after an initial moratorium (that normally does not go more than six months) to pay back the PMEGP loan. 

Indicative Sectors for Which Business Loan under the Scheme of PMEGP is Provided: The PMEGP loan is provided for organizations in the below-given sectors:

• Hand-made Paper and Fibre
• Agro-based Food Processing
• Service and Textile 
• Polymer and Chemical-based Products
• Forest-based Products
• Mineral-based Products
• Rural Engineering and Bio-Tech

Who can apply under the PMEGP scheme – PMEGP Loan Eligibility?

Any person who belongs to SC, ST OBC, general, and minor sections, and people living in border areas and ex-servicemen are eligible under the PMEGP scheme. Let us check the listings of people who are eligible for the PMEGP scheme. 

• Minimum education qualification should be 8th pass.
• Self Help Groups
• Individuals should be at least 18 years old
• Charitable Trusts
• Production Co-operative Societies
• Institutions registered below the Societies Registration Act, 1860.

How to apply for PMEGP online?

Have a look at the steps given below to apply for PMEGP online for an individual:

Step 1: Visit the PMEGP (KVIC website)  for filling the online form. 

Step 2: You have to follow the guidelines for filling the PMEGP application online and enter all the necessary details according to your information.

Step 3: After providing all the essential details, hit on ‘Save Applicant Data’ to save the provided details.

Step 4: You have to upload all the documents for the final application form submission once you have saved your data.

Step 5: Once you complete and submit the application, the ID number and password of the applicant will be sent to his or her registered mobile number. 

FAQs on PMEGP Loan

1. What is the maximum project cost given under PMEGP?

The maximum project cost allowed under PMEGP is Rs. 10 lakhs for Service Unit and Rs. 25 lakhs for Manufacturing Unit.

2. Which business falls under PMEGP?

The business that comes under PMEGP is as follows:

• Biotechnology
• Textile products
• Forest-based products
• Service
• Food processing units using agriculture-based products as raw materials
• Rural engineering
• Hand-made fibers and paper
• Mineral, polymers, chemical-based products

3. Which bank is ideal for PMEGP Loan?

There are different Co-operative Banks, Private and Public Sector Banks, Small Finance Banks, Regional Rural Banks, Foreign Banks, Non-banking Financial Companies, and Scheduled Urban banks, etc. that offer PMEGP loan. A few of the leading banks that offer PMEGP loans are Bank of Baroda, Allahabad Bank, SBI, PNB, Axis Banks, etc. 

4. Is PMEGP collateral-free?

As per the RBI guidelines, an organization with a project cost up to Rs. 10 lakhs is collateral-free. Moreover, CGTMSE offers collateral security to projects that range from Rs. 5 lakhs to Rs.25 lakhs. 

5. What is the project report cost of PMEGP?

The project cost is nothing but the break-up of the working capital requirements and the capital expenditure for one cycle. It even comprises the cost of renting or leasing a workshop or any work shed but the sum of such lease or rent is not for above three years. The applicant’s own contribution for the general category falls under 10% of the project cost and the applicant’s own contribution for the special category falls under 5% of the project cost. Remember the land cost cannot be involved in the project cost.

6. Which beneficiaries come under the PMEGP scheme?

The entities given below are the beneficiaries listed under the PMEGP scheme:

• Production Co-operative Societies
• Charitable Trusts
• Self-help Groups (SHGs)
• Societies registered under Societies Registration Act, 1860
• Individuals who are above 18 years of age

7. Can an individual staying in an urban area apply for a PMEGP loan?

Yes, of course, the PMEGP loan scheme is accessible to all eligible applicants no matter where they live. However, there are several restrictions on how much subsidy you can receive. For example, the subsidy for the general category is 25% in rural areas and 15% in urban areas. When it comes to weaker sections of society, it is 35% in rural areas and 25% in urban areas. 

8. What is a PMEGP subsidy?

PMEGP subsidy is a credit-linked program offered by the Government of India under which the beneficiary can receive a subsidy of 15% to 35% on the total cost of a project. This subsidy can be mostly availed by MSMEs and individuals all over the country. 

9. Can I receive a PMEGP loan for a fast food restaurant?

Yes, you can get a PMEGP loan scheme to run a fast-food restaurant. If you are eligible, you can also receive a PMEGP subsidy of 90% of the total project cost provided by the Government of India. The PMEGP subsidy can range from 15% to 35% depending upon the loan amount. 

10. Are there any age restrictions for availing a PMEGP loan?

The PMEGP makes the eligibility criteria mandatory that the applicant should be at least 18 years of age. Even though banks might use their own criteria to specify an upper age limit, there are no upper age limits.

11. How long does it take to avail a PMEGP loan?

After the completion of the 16-days training program, the approximate time period to get a PMEGP loan from banks normally need approximately two months in total. 

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For this, the Government of India has introduced different loan schemes for MSMEs to flourish their business as well as the economy. Let us study more about government subsidy loan for business in detail further:

What is meant by a Government subsidy loan for business?

As mentioned above, government subsidy loans for business are nothing but the loan schemes that are sanctioned to the SMEs to expand their business, fund their day-to-day operations, purchase new equipment, and so on. 

The Small and Medium Enterprises fall under the sector of small-scale business and they are liable to contribute about 40% of the total GDP (Gross Domestic Product) of India. This sector acts as a main source of employment in the country but encounters tough competition from privately-funded businesses. This is the only reason why the government is providing subsidy loans to such businesses. 

Let us take a look at the chief 5 government subsidy loan for business and its features.

1. Features of Stand-Up India scheme

• The Stand-Up India Scheme has been specifically designed to fulfill the fund requirements of Scheduled Tribes (ST)/Scheduled Caste (SC) businesswomen for establishing a Greenfield organization.
• This loan scheme is of complex nature. It simply means that the loan also includes a term loan and working capital. 
• To achieve this loan scheme, the organization should be involved in the business of trading, manufacturing, or services.
• An ST, SC, or women entrepreneur has to hold a 51% controlling stake if the company is established as non-individual.

2. Features of PMMY – Pradhan Mantri MUDRA Yojana

• PMMY (Pradhan Mantri MUDRA Yojana loan scheme will generate income opportunities and employment offers in the sectors of agriculture, retail, services, and manufacturing.
• Under Mudra, three kinds of loans can be availed for various business stages named Tarun, Kishor, and Shishu.
• The Mudra Yojana loans will be extended by private sector banks, public sector banks, Regional Rural Banks (RRBs), cooperative banks, Non-Banking Financial Companies (NBFCs), foreign banks, and Micro Finance Institutions (MFIs).
• There is no need to offer security or collateral to get the benefits of the Mudra loan.

3. Features of SMILE – SIDBI Make in India Loan for Enterprises

• SMILE (SIDBI Make in India Loan for Enterprises) offers loan schemes in the form of term loans and soft loans. 
• This scheme has been made to facilitate investment, foster innovation, enhance skill development, protect intellectual property, and form the best infrastructure for MSMEs.
• Rates of interest are competitive with a longer repayment period.
• The importance would be given to the new companies in the manufacturing and services sector along with an emphasis on smaller organizations within the MSME.
• The amount of the loan would be released to your bank account quickly.
• As part of the ‘Make in India’ campaign launched by the government of India, the MSMEs that are involved in 25 selected sectors will get full financial support at competitive interest rates.

4. Features of MSME Loans in 59 Minutes

• You have to submit minimum documents and only upload the scanned versions of the required documents. You can upload them online to get the loan.
• Under the scheme, you can receive a loan between Rs. 1 lakh and Rs. 5 crores. Even though you have the option to avail of this loan from any of the loan lenders, the rate of interest applied might be different and it begins from 8.5%.
• As the name suggests, the loan amount of up to Rs. 5 crores can be availed and it will be dispensed to your bank account in less than 60 minutes. 

5. Features of CLCSS – Credit Linked Capital Subsidy Scheme

CLCSS (Credit Linked Capital Subsidy Scheme) is an innovative credit scheme established by the Ministry of MSMEs. The main objective of this scheme is to support the technology up-gradation of MSMEs specifically in semi-urban and rural areas. Under the CLCSS scheme, businesses can prefer a 15% subsidy on investment in eligible machinery but there is an optimum cap on the subsidy that is limited to Rs. 1 crore.

The benefits that the CLCSS provides to small scale industries are as follows:

• It assists small-scale industries to upgrade the required technologies to the latest ones.
• It renders a 15% subsidy for buying machinery, equipment, and an eligible plant that helps in decreasing the whole burden of small-scale industries.
• It enhances the growth of rural industries which can now produce high-quality items.

Steps to register for the Government subsidy loan for business

If you want to register for the government subsidy loan for business, you can follow the steps given below:

Step 1: You have to visit the official online portal of your desired bank that is related to the scheme.

Step 2: Then you have to register or sign up on the portal and log in with the valid credential and make use of One-Time Password (OTP) authentication.

Step 3: After that, you have to check the terms and conditions of the government loan scheme.

Step 4: Later, you have to enter other required information and financial credentials.

Step 5: At last, you should proceed further with the process by uploading the essential documents and filling in the forms on the portal. 

Eligibility Criteria for availing Government subsidy loan for business

Have a look at eligibility criteria and documents that are needed to receive government subsidy loan for business right below:

The scheme bodies check the eligibility criteria of the loan applicants and ask them to provide all the data they need to evaluate as a part of the loan process. The following are the factors of eligibility criteria: 

• Loan Amount
• Age of the Applicant
• Type of Business
• Annual Turnover
• Credit Score
• Capital Invested

Government loans are rendered to sole proprietorship, start-up businesses, individuals, partnership firms, MSMEs, SMEs, business owners, large enterprises, private limited companies, and so on. When it comes to the minimum age criterion to apply for government business for a loan, it is 18 years. To apply for a loan, the minimum business existence for the existing businesses is 2 years. As per the lenders’ demand, the applicants’ minimum credit score should be more than 650 to process the loan. 

Essential Documents required applying for Government subsidy loan 

According to various loan schemes, the documents that need to be submitted might vary. But, certain common documents might be asked to submit while applying for the loan schemes which are as follows:

• Self-created plan of the business
• Duly filled application form with passport-sized photographs
• Age, Identity, Address, and Income Proofs
• Information of income tax paid in the last 3 to 5 years
• CGST Identification Number
• ITR returns for the last 2 years
• Business address proof
• Bank statements of last 6 months
• List of partners or company directors of the company/partnership firm
• Details of the kind of loan that you want to avail
• Any other document asked by the loan lender

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