The ultimate guide to know about government business loan scheme

Presently, the number of existing SMEs in India is approximately 50 million. The SME sector has developed to a great extent by contributing 40% when it comes to exports. Along with that, they have also provided with millions of occupation.

SME sector in India has the potential to grow in the upcoming years. They have a great entrepreneurial spirit, knowledge of advanced technology as well as job creation. Considering the importance of these businesses, multiple  government business schemes are now put in place to assist SMEs grow sustainably and provide them access to easy financing.

Common challenges faced by Indian SMEs

• Lacking advanced technology: Even though the technology is advancing with every passing year, SMEs are India are well behind the global parity as far as the utilisation of  technology is concerned. Despite digitisation, Indian SMEs do not have subsequent infrastructure to back them up on this field.

• Marketing platform and restricted access: SMEs with best business ideas in India are facing a hard time when it comes to marketing linkages. The average Indian consumer is not yet , marketing for SMEs is bound to be a challenging aspect. They are continuously exposed to budget shortage, which is a massive issue while promoting services or products. Thus, their development is compromised.

• Regulatory practices act as a burden: Regulatory practices, such as development licences, insurance, certifications/securities, tax assessment, etc. will continue being compelling variables when it comes to development of SMEs.

• No scope for required credit: Lack of credit facilities and capital are holding back SMEs from development. The complicated securities laid by financial institutions, delaying payment and the alarming rate of interest would be a few significant consequences for SMEs in the near future. This is the reason why Government Business Loan Scheme was introduced.

Various schemes brought by the Government

Business loans can help you successfully implement a project. Some of the schemes are -

• MSME scheme: This scheme was introduced as a digital platform where loans of up to Rs. 1 Crore can be availed in less than 60 minutes. This scheme was launched to provide financial support to the Small, Medium and Micro Business throughout India.

• Credit fund scheme: This Government loan scheme was established to provide a comprehensive set of benefits to the small enterprises. With the help of this scheme, such companies can apply for collateral-free loans. The loan amount could be extended to Rs. 10 Lakh. However, a higher amount could be sanctioned as well, under specific circumstances.

• Mudra loan: Among various Government business loan schemes in India, this plan was introduced to help non-farm, non-corporate small enterprises, by providing them financial assistance. This scheme offers loans up to Rs. 10 Lakh and can be easily availed from any financial institutions affiliated or recognised by the RBI. Applicants also have the opportunity to apply for the scheme online.

• Credit linked subsidy: This Government loan scheme allows 15% capital subsidy when it comes to your business. However, the maximum amount could be Rs. 15 Lakh. To avail this scheme, you must apply as a partnership firm, proprietorship business, or a private and public ltd company.

• Small industries subsidy: The Government has introduced this scheme to help small businesses grow. It’s highly beneficial when it comes to raw material assistance and marketing assistance. For Small Scale Industries, whose projects do not require more than Rs. 25 Lakh, this scheme provides financial help for their building and land development.

Apart from these schemes, small enterprises with the best business ideas in India can also apply for a business loan in order to prosper in the future since loans can keep your business financially healthy.

If you are a business owner, you can easily refer to these government schemes to push your SME forward into the growth phase. However, these schemes come with long turnaround times, not the case if you avail the loan from top lending institutions. Analyse your financial requirements and avail the finances wisely.