The start-up scene in the Indian Economy has seen a lot of activity over the past few years. It is estimated that India is home to about 39000 start-ups and the number is definitely growing by the day. The government has taken cognizance of the fact and has come up with various programs and loans to encourage entrepreneurship. As the start-ups are spread over a number of areas and sectors, the government has also come with many sector-specific and generalized loans.

Through this article of ours, we bring to you a list of many of the government loans that an entrepreneur can think of applying.

MSME Loans in 59 Minutes

This is the latest initiative of the Government of India to make business funding easier for MSMEs.

Eligibility Criteria

  • This initiative is for existing businesses

  • They have to be GST compliant and should have filed IT returns.  Six months of bank statement is also required

  • Director information like basic details, educational qualifications, and other ownership details are also required

Features of the Loan

  • This loan requires an online application through the Loan Portal with details of GST, Income Tax and other details as given above

  • A total of 21 banks are participating in this scheme

  • An amount of Rs 1 lakh to Rs 1 crore is lent through this facility

  • The platform is directly connected to CGTMSE scheme of the Government

  • In principle approval of the loan is provided in 59 minutes and with any one of the linked bank

  • After approval, the amount is disbursed in a period of 7-8 days subject to other conditions

  • An interest of 8% is charged

Additional Reading: MSME Loan

SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)

Features of the Loan

  • Emphasis is on covering new enterprises under the services and the manufacturing sector with increased focus on smaller MSMEs

  • Existing MSMEs would also be eligible for this loan for undertaking modernization, upgrades, etc

  • Minimum Loan Size - ₹ 10 lakh for Equipment Finance & Others: ₹ 25 lakh

  • Term Loans and Soft Loans are available under this scheme. For Term Loans, first charge over all assets created will be held by SIDBI and for soft loans, residual charge of all assets is held by SIDBI.

  • Longer repayment periods of up to 10 years is allowed with moratorium of up to 36 months

SIDBI Working Capital Cash Credit

As long-term loans are essential for running a business, so is the need for working capital for day-to-day running of the business.  Considering this, SIDBI also offers working capital cash credit.

Features of the Loan

  • It is available for those MSMEs who have outstanding Term Loans with SIDBI or those who prefer to avail Term Loans and Working Capital Loans from SIDBI

  • The MSME units have the option to choose from platform of 2-3 banks

  • Takeover of existing Working Capital as well as Term Loans is also allowed in accordance with rules and regulations of the bank

  • This loan requires fulfillment of certain financial parameters like a minimum interest coverage ratio of 1.5 times, a current ratio of 1.25, etc.

Raw Material Assistance Scheme from National Small Industries Corporation

NSIC is a premier organization fostering the growth of MSMEs which implements this scheme.

Features of the Scheme

  • This scheme aims at facilitating MSMEs  by financing of raw material purchase- both indigenous and imported

  • Financial Assistance for procurement of Raw Material is available up to 90 days

  • MSMEs are also helped to avail Economies of Scale through bulk purchase, cash discount, etc.

  • NSIC takes care of all the procedures, documentation & issue of Letter of credit in case of imports.

  • Security in the form of Bank Guarantee from approved/ nationalized banks is a requirement

  • The rate of interest on the facility starts from 9.5% and depends upon the rating of the MSME and days for which the finance facility is required

  • A processing fee of 1% is also charged

Bank Credit Facilitation Scheme by NSIC

Features of the Scheme

  • The scheme aims to meet the credit requirements of MSME units

  • The NSIC has entered into a MoU with various nationalized and private sector banks for the purpose

  • Through syndication with these banks, the NSIC arranges for credit support (fund- or non-fund-based limits) from banks without any cost to MSMEs

  • NSIC assists MSMEs in completion of the documentation for submitting the proposals to the banks and also does the follow up with the banks

  • Interested applicants can send in emails to NSIC for availing bank credit facilitation through NSIC

Stand-Up India

Features of the Loan

  • Stand-Up India is a scheme exclusively on offer to women entrepreneurs and individuals belonging to SC and ST category

  • Manufacturing enterprises, services or trading sectors are all eligible for this loan facility

  • When availed by a  non-individual enterprise, it is mandatory that the company should have 51% of shareholding and control by SC/ST category individuals and/or women entrepreneurs

  • Loans anywhere between 10 Lakhs and Rs. 1 Crore can be availed under this scheme to cover 75% of the project cost.

  • The minimum age criteria for availing this loan is  18 years

  • Stand Up India offers loan tenures of to 7 years with a moratorium of 18 months

  • The rate of interest is lowest applicable rate for the particular credit rating of the individual

Startup India

This is an initiative of the Govt of India intending to build a strong ecosystem for growth of start-ups and entrepreneurs in the country.

Features of the Scheme

Though not a regular loan scheme, it provides start-ups with a lot of support through its initiatives. Some of the benefits provided to recognized start-ups under the Startup India initiative are:

  • Self-Certification: The start-ups can self-certify and comply under 3 Environmental & 6 Labour Laws

  • Tax Exemption: Income Tax exemption for a period of 3 consecutive years and exemption on capital and investments above Fair Market Value is provided to registered startups

  • Easy Winding of Company: It allows for easy winding up of the company in 90 days under Insolvency & Bankruptcy Code, 2016

  • Start-up Patent Application & IPR Protection: Fast track patent application service is provided with up to 80% rebate in filing patents

  • Easier Public Procurement Norms: Start-ups are allowed exemption from requirement of earnest money deposit, prior turnover and experience requirements while applying for government tenders

  • SIDBI Fund of Funds: Funds are made available for investment into start-ups through Alternate Investment Funds

Additional Reading: Government Loans For Small Scale Businesses