4 best government loan schemes for startups in India to fuel your business | Mint
Source: Live Mint
Every startup starts with an idea. To bring this idea to reality, a team of efficient leaders and adequate funds are required. Startups can get funds through angel investors, friends, and family, or they can borrow. The government has initiated several schemes to provide loans for startups in India.
Some schemes offering loans for startups in India
1. Pradhan Mantri Mudra Yojana
The Pradhan Mantri Mudra Yojana (PMMY) was launched in 2015 and provides loans up to 10 lakh to non-corporate and non-farm small/micro enterprises. The loans under this scheme are classified as MUDRA (Micro Units Development & Refinance Agency) under PMMY.
Commercial banks, regional rural banks, small finance banks, microfinance institutions, and non-banking financial companies (NBFCs) provide these loans. In the 2023-24 financial year, a total of nearly ₹5,32,358 crore was disbursed as loans under the scheme.
Categories of MUDRA loans
- Shishu: Loans up to ₹50,000
- Kishore: Loans from ₹50,001 to ₹5 lakh
- Tarun: Loans from ₹5,00,001 to ₹10 lakh
For loans up to ₹10 lakh, no collateral is required in the Micro Small Enterprises sector. Women entrepreneurs can avail the loans at discounted interest rates.
2. Stand Up India Scheme
This scheme, launched by the government in 2016, provides loans in the range of ₹10 lakh to a crore. It is specifically designed for SC/ST or women in sectors such as manufacturing, services, and trading. The scheme is only applicable to greenfield projects. Loans under this scheme can be availed by bank branch directly, SIDBI Stand-Up India Portal or Lead District Manager.
The repayment period of the loan is seven years with a moratorium of 18 months.
3. Credit Guarantee Fund Scheme for startups
The Credit Guarantee Scheme for Startups (CGSS) was introduced under the Startup India Action Plan in 2016. The National Credit Guarantee Trustee Company Limited administers the scheme.
4. Prime Minister’s Employment Generation Program
The Prime Minister’s Employment Generation Program (PMEGP), a credit-linked subsidy scheme administered by the Ministry of MSMEs. It aims to promote self-employment opportunities through financial assistance to establish new micro-enterprises and generate employment in rural and urban areas. Eligible entrepreneurs under the scheme can avail business loans up to ₹25 lakhs for manufacturing sector projects and ₹10 lakh for service sector projects.
Who can get this loan?
- Any individual above 18 years of age.
- At least VIII standard passes are required for projects costing above Rs10 lakh in the manufacturing sector and above ₹5 lakh in the business or service sector.
- Only new projects are considered for sanction under PMEGP.
- Existing Units that have already availed the government subsidy under any other scheme of the central or state government cannot apply.
In conclusion, the government has launched many schemes to promote startups in the country. If you are planning to establish a startup or want funds for an existing one, navigate through government schemes to fully utilise them.
(Note: Raising a loan comes with its own risks. So, due caution is advised)
