Through the survey, when many businessman were asked about, where they faced the most problems while setting up their business. The answer to most of them was that they have to work hard to find investment or funding. For most of the business, money work as fuel. Because if there is no money, no matter how good or innovative idea you have its useless. Because to implement any idea you need enough amount of funds. So any innovative startup does not stop simply because of the lack of funds. The government has introduced many subsidy loan schemes for the business in India. In this article, we will talk about four such government subsidy loan for business in India. Additionally, we will talk about its eligibility criteria, benefits, documents required, and its application process.
Government Mudra Loan Scheme for Business
What is Mudra Loan?
The government of India has launched a scheme known as Pradhan Mantri Mudra Yojana to give affordable loans to all types of businesses except farming. Normally if you go anywhere for the loan they ask you for many files, many documents, you have to pay many file charges, and also ask you for a guarantee. Due to this, the common man who has small business faces many difficulties to get a loan. So our government has introduced PM Yojana in 2015 whose name is PMMY (Pradhan Mantri Mudra Yojana).
Eligibility Criteria for this Government Loan Scheme
The person who has a non-farming business such as, trading, import and export, servicing, manufacturing, shops, and many other businesses from small to big which is not connected to farming can get this loan.
Types of loan
Generally, in this government subsidy loan scheme for business you will get three types of loan.
Shishu Mudra Loan
In the Shishu loan, you can get a loan up to a maximum of 50000 Rs. In which your annual interest will be 12%. That is 1% per month. And the tenure, that is the time given to you to settle the loan would be 3-5 Years. Which is different according to different banks. Whereas, there is one additional benefit for those who have taken the Shishu loan or willing to take the Shishu loan. In that case, you will get benefits of 2% on your annual interest. As a result, you only have to pay 10% interest per annum. And this benefit is only, especially for Shishu loans.
Kishore Mudra Loan
In a Kishore loan, you can get a loan up to 50000Rs to 500000Rs. Also, if you apply for a Kishore loan they will see your cibil score. If your cibil score is good, then you have to pay less interest. And if your cibil score is bad then the bank can also charge you greater interest. Though there is not any condition that if your cibil score is bad you will not get a loan, you can still get a loan but your interest will be more. 3-5 Years is also given in Kishore yojana to pay the loan back. It also depends on the bank.
Tarun Mudra Loan
If you want to open a small or medium scale business or you have already opened it and didn’t have any support. In that case, you can go for a Tarun Mudra loan. The maximum amount you can get from Tarun loan is between 5 lakhs to 10 lakhs. Here also you required a good cibil score to get benefits on interest. Here also the tenure to pay the loan back is 3-5 Years depending on different banks.
How to apply online for the Loan?
- Go to the official website of mudra loan.
- Scroll down and click on CONTINUE FOR PMMY LOAN.
- Next, click on the new user to register yourself.
- Type how much amount of loan you want to get and click on next.
- Fill the form coming on the screen and register yourself.
- Your user name and password will be given to you through the mail. Then login into your account.
- Click on SELECT HANDLING AGENCY.
- Fill the following details.
- Then send a request to HAND HOLDING AGENCY.
- Then click on the FILL APPLICATION FORM AND APPLY and fill all the details. And your registration will be completed. This is how you can apply online for a mudra loan.
NOTE: There is same method to apply online for all three types if mudra loan.
Documents required for this Loan Scheme
- Any identity proof such as Voter ID card, Driving Licence, Pan Card, Aadhaar Card, Passport, Photo ID received by a government authority, etc.
- Proof of residencies such as Voter ID card, Aadhaar Card, Passport, Certificate received by government authority Recent telephonic bill, Electric Bill, Property tax receipt not older than 2 months, Bank Passbook, Domicile certificate, or latest account statement duly attested by bank official
- Your recent photograph (2 copies) not older than 6 months
- Quotation of Machinery or another item to be purchased
- Name of suppliers/details of machinery/price of machinery/ as well as item to be purchased
- Proof of cast such as SC/ST/OBC/Minority etc
- Proof of Identity/Address of the Business Enterprise – Copies of relevant licenses/registration certificate/other document pertaining to the ownership, identity, and address of business unit if any
NOTE- This is the general documents required for all types of loans. For the other documents, you can visit the official website.
Government Stand Up India Loan Scheme for Business
What is the Stand-Up India Loan?
- This government subsidy loan scheme for business is specially launched to provide loans to SC/ST or women entrepreneurs.
- In this scheme, the loan limit is between 10 lakh to 1 crores.
- This scheme is a composite scheme, which means you can use this loan either for a term loan or working capital both.
- If you had already taken a loan from SIDBI, in additionally you can also avail of the refinance facility. In which you have to raise the initial amount of Rs 1000.
Eligibility Criteria for this Government Loan Scheme
- The age requirement to avail this loan is 18 years or more.
- Your turnover should be up to 25 crores.
- You can only apply for this loan if you are a new entrepreneur or if you have started your new business.
- No loan default in financial institutions earlier.
- 51% of the shareholding by SC/ST or women entrepreneurs.
Benefits of this Government Loan Scheme
- Exemption in income tax for the first three years of business.
- 80% of rebate on registration of intellectual property rights.
- Credit guarantee under NCGTC up to 75%, in case you are paying your EMI on time.
- The repayment term provided up to 7 years.
- In this scheme, you can also get a moratorium for up to one year.
How to apply online for the Loan Scheme?
- Go to the official website of stand up India.
- Give information about your business.
- Give background information of proprietor/partner/director.
- Tell about associate concerns, your existing credit facilities, and the proposed facility you want.
- Tell the bank about your future financial perspective such as your future turnover, future profit to the repayment of the loan.
- Attached your documents,
- Read the declaration and confirm your application.
Documents required for this Loan Scheme
- KYC document such as Aadhar Card/PAN Card/Driving license
- Address Proof
- Business activity such as Memorandum of Association and Article of Association
- Rent agreement (Conditional)
- Udhyog aadhar memorandum
- The net worth of promoters
- IT Return
- GST Return
- ZED Return
Government PSB 59 Minutes Loan Scheme for Business
What is the PSB 59 minutes Loan Scheme?
Through this government subsidy loan scheme for the business, you can get a loan of up to 1 crore rupees in just 59 minutes. Moreover, for this loan scheme, you do not have to go to any bank or institution. In short, you can apply for this loan online at home. Unless your application is according to the eligibility criteria you can avail this loan. Now, let’s talk about the eligibility criteria, benefits, and the online application process for this loan.
Eligibility Criteria for this Government Loan Scheme
- Your business should be registered with MSME.
- You should have a GST number.
- IT Compliment
Benefits of this Government Loan Scheme
- You can avail Loan up to Rs 1 lakh to Rs 5 Crore.
- The rate of interest starts from 8% onwards.
- Easy application process and minimum documents required.
- You can apply for the loan in multiple banks.
- As this scheme is interlinked with the government, you can also avail the other government benefits.
- It is safe and secure.
How to apply online for the Loan Scheme?
- Go to the official website of the PSB 59 minutes loan.
- Answer the 4 simple questions on GST.
- Fill your GST details.
- Fill your IT return details.
- Give your bank details.
- Next, fill your personal details.
- Give information about the loan you want to take.
- Selection of the bank.
- Pay the fees, that is GST and Rs 1000.
- Then you will receive the approved message.
Documents required for this Loan Scheme
- GST Number
- GST User ID and Password
- Business current account number
- 6 Month bank statement PDF
- IT Return pf last 3 years in XML format
- Director/Partner/Proprietor details
- KYC Documents
- Educational details
- Business Experience
- Net Worth
- MSME Registration Number
- Purpose of the loan
Government Credit Guarantee Fund Trust for Micro and Small Enterprise (CGTMSE) Loan Scheme for Business
What is CGTMSE?
This government subsidy loan scheme for business, can be avail by all startup or already set up businesses. But for the setup, there is a limit on their first turnover. This scheme has been established by SIDBI, which is a small industry development bank of India in collaboration with the government of India. Both none fund base and fund base facilities are available. Besides its interest rate is 14% for SBCs and 18% for NBFCs.
Eligibility Criteria for this Government Loan Scheme
- A startup that does manufacturing or provide services can only avail this loan.
- But the condition is that they should be new. If they are already set then, their turnover should not be more than Rs 25 Crore.
- Your business should be registered in MSME.
Benefits of this Government Loan Scheme
- The biggest benefit of this government subsidy loan scheme for the business is to get a cover-up of up to Rs 2 Crore. This can also be fund based and nonfund based. That is if you want, you can also sell your company’s stake instead.
- Moreover, under this scheme, you can get the necessary loan without the guarantee of a third party and without any collateral security.
- Through this scheme, the borrower can get 50 – 75% of the guarantee cover. Although, this guarantee cover will be decided from at which stage your startup is.
- Additionally, women are given special exemptions on micro and small enterprises run by women.
How to apply online for the Loan Scheme
- Go to the official website of the CGTMSE.
- Then you have to create a business model of your startup and it should have all the details of your business.
- Keep in mind your business model can fully explain how your startup works.
- Then decide which bank you want to take a loan from.
- Then submit your application with the bank model in the selected bank.
- While doing this you may also be asked for some identity-related KYC documents which are required for authentication.
- After following these steps, the bank will now do further work.
- That is the bank will verify your application again and will send it to the credit guarantee trust fund.
- Now the credit guarantee trust fund will again verify your application and if it is according to the eligibility criteria only then the instruction will release the fund.
Documents required for this Loan Scheme
- Your business model, including all the information about your business.
- KYC Documents
FAQ Regarding Government Loan Scheme for Business
Your loan will be sanctioned and come into your bank account within 30 days. In case, you did not receive your loan money within 30 days you can also complain against that bank as per the government orders. Because the bank can only decline the loan if you have not given the right documents.
All the big banks like SBI, HDFC, ICICI, AXIS banks, and many big banks will provide you this loan. Many small banks have also started providing this loan. Other than this the financial institute like Bajaj Finance etc will also provide you this loan.
The full form of SIDBI is the small industry development bank of India. The principle of SIDBI is to promote, finance, and development of the small and micro-enterprise sector.
It is known as the chart of the company. The purpose of the MOA is to enable shareholders, creditors, and all those who deal with it to know the permitted range of enterprise.
It is the documents which contain rules and regulation for the internal management of the company. It is the structure of the company, in which time to time updation can be done.
Editor’s Note | Government Loan Schemes for Business
COVID-19 has affected every sector in the world. Lets’ talk about the effect of COVID-19 on MSME and loan schemes. As the Indian government has announced the special economic and comprehensive package of Rs 20 lakh. In that package, the government has announced that they will give loans up to Rs 3 lakh crore without any collateral security and with a low rate of interest. And regarding the loan scheme, the supreme court has decided that till the next hearing even if you failed to pay the EMI then also your account can’t be declared as the NPF account. Additionally, there are also chances of extending the moratorium period.
