Small and medium enterprises (SME) are the lifeblood of the Indian economy, with more than 40 million SMEs presently involved in fields like manufacturing, services, IT, food processing, etc. One of the biggest challenges facing a small business is that of growth. As opposed to the Big Players, SMEs don’t possess the capital required to expand. This is why so many of them seek MSME and business loans.

Recognising the sector’s importance to our economy, the government has launched various business loan schemes to boost small and medium enterprises. If you’re looking for external financing for your business, here are some of the top SME loan schemes you can choose from.

MSME Loan in 59 Minutes

Launched by the Indian government, this MSME loan scheme offers a working capital loan of up to Rs. 1 crore in just 59 minutes! The interest rate starts at 8%, and you can choose from a number of lenders. For women entrepreneurs, a reservation of 3% is available; a move that aims to encourage women starting up. If your business is registered for GST, a rebate of 2%, up to Rs. 1 crore, is also available. The business loan application process is simple, requiring minimal documentation, and can be completed online.

MUDRA Business Loan

The Micro Units Development and Refinance Agency (MUDRA) has a small business loan scheme that supports small businesses with low-cost credit. MUDRA loans can be secured through public and private banks, NBFCs, co-operative societies, scheduled commercial banks, etc. Any MSME operating in the manufacturing, trading, or services sector is eligible for this SME loan.

Additional Read:- Top Things to Know About an SME Loan Agreement

To further facilitate quick funding for SMEs, the government has also introduced the MUDRA Card, which offers a working capital loan as a cash credit arrangement. This card is issued as a debit card against the MUDRA loan account. You can use this card to withdraw funds from your MUDRA loan account, make POS purchases, and even withdraw cash from ATMs.

Credit Guarantee Scheme for Micro and Small Enterprises

The CGTMSE has been instituted to facilitate collateral-free MSME loans to both new and established businesses. It provides working capital loans and term loans of up to Rs. 10 lakhs without requiring any collateral. Under this SME loan scheme, you can avail a guarantee cover up to 75% of the amount sanctioned for the credit facility. For SMEs owned and operated by women and those in the North-Eastern region, the cover goes up to 80%.

Stand-Up India Scheme

This SME loan scheme is meant specifically for Scheduled Caste (SC)/Scheduled Tribe (ST)/women entrepreneurs engaged in the manufacturing, trading, or services sector. The MSME loan provided is composite in nature, i.e., it includes both working capital and a term loan.

Additional Read:- Difference Between SME Loans and Business Loans

Applying for MSME Loans

While government business loan schemes for MSMEs cover a variety of needs, they often come with prerequisites and caps. To get a fast and collateral-free business loan, come to Tata Capital. With competitive MSME loan interest rates and flexible tenures, we give your small business just the financial support it needs. Use our business loan EMI calculator to calculate monthly payments with a break-up of the interest and principal amount. Contact us today!

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