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Tata Capital > Blog > Loan for Business > All About Government Business Loan Schemes

Loan for Business

All About Government Business Loan Schemes

All About Government Business Loan Schemes

Everyone should be able to live their dreams regardless of their financial situation. Loans enable you to do exactly that. Although most financial institutions provide different types of loans, you can also opt for government business loan schemes.

Government caters to the financing needs of a diverse range of borrowers with its government business loan schemes. The purpose of govt loan schemes is to bring financial inclusivity by making credit available to all.

Here are some government business loan schemes which can help you fund your expenses.

1. Pradhan Mantri MUDRA Scheme

Under this central government scheme, micro, small and medium enterprises can get loans up to Rs. 10 Lakhs. PMMY does not require any security or collateral. It has no minimum loan amount requirement. So, you can take the loan as per your expenses. From manufacturers to vendors, shopkeepers to farmers, all can avail of this scheme. You can use the loan to set up manufacturing units and shops and purchase machinery and transport vehicles. 

You can benefit from PMMY whether you have a business, or you want to set up your business. It has three sub-schemes based on the stage of your business:

  • Shishu: It’s ideal for setting up your business. You can get a loan up to Rs. 50,000 under this scheme.
  • Kishore: If you have an established business and need additional funds, you can get a loan up to Rs 5. lakhs under this PMMY sub-scheme.
  • Tarun: It’s ideal for mature businesses with a higher fund requirement. You can avail of a loan up to Rs. 10 lakhs.

Almost all major financial institutions provide loans under this business loan government scheme. You can apply for PMMY online.

2. Udyogini scheme

Women have long been disadvantaged, especially when it comes to starting a business. Besides, women in the rural part of the country are still on the last step of the economic ladder. This central government scheme empowers women in rural areas of the country by financially supporting them. 

Women in the age group of 25 years to 65 years and having a family income of less than Rs. 1.5 lakhs per annum are eligible to take an interest-free loan up to Rs. 3 lakhs. There is no income limit for widows and differently abled women. The government provides up to 30% subsidy on loans to make repayment affordable. 

Udyogini loan scheme by government takes the spirit of female entrepreneurship to the countryside. The scheme enables homemakers to establish micro-business such as bakeries, pottery, and flour mills. A total of 88 small scale industries are eligible for Udyogini benefits.

3. PM Svanidhi scheme

Street vendors power the informal economy of the country. Being the informal sector, private lenders do not provide them with loans. PM Svanidhi Scheme, short for PM Street Vendor’s AtmaNirbhar Nidhi Scheme, was introduced on 1st June 2020 to make street vendors self-reliant during the lockdown period. This govt business loan scheme supports the working capital needs of street vendors operating in urban, semi-urban and rural areas.

Under this collateral-free working capital loan scheme by government, vendors initially get Rs. 10,000 on credit. On timely repayment, vendors receive an interest subsidy of 7% per annum and qualify for a larger loan portion in the future. The government also provides cashback up to Rs. 1,200 per annum to encourage digital transactions.

Only street vendors active on and before 24th March 2020 are eligible for this scheme. Also, they must have a valid Vending Certificate provided by Urban Local Bodies. You can register for this scheme using the mobile app or by visiting this online portal.

4. Skill Loan Scheme

If you are a student, this government scheme is for you. The skill loan scheme provides institutional credit to individuals for skill development courses aligned to NSQF. To apply for this scheme, an individual must secure admission in courses offered by Polytechnics, Industrial Training Institutes (it is), or schools recognized by Central or State Education Boards. Students belonging to a college affiliated with a recognized university are also eligible.

Students admitted to courses run by training partners affiliated with National Skill Development Corporation (NSDC) / Sector Skill Councils, State Skill Mission, and State Skill Corporation can also apply.

Under this central government scheme, beneficiaries can avail of loans worth Rs. 50,000 to Rs. 1,50,000. The loan covers the course fee, examination fee, study material, and other academic expenses. Like all the other government personal loan schemes on this list, lenders cannot charge collateral from beneficiaries. The repayment period depends on the loan amount:

  • for loans up to Rs. 50,000, the repayment period is 3 years.
  • for an amount between Rs. 50,000 – Rs 1,00,000, the repayment period is 5 years.
  • for loans above Rs. 1 Lakh, the repayment period is 7 years.

To apply for this scheme by government, you can visit the government portal.

Final Words

Government schemes make credit available to all. These schemes power economic development and nation-building. Avail of govt personal loan scheme and fulfil your distinct needs.

If you are looking for instant business loans, apply for Tata Capital Business Loan.

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