Top 10 MSME Loan Schemes in India

According to the Ministry of Micro, Small & Medium Enterprises report, there are over 12 million registered MSMEs in India. The MSME sector is undeniably the country's backbone, contributing significantly to its economic progress. Therefore, substantial steps have been taken by the Government of India and other financial institutions to ensure these businesses receive adequate loans for msme for uninterrupted growth. Here’s a quick rundown of 10 such schemes that can benefit this sector.

10 Best MSME Loan Schemes 

1. MSME Business Loans in 59 Minutes

With this scheme, an eligible MSME can avail of a credit amount ranging from ₹1 lakh to ₹5 crores. Using traditional institutional lenders and NBFCs, a business owner can secure this MSME loan at a yearly interest rate of 8.50%.

2. Growth Capital and Equity Assistance Scheme (GEMs)

Operating as a mezzanine debt instrument, this fundraising method can benefit the MSME sector in India. If a company seeks financial means for further expansion or modernization of its operations, this scheme can be an ideal alternative. The loan amount is variable based on requirements but is usually at least ₹25 lakh. Notably, this fiscal boost can support non-asset-creating investments such as research and development or marketing expenses.

3. Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE)

Small businesses often lack collateral to use as security while applying for credit. Consequently, they may be labeled high-risk borrowers, resulting in the rejection of loan applications. To eliminate such obstacles, the Government of India launched this scheme. Under this policy, new and existing businesses can opt for collateral-free credit (up to ₹2 crore on an outstanding basis) from select financial institutions.

4. Credit Linked Capital Subsidy Scheme for Technology Upgradation

Bearing the upfront capital needed to procure an asset can often be burdensome for a small business. However, such assets can be directly linked to the enterprise's sustainable growth capacity. Considering these factors, the MSME Ministry of India launched this scheme. Eligible businesses can receive a 15% capital subsidy to improve their technological infrastructure, with the sanctioned amount limited to ₹15 lakh.

5. Prime Minister Employment Generation Programme (PMEGP)

This scheme by the Indian government has enjoyed notable success as a credit-linked subsidy program. A substantial portion of the project cost can be subsidized by the government under this scheme, with credits ranging from ₹5 lakh to ₹25 lakh available. A primary goal of this program is to generate new job opportunities in the rural sector by transforming entrepreneurs into large-scale employers, focusing on micro-enterprises.

6. Pradhan Mantri MUDRA Yojana (PMMY)

This scheme targets non-farming and non-corporate business entities, allowing enterprises in trading, manufacturing, and the service sector to receive up to ₹10 lakh from various financial intermediaries as an unsecured business loan.

7. National Small Industries Corporation (NSIC) Scheme

This dual credit and marketing support scheme under NSIC provides a crucial edge to small-scale businesses, enabling them to compete effectively in the market. Eligible small businesses can receive a lump sum to boost their advertising capabilities while the NSIC organizes tech fairs and exhibitions to promote these enterprises. Single MSME units can avail of credit up to ₹5 crore, with interest rates ranging from 9.5% to 12%.

8. Udyogini Scheme

Spearheaded by the Women Development Corporations, this scheme has garnered universal praise for supporting businesswomen in India. Under this program, small or micro enterprises led by women entrepreneurs in rural or underdeveloped areas can receive a subsidized MSME loan of up to ₹3 lakh.

9. Stand Up India Scheme

The Stand Up India Scheme assists MSMEs from underprivileged areas of India. Its objective is to ensure that at least one SC/ST and one woman borrower can secure financing to set up their greenfield projects. Supported by the Small Industries Development Bank of India (SIDBI), the sanctioned credit amounts range from ₹10 lakh to ₹1 crore.

10. SMILE Scheme

The SIDBI Make in India Soft Loan Fund for MSMEs, or SMILE scheme, is another initiative to provide financial backing to small and micro enterprises. New enterprises can receive a credit up to ₹50 lakhs while existing enterprises can obtain a minimum of ₹25 lakh. An MSME loan under this scheme has relatively flexible terms, allowing for a balanced debt-equity ratio.

Conclusion

In the end, it is clear that the MSME sector plays an important part in the growth of India's economy and job opportunities. With more than 12 million registered businesses, they need to be able to access financial resources that support their development. As mentioned earlier, schemes offer various options tailored to accommodate the multiple needs of MSMEs and ensure they have access to the funds to expand, modernize, and entrepreneurship. It could be through collateral-free loans, subsidies to upgrade technology, or a specific support program for women who are entrepreneurs. These programs show the government's determination to cultivate the entrepreneurial spirit in the nation. Since MSMEs continue to develop and expand, using these financial programs is crucial to sustain their growth and enhance the overall economy of India.