All About Small Business lending Schemes in India

Business

India is the home ground of millions of small to medium-sized companies. And the market of small and mediocre companies in India is emerging highly across the world at this present moment. However, these small to medium-sized enterprises exceedingly contribute to a significant portion of India’s GDP growth. Furthermore, these corporations remain a vital source of employment for a widespread section of India’s population as well. 

Hence, acknowledging the essentiality of SMEs, RBI and the Indian government have decided and commenced several small business lending schemes in order to help these companies and businesses enhance and expand their industry. 

Small Business Lending Schemes in India

Highlights of Loans for Small Businesses 

1. Availability of funds at a nominal price

Sadly, more than 80% of seeding businesses fail to survive in their initial stage due to insufficient capitals. Backing these early-stage businesses like MSMEs and SMEs with small business loans is a true effort by different financial institutions, banks and the government. 

Rendering financial support to those seeding companies facing economic issues is a severe operation indeed for the government. However, the government and lender grant funding to these businesses based on their business potential and requirements. Therefore, affordable pricing is one of the eminent factors of these credits.

2. Availability of Flexi loan facility

Some banks offer Flexi loans, which are a great initiative that contributes great flexibility with business funding. This loan type allows entrepreneurs to withdraw capital according to their needs and an opportunity to pay back the amount based on their cash flow. 

However, with Flexi loans, entrepreneurs can repay, particularly, the interest segment at the primary stage and pay back the principal loan amount at the end of the tenure period. 

3. Online Assess

Now, you can access many government business funding as well as different business loan schemes online. As a result, business owners can prevent unwanted hassles that they previously had to face by hitting banks and government offices. 

4. Small business loans allow unsecured financing

Banks find it difficult to trust small and startup businesses for repaying the principal loan amount. And in some banks, it comes in an unsecured way. It allows several small business owners to obtain finance that they could not receive through a traditional business loan.

The small business lending options available in India

1. MUDRA Loan 

MUDRA loan scheme has been designed to offer financial aid to India’s non-farm micro/ small enterprises, non-corporate enterprises. You can get this loan from authorized public and private sector banks, financial institutions, corporate banks, RRBs and some small finance banks. Besides, you can too apply for this loan online through the official website of MUDR. 

Eligibility:

Any non-corporate startups comprising enterprise firms or proprietorship in the urban or rural areas are eligible for the Mudra loan. The list includes:

  • Shopkeepers
  • Repair shops
  • Machine operators
  • Truck operators
  • Food processors 
  • Food-service units
  • Small manufacturing units
  • Small firms and industries
  • Vegetable and fruit vendors and others

2. Credit Linked Capital Subsidy Scheme (CLCSS)

Credit linked capital subsidy scheme or CLCSS is a type of government business loan fund that includes technological upgrades. The Ministry of MSMEs especially launched this scheme in semi-urban, including rural areas. In this loan, you will get a 15% subsidy on financing in eligible machinery. 

Eligibility:

The business owner needs to refer to a sole proprietorship firm to be eligible for the scheme. Otherwise, he needs to enlist a partnership company, public/ private limited company or cooperative enterprise. 

3. Fullerton India Business Loan

This business loan type is specially designated for investment in the business industry. If you avail of this loan, it will help you satisfy your urgent requirements of the business, which are essential to keep your company in existence in the competitive market. This loan can be unsecured or secured by collateral, either way, based on the required loan amount, credibility and profile of the business. 

Eligibility:

To avail of the Fullerton India Business Loan, 

  • The applicant has to be a business professional, self-employed, trader or retailer.
  • Age must be minimum of 21years and a maximum of 65 years.
  • Minimum business turnover should be ₹ 10, 00,000 last year.
  • Applicant should have filed an IT return file of above 2.5 lakhs for last year.
  • The business experience should be of minimum 3years
  • The applicant’s experience should be of a minimum of 5 years.

Summing-up:

These are some eminent small business lending provided by the Indian government. Presently, this financing can efficiently provide you with sufficient capitals to meet your business needs at a minimum eligibility requirement. That too at a nominal interest rate.

Karan Singh
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