The small scale industry’s contribution has become essential for the Indian economy today. Presently, this sector alone employs more than 111 million people. Besides generating employment, it creates wealth for the country and contributes to social development as well.

  • MSMEs contribute around 29% of the nation’s GDP.
  • The Union Ministry aims to boost this contribution to 50%.

Despite being such a crucial part of India’s economy, the Micro, Small and Medium Enterprises sector faces several drawbacks which hinder their growth. 

Low accessibility and availability of technology, lack of advertising & marketing, and adequate funds are among some challenges these businesses face. 

While the government has rolled out several measures to uplift MSMEs so far, it is also essential to find more financing options like MSME loan schemes which can substantially help with the financial aspects.

One of the significant sources of cash flow for MSMEs and SMEs are government payments made to contractors and suppliers. Therefore, reducing payment delays can provide a major boost in MSME investments.

Credit initiatives are undertaken by the government

The government has laid down certain criteria to classify such enterprises for rolled out schemes or initiatives.

  • Micro enterprises – Service enterprises with investments below Rs.10 lakh and manufacturing businesses with investment below Rs.25 lakh.
  • Small enterprises – Service sector businesses with investment within Rs.10 lakh to Rs.2 crore and manufacturing businesses with investment within Rs.25 lakh to Rs.5 crore.
  • Medium enterprises – Service enterprises whose investment range from Rs.2 crore to Rs.5 crore and manufacturing businesses with Rs.5 crore to Rs.10 crore of the investment.

Access to finance can address various growth requirements of a small and medium enterprise. The government has, therefore, introduced some business loan schemes in India, such as –

  • MUDRA scheme

The Indian Government launched the Mudra Yojana under its Jan Dhan Yojana initiative. MUDRA refers to the Micro Units Development and Refinance Agency. This scheme looks to aid in the development of new micro-units across India. Small businesses often fail to avail loans from financial institutions due to a credit guarantee. Under the MUDRA scheme, small businesses functioning across a large gamut of industrial sectors can avail loans across 3 categories, viz. –

  • Shishu – Under this category, a business can borrow up to Rs.50,000 with maximum interest rates of 12% p.a. The tenor is up to 5 years.
  • Kishore – Loan quantum can range between Rs.50,000 and Rs.5 lakh. Interest rates and repayment tenor depend on the respective NBFC.
  • Tarun – Loan amounts can range between Rs.5 lakh and Rs.10 lakh. Here too, the rate of interest and the tenor depend on the financial institution.

Note that MSME loan interest rates under the MUDRA scheme are bound to offer lower interest rates than prevalent market rates to the borrower.

  • CLCS-TUS

This is a specialised credit-linked scheme that is mainly concerned with providing financial assistance to SMEs so that they can avail better technologies. Under this plan, small and mid-sized businesses can avail up to 15% subsidies on their business loans.

With such a scheme you can now afford essential technologies that all small businesses need.

  • PMEGP

The Prime Minister’s Employment Generation Programme or PMEGP looks to provide enough financial assistance in rural and urban centres for unemployed youth to set up their business. The scheme is also designed to assist artisans who have may lack the necessary sources of income.

  • CGTMSE

Credit Guarantee Fund Trust for Micro and Small Enterprises was launched in 2000. The scheme looks to offer a guarantee for loans availed by SMEs and MSMEs. Under this policy, entrepreneurs are encouraged to opt for collateral-free loans which are provided along with a substantial credit back up from the government.

Regardless of the scheme, you select, picking the perfect financial institution for a business loan is essential. Doing so leads to a hassle-free loan repayment tenor. Note that all leading financial institutions are bound to provide such loans under the schemes as mandated.

For instance, reputed NBFC Bajaj Finserv brings their exclusive pre-approved offers making the loan availing procedure more simplified and less time-consuming. These offers are applicable to business loans, personal loans, home loans, and a plethora of financial products. 

Thus, when opting for credit for your business, check whether you are eligible to utilise such helpful schemes. They can significantly lower your debt burden.

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