According to a report from the Ministry of Micro, Small, and Medium Enterprises, India has over 12 million registered MSMEs. The MSME sector is undeniably the country’s backbone, rapidly contributing to the country’s economic progress.
As a result, the Government of India and other financial institutions have taken significant steps to ensure that these businesses receive adequate MSME loans to ensure continuous business growth. Here is a quick rundown of ten such schemes that could be beneficial to this industry.
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An eligible MSME can obtain a credit amount ranging from 1 lakh to 5 crores under this scheme. This MSME loan is available from both traditional institutional lenders and NBFCs, with an annual interest rate of 8.50%.
Growth Capital and Equity Assistance Scheme (GEMs)
This method of fundraising, which functions as a mezzanine debt instrument, can be beneficial to India’s MSME sector. If a company is looking for financial resources to expand or modernise its mechanism protocols, this scheme may be an excellent option. The loan amount is variable based on the requirement, but usually it is at least Rs. 25 lakh.
Interestingly enough, this fiscal boost can also be helpful in non-asset creating investment measures such as lump sum spending required for research and development or marketing purposes.
Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE)
Small businesses frequently lack collateral to use as security when applying for credit. As a result, they are frequently labelled as high-risk borrowers, and their loan application is denied.
The Government of India has launched this business loan for the MSME sector in order to remove such barriers for these businesses. This policy allows both new and existing businesses to apply for collateral-free credit (up to Rs. 200 lakh on an outstanding basis) from select financing institutions in the country.
Credit Linked Capital Subsidy Scheme for Technology Upgradation
A small business may find it difficult to bear the upfront capital cost required to acquire an asset. However, such assets are directly related to the enterprise’s capacity for long-term growth.
Keeping these factors in mind, India’s MSME ministry launched the aforementioned scheme. To elaborate, a business considered eligible under the parameters of this scheme can receive 15% of capital subsidy in order to improve its technological infrastructure. Notably, this sanctionable amount is restricted to Rs. 15 lakh.
Prime Minister Employment Generation Programme (PMEGP)
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The Indian government’s scheme has had notable success as a credit-linked subsidy programme. In other words, under this scheme, the government can subsidise a significant portion of a company’s project costs. This programme provides credits ranging from Rs.5 lakh to Rs.25 lakh.
The primary goal of this programme is to transform entrepreneurs into large-scale employer entities in order to create new job opportunities in the rural sector. As a result, this scheme has concentrated on microbusinesses.
Pradhan Mantri MUDRA Yojana (PMMY)
The government here has launched this scheme with non-farming and non-corporate business entities in mind. As a result, enterprises in the trading, manufacturing, and service sectors can receive up to Rs. 10 lakh as an unsecured business loan for MSMEs from various financier intermediaries.
National Small Industries Corporation (NSIC) Scheme
NSIC’s dual credit and marketing support scheme gives small businesses the competitive edge they need to compete in the open and free market. To elaborate, small businesses that qualify for this scheme can receive a lump sum to help them improve their advertising capabilities. Notably, the NSIC organises technology fairs and exhibitions to promote small-scale businesses.
Single MSME units can obtain credit of up to Rs. 5 crore at interest rates ranging from 9.5% to 12%..
Udyogini Scheme
This scheme, spearheaded by the Women Development Corporations, has received universal acclaim for assisting the nation’s businesswomen. A small or micro enterprise led by a woman entrepreneur may be eligible for a subsidised MSME loan under this programme if it is located in a rural or underdeveloped area. Applicants can apply for a loan of up to Rs. 3 lakh.
Stand Up India scheme
The Stand Up India Scheme assists MSMEs in underserved areas of India. According to the loan’s objectives, at least one SC/ST and one woman borrower will be able to borrow a certain amount in order to establish their greenfield projects. The sanctionable credit is limited between 10 lakhs and 1 crore and is supported by the Small Industries Development Bank of India (SIDBI).
SMILE scheme
Another measure taken by the authorities to provide financial support to small and micro enterprises is the SIDBI Make in India Soft Loan Fund for MSMEs, or SMILE scheme. New businesses can get up to Rs. 50 lakh in credit, while existing businesses can get up to Rs. 25 lakh. The terms of an MSME loan under this scheme are relatively flexible, allowing a debt-equity ratio balance to be maintained.
