How To Get A Loan To Start A Business From The Government

MSME Loan

The MSME Loan scheme is one brought in by the Government of India to provide business owners who require loans a very fast means of acquiring the funds that they may need for the growth of their organization. 

This allows for loans to be found from all different financial sectors.

The UdyamiMitra is an online platform that provides access to all MSME loan options available, where a simple form is required to be filled out by the business owner.

This application process is incredibly fast and requires some basic information about the business. The loan amount can be between INR 1 lakh to 5 lakh, but the loans under the process can be extended to up to 1 crore.

The process of the extended loan can take up to 8-12 days, but the quick loan system can provide certain low amount loans in 59 Minutes which has made this very popular.

Repayment capacity is one of the few considerations that are made along with the Income and Revenue of the organization are looked into, and whether the organization has other credit facilities availed. 

The organization is required to provide Bank Account Statements for 6 months, GST Verifications, KYC details, Ownership documentation, and Income Tax Verifications. 

The documents required are very minimal and the process is incredibly fast-paced.

Pradhan Mantari MUDRA Yojana

This is a loan service provided through the Micro Units Development and Refinance Agency, that focuses on the growth and support of Microbusinesses within India. 

The larger goal of the loan service is to provide opportunities for smaller businesses to grow and develop.

While the focus certainly falls upon the smaller businesses, all businesses, Private Ltd., public companies, and smaller private firms are eligible to apply for loans within this scheme.

The loans are categorized into 3 categories:

• 1 Amount up to 50,000 – Shishy Loans

• 2 50,000 to 5,00,000 – Kishor Loans

These loans can be called business loans that are offered to vendors and shopkeepers, or loans that can be used for commercial vehicle purchases or to purchase equipment for the Micro units.

The MUDRA card Is provided against the MUDRA loan amount that borrowers have access to and can use freely. It also assists in the digitization of all transactions, making the system more transparent.

Credit Guarantee Fund Scheme For Micro And Small Startup Business Loan

start-up business loan by Indian government launched by the Indian government, as a means of providing credit to the MSME section of the Business world. 

As a part of this scheme, the MSMEs can access amounts up to INR 200 lakhs with a preference given to eligible women. 

The CGFMSE Scheme is implemented by the Credit Guarantee Fund Trust for Micro and Small Enterprises, which was established for this explicit purpose. 

The fee that is charged by the Fund is 1% of whatever amount has been taken. It is 0.75 for credit up to Rs 5 Lakh, and 0.85 for credit above 5 lakh to 1crore.

The following kinds of organizations and enterprises can avail of this service, regardless of whether they are newly established or an older organization 

• Those involved in any form of Manufacturing activity, which includes Educational institutions, Self-help groups, training institutions or Retail trade enterprises.

National Small Industries Corporation Subsidy

The NSIC is another financial assistance tool that falls under the MSMEs. Its focus is on the growth of MSMEs by providing finance, technology, market, and other services across the nation to different businesses. 

The scheme has 2 different provisions that assist the growth of business in unique ways. 

A marketing Support Scheme supports the growth of a business by developing Consortia and Tender Marketing schemes as a means of growing the presence of a business.

This allows MSMEs the opportunity to grow in the hypercompetitive modern market. 

A credit Support Scheme focuses on providing more financial support for the various needs of the organization and allows the organization the opportunity to acquire more financial power through which it can grow and develop. 

To apply for this subsidy, the MSME is required to apply along with a number of documents as a part of the application process. These documents are as follows:

• Identity Proof and Address proof

• Acknowledgement of MSME Registration

• Signed Copy of Pan Card

• Copy of Sales

• List of Quality Control Equipment in Factory

These are only some of the many documents required by the NSIC as part of their application process.

This is one of the more specialized forms of loan that requires greater effort, and may not be suitable for all businesses. It would be good to evaluate the needs of your business and apply for this loan accordingly.

Credit Linked Capital Subsidy Scheme 

This is a subsidy scheme that focuses on small businesses and their growing technology needs. This exists to allow businesses to upgrade their technological tools within their organization. 

This can assist a business in streamlining its manufacturing, marketing and supply chain, assisting the organization as a whole to grow at an impressive pace.

It allows them to keep productivity high and stay in lockstep with other larger competition that may also be attempting to grow. 

The government also aims to make goods and services more accessible and affordable to smaller businesses. The micro and small businesses of the MSME are eligible for this subsidy.

This subsidy can be applied for in the online format, through the Primary Lending Institutions where MSEs avail themselves of the term loans.

The application is processed and upon the availability of the funds from a central body, the funds are transferred to the PLIs and then to the account of the MSE. 

This scheme can provide amounts up to 15 per cent of the institutional finance availed by them.

The core focus of this loan is providing the opportunity to upgrade, plant and machinery with updated and most modern technology that is affordable to the organization.

These would accommodate purchases such as electrical accessories, communication tools, Information Technology hardware, auto parts and so on. To apply for this scheme, the following documents are needed

• KYC Documents

• Business Proof

• Address Proof

• Aadhaar Card

• PAN Card

• Recent Photographs

Stand Up India

The Stand up India scheme was one that focuses on the Businesses run by the marginalized communities of India. The Government provides loans for Scheduled Caste, Scheduled Tribe and women-owned businesses within India. 

This loan has a clear purpose of assisting the historically suppressed and marginalized sections of the Indian society and helping them grow stronger economically and socially. The loan is governed by the Small Industries Development Bank of India.

The startup business loans amount provided under this scheme can be from INR 10 lakhs to 1 Crore, and every single bank is required to provide such a loan to at least one individual from the previously noted communities and regions.

The fund is expected to cover 75% of the total cost. A vast variety of businesses qualify for this loan, some of which are enterprises engaged in manufacturing, trading, services and so on. 

These businesses can access these loans. If the business is not an individual undertaking, 51% of the shares must be held by an individual who belongs to the previously mentioned groups. 

The loan repayment considerations for this loan can be extended to 7 years at the most. 

The eligibility and documents are very much focused on information on whether they qualify as a part of the SC/ST community or as a woman. The documents needed are:

• Identity Proof, Address proof, Memorandum of Articles of association of the Company, Rent agreements, Lease deeds, At least 3 balance sheets of the company and so on.
  
  
• If the company is a partnership, the partnership deed should be made available.

The interest rate will be the lowest for the category of loan, This is capped at MCLR 3% Tenor Premium. 

How To Get Startup Loan

Udyogini

This loan scheme was born out of the Indian government's attempts to build the strength of  Indian women who are trying to start and run their businesses. 

It is an attempt to empower Indian women and allow them to develop their businesses and help them in the financing of their businesses.

The Scheme is sponsored by the Women Development Corporation, and it allows women aged between 18 – 55 years, to apply for this loan. 

The maximum amount that can be obtained via this loan is 15,00,000, however, this is under the condition that the woman’s annual family income must not be above 15.00,000.

Women of all backgrounds can access this loan, regardless of any disability or marital status they may hold. The loan is incredibly beneficial to women wanting to establish themselves in the economy and become financially independent.

This is also reflected in the fact that women would not require a form of collateral that is required for availing of the loan under this scheme.

The women who seek out this loan will have to submit the following documents:

• Birth certificate

• Below Poverty Line Card

• Aadhar Card

• Passport Sized Photographs

• Caste Certificate

• Bank documents

• Certification of income

Women can seek out a large variety of kinds of loans depending on their eligibility and requirements.

Conclusion

These were some of the most fundamental aspects that an individual must take into consideration in order to get a startup business loan to start a business from the government. 

Be sure to seek assistance from experts and conduct a thorough research about the market and standards involved so that the process can be initiated with complete ease.

Frequently Asked Questions (FAQs)

Q1. How to get a loan to start a business from the government? 

The MUDRA scheme is one of the many sources of loans provided by the Indian government for the explicit purpose of supporting businesses, start-ups and organizations that assist in the process of establishing and growing a business. 

There are a variety of loans that are provided by the Indian government, each with a different purpose and need. 

Q2. Who is eligible for a MUDRA loan?

All Indian Nationals and Indian citizens can apply for a MUDRA loan, as long as the business is a Non-farm income-generating activity.

This includes businesses in the realm of manufacturing, service sector, processing, and trading. These individuals can then approach a financial institution for availing themselves of a MUDRA loan.

Q3. How can I get a loan from the Prime Minister Scheme?

The Pradhan Mantri MUDRA Yojna is a collection of loans that are given through various financial institutions such as commercial banks, MFIs, and NBFCs. 

To secure a loan under this categorization one can approach any of these organizations and request a loan through that means. An individual can also apply through the online portal www.udyamimitra.in

Q4. Can we take a Loan from the government?

Government can provide a loan for a large number of reasons. This includes personal loans that usually have less stringent eligibility criteria.

The government also provides many different loans for businesses and business owners. These loans can assist in the growth and development of businesses that are owned by different communities within India.

The Indian government and many of its recent policies create a great deal of room for the entrepreneurs and business owners of India. 

These policies provide business owners with a large number of options when it comes to financial support and assistance in the growth and function of their businesses. This has made startups and businesses far more viable within the nation.