The Central Government of India has actively participated in enhancing the business environment of the country and bringing forward the economically weaker sections to the mainstream of India’s economy. For this reason, the govt. has hugely invested itself in formulating regulations so that the people from all parts involve themselves to participate in making the economy grow actively.
Government Schemes For Small Business Loans
The various such schemes have helped for the economic enhancement of the small traders and business persons. These programs aim to create employment generation and not be dependent on trying to find employment. Some of the schemes formulated by the government.
When a new government forms, the common man is the one who faces the most potent impact as the majority of the citizens of India comprises them. These people contribute to the significant part of Indian economy by engaging in some small scale business sectors as the Small and Medium Enterprises popularly known SME sector is the source which contributes about nearly 40% to the total Gross Domestic Product (GDP) of India.
To encourage more of these, the Government of India has put forward loan schemes to uplift the small businesses which are not finally stable or need funds for their daily operations to make a stand in the market. This can quickly help them to refinance their transaction, get a proper working capital as well as expand it. This can be applied at any banking or non-banking companies related to finance as they offer some of the best schemes to either go for a business loan or loan refinancing depending on the benefit that each can offer.
However, it is essential to avail the right business loan depending on the goals set up by the small business. Nowadays the Government has come up with schemes like;
Pradhan Mantri Mudra Yojana (PMMY)
This is one such scheme where the rate of interest and the repayment tenure at which the loan is given varies from bank to bank with a loan amount up to 10 lakhs. This yojana covers all the essential aspects like agriculture, services, retail, and manufacturing for small as well as micro-enterprises. Having a proper vision and mission this Mudra Yojana offers loans at Small Finance Banks, Regional Rural Banks, Cooperative Banks and some others without the need of security. Mudra loan involves investment for the different levels of business like the Shishu, Kishor, and Tarun. They also provide online applications through their registered portal.
The main focus of the Mudra Yojana are-
- Working capital loans using the help of Mudra cards
- Business loans for traders, shopkeepers and other service sectors works
- Transport vehicle loans
- Finance for various machinery and equipment
MSME Scheme
MSME schemes for the micro, small as well as the big enterprises which lack the proper resources and types of equipment and need some backup and there comes the Government which provides the required aid. The SIDBI Make in India Loan for Enterprises (SMILE) is one such scheme which promotes innovation, skill development with the required investment. As a part of the ‘Make in India’ project, the Government of India provides financial support to MSMEs from selected sectors. They provide equal importance to the new enterprises along with the small ones that lie within the MSMEs.
National Small Industries Corporation (NSIC)
NSIC helps to facilitate the growth of small scale industries involving various schemes like the raw material assistance to get the better support, single point registration to participate in the government purchases and B2B portal as a service by being a member and so on. It also includes some facilities and initiatives that can be a great help towards the common man by boosting up their confidence.
Credit Guarantee Scheme
With this scheme, people can go for the free credit offered to the MSEs covering the term loans as well as the working facility. The Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE) is one such scheme which provides a guarantee to cover nearly 75% of the amount approved by the facility. And almost 80% guarantee cover is offered to microenterprises handled by women, getting a loan of 5 lakh rupees, MSEs owned and for the Northeastern region loans.
Bank Credit Facilitation Scheme
Like that many other schemes which exist are the Bank Credit Facilitation Scheme which gives a loan amount up to 5 crore rupees for a tenure of five to seven years with an interest rate that varies from bank to bank. This is facilitated by the NSIC to meet the needs of the various sectors at affordable prices. One more is also there which is quite heard of that is the Stand-Up India Scheme which is mainly for the Scheduled Tribe, Scheduled Caste and the women entrepreneurs. They avail loan from 10 lakh rupees to 1 crore rupees for a period of seven years. Apart from these, some other plans are coming up in the future to make the procedure easier and people friendly.
Udyogini Scheme
The Udyogini scheme is a Govt. of India initiative for the improvement of the culture of women entrepreneurship in the country. It aims to make women self-reliant by empowering them in businesses and the labor force. The scheme enables women to elevate their status in society by making them actively involved in structuring the shape of the country. The main features of this loan are to provide interest-free loans to women of all factions of the society without any discrimination. Loans are provided max. up to rupees 3 lakhs for around 88 small industries that include grocery works, bakery, pickle trading, beauty parlor, sewing work, etc. The scheme has hugely transformed the lives of the women who want to be independent financially and contribute towards the welfare of their families and country as a whole.
Eligibility Criteria For Small Business Loans in India
To avail these government loans some eligibility criteria need to be fulfilled depending on the lender, but the most important ones are:
- first, the applicant should be a citizen of India with the living proof.
- Secondly, the person should have the appropriate age depending on the guidelines set by the lender.
- Thirdly, the status and the type of business like whether it is a new or existing one and in which field it is operating, be it the service or the manufacturing sector.
Documents Requirement
Nowadays, document verification has become an important aspect before providing any loan as it enquires about the true identity of the applicant with the original proofs. The foremost thing that is needed to be filled up and genuinely signed is the application form. Then comes the KYC documents supported by the business entity proof along with some certificates and the Articles of Association.
PAN card of all the involved partners along with the financials, which includes the yearly performance of the current year with the turnover, VAT returns, audit reports, and the balance sheet. The address proof along with the bank statements of the last six months and the passport size photographs are some of the evidence that needs to be verified before giving the loan under any scheme.
It is effortless to approach any business loan by visiting the particular financial branch and telling them the requirements. Accordingly, they analyze the points and put forward the best schemes available in the Government Portal. The Government has provided the best facilities, and we have to understand it well and take up the benefits to contribute towards a developing India by minimizing unemployment in the future. In the end, providing loans or refinancing is to unburden the finances and is quite beneficial when carried out properly.
Conclusion
The various schemes initiated towards the development of business culture in every corner of the country has begun to its sign in the form of more no. of people availing these loans to play their part in the development of their and others life. These programs have contributed towards the government. It’s goal of ‘Make in India’ as it results in several new products being made in the country owing to the modern workforce that is emerging thanks to the contribution of such govt. Schemes.
