Top 5 Government Loan Schemes

Top 5 Government Loan Schemes for Small Business in India

India has about 40 million Micro Small and Medium Enterprises (MSMEs), including registered and unregistered ones. The MSMEs of India comes into both the organized and unorganized sectors. These MSMEs contribute to about 40% of the total GDP of India, and they remain a critical component of the economy.

This sector plays a vital role in increasing employment opportunities in India but faces tough competition from privately-funded businesses.

MSMEs contribute to the solution of critical issues that are currently underlying the economy, such as poverty, unemployment, income inequality, regional imbalances, etc. Hence, the government loan schemes offers a variety of loan schemes to MSMEs for financing their expansion. The entrepreneurs who run such MSMEs can borrow money in the form of a loan through any one of the schemes that suit their requirements.

Here we explain some of the most significant government loan schemes for small businesses.

1-MSME Government Business Loans in 59 Minutes

An MSME can get a loan of Rs. 1 crore in just 59 minutes after the Government of India launched this scheme as a working capital loan. The loans sanctioned under this scheme are to boost financial assistance to the growth of the country and to also encourage their growth in the country. Schemes that provide financial assistance to existing and new businesses are available through this scheme.

The loans provided under these schemes extend up to Rs. 1 crore and take about 10 to 12 days to complete the process, with loan approval received within 59 minutes, which is why the scheme is known as MSME business loan in 59 minutes. The interest rate is determined by the nature of business conducted by the loan applicant. The interest of such loans begins at 8%. 

The following are the requirements for obtaining a loan under this scheme:

GST verifications

Income tax verifications

Bank statements for the last 6 months

Ownership related documentation

KYC details

2-MUDRA business Loans

MUDRA loans are provided by the Micro-Units Development and Refinance Agency organization, which is a government-run agency that provides funding to units of micro-businesses. MUDRA loans have the theme of “fund the funded.” MUDRA loans are available at all bank branches in India. Low-cost credit for micro and small businesses was made in the context of these loans. There are three sub heads of this scheme – Sishu loan up to Rs. 50, 000, Kishor loan up to Rs. 5, 00, 000, and Tarun loan up to 10, 00,000.

Eligibility criteria

All businesses including proprietary concern, partnership firm, Private Ltd., Public Company, and other legal entities are eligible to apply for a loan under this scheme.

3-Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGFMSE)

This scheme was launched by the government of India that enables for funding through loans without collateral to those businesses that fall under the MSME sector. The loans under this scheme can be granted to both new and existing businesses. The Credit Guarantee Fund Trust was established by the Ministry of MSMEs and Small Industries to carry out the CGFMSE scheme. Working capital loans of up to Rs. 200 lakhs are available under this scheme, with preference given to qualifying women entrepreneurs.

Retail trade, educational institutions, self-help groups, and training institutes are examples of manufacturing enterprises. Additionally, businesses in the service sector are also able to apply for funding under this loan scheme.

4-National Small Industries Corporation Subsidy

The NSIC is an ISO-certified Government of India firm that falls under the MSMEs category. One of its main responsibilities is to help MSMEs growth by providing financial, technological,market, and other services across the country. In order to support the growth of MSMEs, the NSIC has launched two schemes:

Marketing Support Scheme – The scheme supports in the development of any business by devising schemes such as association and Tender Marketing. The MSMEs must be assisted to grow in the current competitive market, so a scheme like this is crucial.

Credit Support Scheme – The NSIC provides assistance to acquire raw materials, for activities in relation to selling and for funding with banks through syndication to MSMEs.

The benefit of this plan is that it allows small businesses to participate in tenders without incurring any charges. And it also eliminates the need for MSMEs to pay security deposits in order to receive financial assistance.


It is a scheme aimed at empowering Indian women, as the name suggests. The Women Development Corporation, which is part of the Indian government, launched this scheme. The funds provided under this scheme is intended to assist women in fulfilling their capital needs in order to start a business.

Under this scheme, the highest loan amount that can be issued is Rs. 15,00,000. To be eligible for this scheme, a woman entrepreneur must be between the ages of 18 and 55, and her family’s yearly income must not exceed Rs. 15,00,000.

Women who are physically handicapped or widowed have no income restrictions. There is no processing charge or collateral required to apply for a loan through this scheme.

To be eligible for this loan, women must provide a passport-sized photos, a birth certificate, a Below Poverty Line Card, an Aadhar Card, a Caste Certificate, a passbook or bank account, a ration card, and proof of income. There are around 88 different types of business for which eligible women can apply for loans.

I am sure you will find above post interesting & write me back for customized solution for your business funding needs at

Yours: CA Naresh Bansal

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