Start-Up Business Loan by Government in 2023

Indian Government is promoting a large number of startups and micro industries. Business Loan by Government comes under various Schemes like PMMY, CGS etc.

Unicorns have been the exponential growth in India. Finance is the basic need for medium enterprises (MSMEs), startups, and entrepreneurs, small businesses to start, grow, and sustain themselves.

The Indian government is encouraging young and aspiring entrepreneurs by introducing many financial assistance schemes or loans by forming special financial institutions like SIDBI, MUDRA, etc.

The Indian government also provides credit guarantee facilities to encourage the entrepreneurship journey of young minds.

Business Loan Schemes by Indian Government

Bank Credit Facilitation Scheme

National Small Industries Corporation (NSIC) facilitates the funding for start-ups. NSIC has the aim of meeting the business credit requirements of MSME. NSIC provides comprehensive services and assists borrowers in technology, marketing, finance, and more.

The NSIC is having partnerships with different banks for providing credit loans to the MSME. The loan duration or it can be repaid ranging between 5 years to 7 years. In special cases, loan tenure can be extended up to 11 years.

The interest rate can vary and depends on bank to bank which is at most 15% per annum.

Pradhan Mantri Mudra Yojana (PMMY)

PMMY Scheme is launched by the Hon’ble Prime Minister on April 8, 2015. This Scheme provides loans ranging between Rs. 50,000 to Rs. 10 Lakh to non-corporate and non-farm small/micro enterprises.

PMMY Scheme has 3 categories 1. Shishu, 2. Kishore and 3. Tarun.

These loans are given by Commercial Banks, Small Finance Banks, RRBs, MFIs, Cooperative Banks,  and NBFCs.

The borrower needs to approach any of the lending institutions mentioned above or can apply online through this portal.

For more details read the article: Pradhan Mantri MUDRA Yojana (PMMY) – SME Loans

MUDRA Loan

MUDRA loans are mainly for start-ups and the borrower can avail of the loan up to Rs. 10 Lakhs at affordable interest rates under the PMMY scheme without any collateral. The processing fees of MUDRA loan are zero and the repayment tenure is up to 5 years. It comes with no limit on the minimum amount. Interest rates may vary from lender to lender which depends on the applicant’s eligibility and business requirements.

Credit Guarantee Scheme (CGS)

CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) is set up by the Government of India and SIDBI in Aug’2000 to make collateral-free credit facilities available to MSEs (Micro & Small Enterprises).

New and existing MSMEs can avail of the Credit Guarantee Scheme, The MSMEs who are involved in the service sector or manufacturing sector which exclude the retail trade, agriculture, educational institutions, Self Help Groups, etc.

Rs. 2 Crores loan amount can be borrowed under the scheme.

Start-Up India

The Startup India Scheme is created by the Government of India in 2016. The main objective of this scheme is to promote startups, employment generation, and wealth creation. The government of India has developed a robust startup ecosystem that is transforming India into New India and India is now becoming the job creator country for job seekers. Start-up India is managed by DPIIT – the Department for Industrial Policy and Promotion

“Startup” means the company should not be older than 10 years, the Type of company should have been incorporated as a Private Limited Company or Register Partnership firm or Limited Liability Partnership, and the Annual turnover should not be more than 100 Crore for any financial year since it’s registered. No splitting up or reconstructing an existing business. The Company should be Innovative and Scalable.

Start-Up India official website: Startup India

Stand-up India Scheme

Stand-up India Scheme is mainly for financing SC/ST and or Women Entrepreneurs. The stand-up scheme facilitates loans between Rs. 10 lahks to Rs. 1 Crore.

The purpose of a loan is for setting up a new enterprise in services, manufacturing, agri-allied activities, or trading sector by SC/ST/Women entrepreneur.

Sustainable Finance Scheme

This scheme is managed by the Small Industries Development Bank of India (SIDBI) which provides financial assistance for startups, and project developments and boosts renewable energy projects, green energy, technology hardware, and non-renewable energy projects.

The main aim is to offer support to the entire value chain of cleaner production or energy efficiency and sustainable development projects.

Fund assistance is given in those projects that are not covered under the international lines of credit like eco-friendly labeling, construction of green buildings, green microfinancing, or in projects related to renewable energy,

For more details visit the pdf: Sustainable Finance Schemes-Aims and Objectives

Udyogini Scheme

The meaning of “Udyogini” is Women Entrepreneurs. Udyogini scheme is developed for the welfare and development of Indian Women Entrepreneurs.

Udyogini Scheme has been introduced by Women Development Corporation under the Government of India.

This scheme motivates women’s entrepreneurship and provides financial support to women for doing business.

Start-Up Business Loan by Government Features and Benefits

Startup business loans have fantastic features and benefits which depend on the scheme to scheme however some common features are mentioned below…

  • Zero collateral
  • Flexible repayments tenure
  • The interest rate depends on the credit score
  • Instant disbursal of loan
  • Minimal documentation

Startup Business Loan by Government Eligibility

Startup business loan eligibility depends on the scheme to scheme however some common eligibility are mentioned below…

  • The borrower should be an Indian Citizen
  • The borrower should be self-Employed
  • The age should be between 25 to 26 years.
  • the borrower should have a business vintage of at least 3 years.
  • Must have a Bank Account

Documents Required for Startup Business Loans

Startup business loan document requirement depends on the scheme to scheme however some commonly required documents are mentioned below…

Adhar Card or Passport or Driving License

PAN Card

Last 3 months’ bank statement

Proof or certificate of business existence, tax filings, profit and loss reports from the last 3 years, etc.

Banks Offering Startup Business Loans

  • HDFC Bank: Rate of interest starting from 15.75% per annum onwards
  • Kotak Mahindra Bank: Rate of interest starting from 17% per annum onwards
  • Fullerton India: Rate of interest starting from 17% to 21% per annum
  • Tata Capital: Rate of interest starting from 19% per annum onwards

Conclusion

This article is providing a brief description of Indian Government Schemes for Start-Up Business Loans, you can easily correlate which schemes suit your business loan. This article also describes the business loan features, benefits, business loan eligibility for startups, documents required for business loans, and details about the banks that are offering business loans.

You can visit the government’s official websites for details of each scheme.

I hope this article has given some insights into business loans.

You can also read the below articles if they are meeting your personal loan requirement which is very easy to apply.

  1. Bharat Pay Personal
  2. Paytm App Personal Loan
  3. Aadhar Card Personal Loan
  4. Google Pay Personal Loan
  5. Phone Pay App Personal Loan
  6. Cashbean App Personal Loan

FAQs on Start-Up Business Loans

What is the maximum loan for a start-up business?

For established manufacturing units: max Rs.50 lakhs and service industries max Rs.20 lakh

What expenditure comes under the project cost?

Capital Expenditure and working capital.

Which banks provide start-up business loans backed by the government?

All Regional Rural Banks (RRB), public sector banks, SIDBI, Co-operative Banks, and Scheduled Commercial Banks provide start-up business loans.

is any security to avail of start-up business loans?

No collateral is required for businesses with a project cost of Rs.10 lakh.

Can I get 100% project cost as a start-up business loan?

General category applicants must contribute 10% of the project cost, and for special category applicants, it is 5%.

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