SME loans are business loans that are offered only to small and medium-sized businesses. They are designed to meet the requirements and needs of SMEs.
SME loans are used to fund capital expenditure and working capital requirements for businesses operating in manufacturing, trading and service industries.
All small and medium companies and other organizations according to the MSMED Act, 2006, with a specified turnover, are qualified to receive these loan.
The Top 10 Government SME credit schemes that are available that are available in India comprise:
1. Pradhan Mantri Mudra Yojana (PMMY)
In April of 2015 The Government of India launched the Pradhan Mantri Mudra Yojana SME loan. The primary goal of this loan to SMEs is to fund the unfunded, decreasing jobless economic growth, as well as overseeing and regulating microfinance institutions.
The nature of the assistance
In this program, loan are able to be extended to INR 10 lakh to micro- and non-corporate businesses.
Criteria for eligibility
The SME loan is available by anyone Indian citizen who is pursuing an established business plan in an industry that is not farming, and has businesses that generate income, such as processing, manufacturing trade, service sector, or any other industry that has a credit demand not more that INR 10, 000. The repayment term is 3 and 5 years and the typical rate of interest is 7.3 percent p.a.
How do I apply
The process to get a loan: Borrowers are able to apply online via Udyamimitra website or offline by going to the closest branch of the bank or NBFC.
2. MSME Business Loans in 55 Minutes
It was launched within the Atmanirbhar Bharat Campaign, under this scheme, small and medium-sized enterprises get in-principle approvals to loan in the amount of the amount of Rs. 1 lakh up to the amount of Rs. 5 Crore in just 55 minutes.
Entrepreneurs can make use of the loan to expand their businesses and scaling operations, as well as for purchasing material, diversification, etc.
The nature of the assistance
In this scheme, loans offered to SMEs are able to be extended the amount of INR 5 crores. There is an initial limit to INR 1 lakh with most bank authorised, and take approximately eight to twelve days for processing. The approval can be received in 60 minutes, which is the reason the program is called that.
Criteria for eligibility
Anyone over 18 years old and non-individuals, such as established businesses and firms with GST registration as well as other documents, such as an IT returns of at minimum one year , and bank statements from the past six months are qualified to apply for this loan. The repayment period is flexible, and rate of interest is usually higher of 8.5 percent p.a.
How do I apply
The borrowers who are eligible can apply for the loan via SIDBI’s website that was created by SIDBI
3. SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)
SMILE scheme, which is a emblematic scheme of SIDBI It offers SME loans that are flexible terms or with soft conditions to satisfy the debt-to-equity proportion of MSMEs.
Nature of assistance
In this program, small and medium-sized enterprises can request loans ranging from the amount of Rs. 10 Lakh to Rs. 25 Lakh. SIDBI has a requirement of 15 percent minimum promoter contribution as well as first charge assets and personal guarantees from promotors to make the loan.
Eligibility requirements
Any MSME operating in the last three years and that is in a financially sound position is qualified to receive this loan. SIDBI can give preference to newly-established MSMEs in the service and manufacturing industries. The 10-year period is considered to be the most long amount of time to repay, however the borrower can choose the option of a 36-month moratorium. The borrower’s profile as well as the loan amount determine the interest rate.
How do I apply
One can visit the closest Branch of SIDBI or fill out an application on the internet.
4. Stand-Up India
In 2016 The Government of India introduced the Stand-Up-India loan scheme to offer SME loans to companies run by individuals from the SC/ST category as well as women to help promote entrepreneurship.
The business should engage in services, manufacturing and agri-allied activities, or trading. It must operate as a sole proprietorship and the women entrepreneur the SC/ST person should own 51% or more of the control stake.
Assistance is provided in the form of
In this program, amount of loan given can be as low as INR 10 lakhs up to INR one crore. Every bank must offer the loan to at least one woman or SC/ST entrepreneur. Based on this model the funds are estimated to cover around 75 percent of the project’s total cost. The fund does not require collateral or third-party guarantees.
Eligibility requirements
Anyone over 18 and non-individuals, such as established businesses and firms that have 51 percent of the shares and the controlling stakes are owned by women or SC/ST entrepreneurs are eligible for the loan. The repayment time is seven years and has an maximum duration for 18 month.
How do I apply
Borrowers are able to apply online on Udyamimitra site.
5. Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT SME)
SIDBI along with SIDBI and the Ministry of Micro, Small, and Medium Enterprises have joined forces to establish an institution called the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTSME).
The nature of the assistance
MSMEs can take out collateral-free, funds-based or non-fund-based SME loans that are up to 200 lakh rupees. 200 lakh from NBFCs and banks. CGTMSE will pay a guarantee cost to the lender to provide financial assistance, which ranges from 75-85 percent of the loan amount that is sanctioned.
Criteria for eligibility
Existing and new MSMEs involved in manufacturing and services are qualified. MSMEs that are involved in retail trade as well as self-help groups or training establishments are not qualified. The rate of interest for the loan is determined by the RBI guidelines.
How do I apply
The applicants can approach directly the lenders directly. They are also required to submit an outline of their business plan that explains the potential of the venture.
6. RMA Against Bank Guarantee
This is a plan of National Small Industries Corporation (NSIC) to offer SME loans (as advance payments or as credit) to purchase raw materials.
Assistance is provided in the form of
- MSME that operates as a single unit within the manufacturing industry can get loans of up to the amount of Rs. 1000 Lakh. A group of MSME businesses that are involved in manufacturing may obtain loans as high as 2000 Lakh. 2000 Lakh.
- MSME working as a single unit within the service sector can get loans of up to 600 Lakh. 600 Lakh. A group of MSME companies that are involved in manufacturing operations could get loans as high as 1500 Lakh. 1500 Lakh.
- MSMEs involved in infrastructure projects are able to obtain loans between Rs.500 and Rs. lakh being a single entity or as a cluster of units.
MSMEs must also provide the bank with a guarantee equal to the amount of the loan, as a security.
Criteria for eligibility
Manufacturing MSMEs that have Udyam Registration Certificateor Udyog Aadhaar Identification are eligible for of this SME credit scheme. The interest rate ranges from 7.5 percent p.a to 9 percent p.a. The limits sanctioned are valid for a year.
How do I apply
Borrowers may apply via the offices in the field at NSIC as well as uploading their application through the web.
7. Bank Credit Facilitation Scheme
This is another program that is supported by NSIC to provide both fund and non-fund support for MSMEs through MoUs with banks and NSIC.
Assistance is provided in the form of
This scheme allows loans to various MSMEs , with the assistance of various private and public sector banks.
Criteria for eligibility
Both existing and new MSMEs in all industries can apply. It is important to note that the quantity of SME loans as well as interest rates and repayment times differ from one bank to the next.
How do I apply
MSMEs are able to directly contact branches of NSIC.
8. Growth Capital and Equity Assistance Scheme
SIDBI launched the Growth Capital and Equity Assistance Scheme to provide subordinated/mezzanine debt to MSMEs.
The nature of the assistance
The amount of the loan varies, but usually exceeds the limit of. 25 Lakh. MSMEs can use the money towards any expenditure that is legitimately a part of expansion.
Eligibility requirements
MSMEs that have three years of financial success or two consecutive years of satisfying bank records are qualified. This rate of interest is set as the SIDBI internal rating and the repayment term will be seven years. Optional moratoriums based on needs are offered.
How do I apply
Borrowers can contact the closest SIDBI branch or contact [email protected]
9. Prime Minister Employment Generation Programme (PMEGP):
The Prime Minister Employment Generation Programme is a Government of India-backed credit-linked scheme. It was launched in 2008 after the merger of two schemes, specifically, the Prime Minister’s Rojgar Yojna and Rural Employment Generation Programme. In this scheme, SMEs can get a subvention of 15 to 35% of their project costs by the federal government.
Nature of Assistance
The SME loan scheme is aimed at creating self-employment opportunities via micro-enterprise enterprises in the non-farm industry through the aid of youth in need and traditional craftsmen. Assistance through this program is available only to newly established businesses–INR 25 lakhs for manufacturing or INR 10 million for the service and business sectors.
Eligibility Criteria
Anyone who is over 18 years old is qualified to apply for any of the SME credit scheme. Current units and units currently receiving any subsidy from the government (State or Central) are not eligible.
How do I apply
The beneficiaries are able to apply via the KVIC website and visit the KVIC office in their local area.
10. Assistance to MSMEs to Recover and Organic Growth during COVID-19 (AROG)
SIDBI has announced a unique program to offer financial assistance to MSMEs who manufacture medical products or services in order to combat the pandemic that is sweeping the world.
Assistance is provided in the form of
Borrowers can get SME loans that can be as high as 200 lakh rupees. 200 lakhs with minimal collateral.
Eligibility requirements
MSMEs who are current clients of SIDBI are eligible on the basis of the cash profits of their balance sheet that was audited last. Customers who have not had cash profits from the last two years also qualify.
The rate of interest is 4.5 percent to 5percent p.a. These loans are characterized by a tenure of 60 months, while working capital loans are able to be repaid over a period that is 18 months. The option of a moratorium is also available.
How do I apply
Applications are submitted via the web.
