Today India has one of the most promising startup scenes in the world and with more than 37k startups on the list and continuously growing, we can easily say that India as a business center has a lot of potential. People are buzzing with ideas and innovations, but nothing about an idea can be done unless sufficient funding supports it. And not every time a startup gets easy funding, especially when it’s just in initial stages. But going with the flow and catering to the rising demands of the business world, the Indian government has initiated about 10 different loans that startups can use to their benefit.
According to reports, less than 5% of MSMEs have access to formal credit, while others rely on informal sources to fund their businesses and the government is taking adequate steps to bridge this gap.
Among the several MSME schemes for entrepreneurs, one of the most important ones was the recently launched 59-minute loan platform that enables easy access to credit for MSMEs.
Also, the Small Industries Development Bank of India (SIDBI) has started lending to companies directly instead of through banks. These government loans for startups are at least 300 basis points lower than the ones that are offered by banks. SIDBI offers long-term loans of up to five years online.
4E (End to End Energy Efficiency)
Launched in: September 2016
Headed by: Small Industries Development Bank of India (SIDBI)
Industry: Sector-agnostic
Overview: With the objective to implement energy efficiency measures across Indian industries on an end-to-end basis, this loan was formulated in association with the World Bank. Also, it aims to help startups finance purchases of second-hand machinery/equipment.
Bank Credit Facilitation Scheme
Launched in: NA
Headed by: National Small Industries Corporation (NSIC)
Industry: Sector-agnostic
Overview: This particular loan aims to meet the credit requirements of MSME units. The NSIC has entered into a MoU with various nationalized and private sector banks for the purpose. Through syndication with these banks, the NSIC arranges for credit support (fund- or non-fund-based limits) from banks without any cost to MSMEs.
Credit Guarantee Scheme (CGS)
Headed by: Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
Industry: Sector-agnostic
Overview: The loan is available for new and existing MSMEs engaged in manufacturing or service activities, excluding retail trade, educational institutions, agriculture, self-help groups (SHGs), training institutions, etc.
Credit Linked Capital Subsidy for Technology Upgrades
Headed by: Office of the Development Commissioner, Ministry of MSMEs
Industry: Sector-agnostic
Overview: Specially designed to facilitate technology upgraded by startups, this loan helps businesses to invest in modern equipment, machinery, and technique to yield better results.
Coir Udyami Yojana
Headed by: Coir Board
Industry: Agriculture
Overview: Directed towards the development of coir units, this loan helps meeting the working capital requirements in cash credit.
MSME Business Loans For Startups In 59 Minutes
Launched in: September 2018
Headed by: Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
Industry: Sector Agnostic
Overview: The initiative aims at automation of various processes to loan appraisal in such a way that one gets an eligibility letter, in-principle approval in less than 60 minutes and chooses the bank that one may prefer to ease access to credit to smaller and micro enterprises.
Pradhan Mantri Mudra Yojana (PMMY)
Launched in: 2015
Headed by: Micro Units Development and Refinance Agency Ltd (MUDRA)
Industry: Sector-agnostic
Overview: MUDRA provides refinance support to banks/Micro Finance Institutions (MFIs) for lending to micro units that have loan requirements of up to INR 10 Lakh.
Shishu: Loans up to INR 50,000
Kishor: Loans above INR 50,000 and up to INR 5 Lakh
Tarun: Loans above INR 5 Lakh and up to INR 10 Lakh
Generally, loans up to INR 10 Lakh issued by banks to MSMEs are given without collateral. Also, within these interventions, MUDRA ensures to meet the requirements of different sectors/business activities as well as business/entrepreneur segments.
SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)
Launched in: August 2015
Headed by: Small Industries Development Bank of India (SIDBI)
Industry: Sector-agnostic
Overview: to enable the establishment of new MSMEs and also to help existing one grows, this scheme provides soft loans in terms of quasi-equity and on relatively softer terms.
Standup India
Launched in: April 2016
Headed by: Small Industries Development Bank of India (SIDBI)
Industry: Sector-agnostic
Overview: This scheme by the Indian government facilitates bank loans between INR 10 Lakh and INR 1 Cr to at least one SC or ST borrower and at least one woman borrower per bank branch, for setting up of a greenfield enterprise.
Sustainable Finance Scheme
Headed by: Small Industries Development Bank of India (SIDBI)
Industry: Green energy, non-renewable energy, technology hardware, renewable energy
Overview: The objective of this startup scheme by the government is to assist the entire value chain of energy efficiency (EE)/cleaner production (CP) and sustainable development projects which lead to significant improvements in EE/CP/sustainable development in the MSMEs and which are presently not covered under the existing sustainable financing lines of credits.
