One of the largest economies in the world, India has become an attractive destination for foreign direct investments. The ease of doing business in the country has encouraged many firms to set up base here.
Micro, small and medium enterprises of the country are significant contributors to its business environment and economical growth. SME’s (Small and medium enterprises) contribute more than 40 per cent to the total GDP (gross domestic product) and is also a critical source of employment for India’s growing population.
Recognising the importance small and medium enterprises, the government has initiated some new business loan schemes to boost the economy.
MSME BUSINESS LOANS
Announced in 2018, loans under the MSME scheme are granted for financial assistance and encouragement of MSME growth in the country. Both established or new businesses can avail loans under this scheme for a financial assistance up to Rs. 1 crore. The entire process of the loan takes 8-12 days to complete, while the approval or disapproval is granted within the first 59 minutes of application.
The interest rate under this scheme depends on the nature of your business and credit rating. To apply for business loan under this scheme, you need GST verifications, Income Tax verifications, bank account statements for the last 6-months, ownership related documentation, and KYC details.
Micro-units Development and Refinance Agency (MUDRA) is an establishment set up by the government of India to provide funds to micro-business units. The aim of loans under this scheme is ‘funding the unfunded’. Since startups don’t easily get investors for their ventures, the government has created the concept of low-cost credit to such undertakings.
The MUDRA Loans are structured as under: Sishu Loans up to Rs. 50,000, Kishor Loans up to Rs 5,00,000, and Tarun Loans up to Rs. 10,00,000.
NATIONAL SMALL INDUSTRIES CORPORATION SUBSIDY
Under this, small businesses are offered two kinds of financial benefits – Raw Material Assistance and Marketing Assistance. Under the raw material assistance scheme of NSIC, both indigenous and imported raw materials are covered. Under the marketing support, funds are given to SMEs for enhancing their competitiveness and the market value of their products and services.