SME loan
Business & Finance

Loan Schemes Government Launched for SME Growth in India

SME loan

During the first quarter of the FY 2019-20, the Indian economy saw a GDP growth of almost 5%. This continuous growth in GDP has been noticed over the last few years, indicating the rising influence of business on the Indian economy.

Over the last few years, the Government of India has introduced numerous schemes and initiatives with the singular aim of aiding and promoting new business ventures. These initiatives cover multiple aspects like easy financing, subsidies, etc.

Among the initiatives launched by the Indian Government, three are discussed below. Of these, CGTMSE launched in 2000 is one of the most crucial and influential ones. It has provided financial institutions with the security to invest in upcoming businesses more readily. Successive initiatives by the Government of India even offer direct business loans on a prompt basis with additional subsidies granted as well.


Functional for almost two decades, Credit Guarantee Funds Trust for Micro and Small Enterprises (CGTMSE) initiative by the Government of India provides credit guarantee to financial institutions that offer loans for small and medium business enterprises.

Launched by the Ministry of Micro, Small and Medium Enterprises along with Small Industries Development Bank of India (SIDBI); this trust guarantees repayment in case of defaults at the underneath rate.

  • Guarantee up to 85% for micro-enterprises for loans up to Rs. 5 Lakh.
  • Maximum guarantee of 75% for sums in between Rs. 5 Lakh and Rs. 50 Lakh with an additional 5% for women entrepreneurs.
  • Maximum guarantee of 50% for loan products between Rs. 50 Lakh and Rs. 1 Crore.

MUDRA loans:

Officially named Pradhan Mantri MUDRA Yojana, this scheme provides financial assistance to any small business that is not related to farming or corporate.

Under MUDRA loan, 3 slabs of financial aid are classified.

  • Shishu: This is the smallest division of financing under PMMY scheme. Here Rs. 50,000 is granted to business owners who require minor upgrades or are starting off.
  • Kishor: In case a business owner requires financial aid above Rs. 50,000; they must apply for Kishor. Under this section, a total amount going up to Rs. 5 Lakh is offered.
  • Tarun: With MUDRA loans demystified, this is the final division under it. Entrepreneurs going for this section can get a total of Rs. 10 Lakh in financial aid.

The first 3 years of this scheme recorded a disbursal of more than Rs. 2.4 Lakh Crore by different financial institutions across the country.

MSME business loans:

Launched in September of 2018, this initiative made headlines with its easy application and immense convenience. While initiatives by Government of India like CGTMSE promote financial lending for business growth, this scheme directly offers loan to businessmen from its portal.

With a total loan amount going up to Rs 1 Crore, borrowers can learn if they will have the loan approved or not within 59 minutes of application. The actual disbursal process takes 8-12 days.

With these innovative steps like CGTMSE, MUDRA and others, the Government of India has already taken the business sector of the country forward by miles.

The numerous financing schemes offered under these schemes typically have an easy application process as well. NBFCs like Bajaj Finserv even bring you pre-approved offers that make availing Business Loans quick and easy.

Any individual considering building up his or her enterprise with aids under government initiatives like MUDRA loan should also look up for other means of collecting finances.

On one hand, borrowers under these schemes should look up all benefits which are offered by the specific financial institution they have opted for. On the other, they should also look up for government subsidies like National Small Industries Subsidy and others which might be pertinent for them.

Essentially, all an individual needs to know about government business loan schemes in India must be looked up to avail the maximum benefits.

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