For cash-strapped businesses, MSME loan schemes offered by the government are a boon. In this article, we list the top MSME loan schemes offered by the Government of India in 2022.
The government wants the total contribution by MSMEs to India’s GDP should to reach 50% from the current 29% by 2024. It also projects that MSMEs will be able to provide 15 crore jobs to Indians compared to the current 11 crore jobs.
This is why the MSME loan schemes have been drafted and executed by the government, to provide more business growth opportunities for the micro, small and medium enterprises of the country.
In this article, we’ve listed the top MSME loan schemes by the Government of India in 2022.
However, a word of caution. This is introductory information being offered to readers who want to gain a better understanding of the various loan schemes for MSMEs. We strongly recommend doing your own thorough research before applying for any of the schemes listed below.
Top 5 MSME Loan Schemes in India in 2022
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PSB loans in 59 minutes
Who is it for?
The Small Industrial Development Bank of India (SIDBI) has set up a fintech platform called PSB Loans in 59 minutes. to help micro, small and medium-sized businesses with a GST identification number for their working capital requirement. Any business with a GST identification number can apply for a business loan under this scheme.Key benefits
The maximum amount for a business loan to be disbursed is up to Rs. 5 crores. The approval for the loan takes place in 59 minutes or less. The rate of interest varies depending on the type of business.Conditions to be aware of
In order to avail the benefits of this scheme, you will require the following documentation:- GST identification number
- Income tax returns, PAN number, and certificate of incorporation
- Bank account statements for the last 6 months
- Details of the director(s) or proprietor, ownership details and company/business address
- Loan amount, the purpose of the loan and details of any past or existing loan
- A convenience fee of Rs. 100 to complete and submit the loan application
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Credit Linked Capital Subsidy Scheme (CLCSS)
Who is it for?
The Ministry for Small Scale Industries (SSI) has set up Credit Linked Capital Subsidy Scheme (CLCSS) to upgrade technology from time to time. The scheme provides upfront cash for modernising production equipment and techniques, that can be availed by SSI units. Some of the eligible sectors are listed below –- Biotech industry
- Corrugated boxes
- Pharmaceuticals and drugs
- Food processing, including ice cream manufacturing
- Leather and leather products
- Steel furniture
- Paints, varnishes, alkyds, and alkyd products
- Sewing machine industry
- Cosmetics
- Ready-made garments
Key benefits
The key benefit that this scheme provides is that SSI units can get a maximum capital loan of Rs. 100 lakhs. An additional subsidy of 15% would amount to another subsidy of Rs. 15 lakhs. However, units that have already availed of the subsidy are not eligible further.Conditions to be aware of
- Under this scheme, a 15% rate of capital subsidy in eligible plant and machinery is available only for those projects where term loans have been sanctioned by the eligible PLI
- The industries which are upgrading from small scale to medium-scale on account of the sanction of an additional loan under CLCSS are eligible for assistance
- Eligibility for capital subsidy under the scheme is not linked to any refinance scheme for the nodal agencies
- Export-oriented and labor-intensive new sectors/activities will be considered under this scheme
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Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
Who is it for?
The MSME Act, 2006 gives special protection to small-scale industries which require immunity. The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) aims to provide financial assistance to these industries (listed below) without any third-party guarantee/collateral. Enterprises that are engaged in the below activities are eligible:- Manufacturing activity
- Service activity, except: Retail Trade Educational Institutions Self-Help Groups Training Institutions
Key benefits
- The CGTMSE scheme provides a loan without any collateral up to a limit of Rs. 200 lakh
- Women entrepreneurs eligible under this scheme are given special preferences
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This scheme is also available to borrowers who are located in the North-Eastern States of India including Sikkim and also Jammu and Kashmir.
Conditions to be aware of
- The fees charged by the trust fund are a percentage of 1% p.a. of the amount sanctioned
- 0.75% – for credit of up to Rs. 5 lakhs
- 0.85% for credit above Rs. 5 lakhs up to Rs. 100 lakhs
- To avail of the loan — first and foremost a proper business plan needs to be prepared and submitted which includes all financial details
- Only once the business plan is ready, is the decision regarding which lender bank to approach taken. After that, the proposed business model & the loan application is to be submitted
- After verification of the document, the bank will submit the application to the CGTMSE fund. The application will go through another round of due diligence again. If approved, the trust will give the bank the go-ahead to release the funds.
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Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
Who is it for?
In order to promote cluster development of traditional industries and artisans, the MSME ministry had launched the Scheme of Fund for Regeneration of Traditional Industries (SFURTI). The scheme itself has 4 MSME loan schemes that are merged into the SFURTI.- The Scheme for Enhancing Productivity and Competitiveness of Khadi Industry and Artisans
- The Scheme for Product Development, Design Intervention and Packaging (PRODIP)
- The Scheme for Rural Industries Service Centre (RISC)
- Field functionaries of Central and State Government
- Non-Government Organisations (NGOs)
- Panchayati Raj Institutions (PRIs)
- Institutions of the State and Central Government and semi-government institutions
- Private sector by forming cluster-specific Special Purpose Vehicles (SPVs)
- Corporates and Corporate Social Responsibility (CSR) foundations have the expertise to undertake cluster development
Key Benefits
The assistance provided by the trust is as follows: Regular cluster (up to 500 artisans) – Up to Rs. 2.5 crores (per cluster budget) Major cluster (more than 500 artisans) – Up to Rs. 5 crores The scheme also includes three types of interventions which are soft, hard and thematic interventions. The soft interventions include the following:- Capacity building and skill development for the entire value chain
- General awareness, motivation, counselling, and trust-building
- Exposure visits
- Institution development
- Product and design development
- Market promotion initiatives
- Participation in training programmes, workshops and seminars on technology up-gradation, etc.
- Multiple facilities for packaging and multiple products wherever needed
- Raw Material Banks (RMBs)
- Common Facility Centres (CFCs)
- Tools and technological up-gradation such as tool-kit distribution, charkha up-gradation, etc
- Up-gradation of production infrastructure
- Training centre
- Warehousing facility
- Value addition and processing centre/multi-products
- E-commerce initiatives
- Promotion and brand-building campaign
- New media marketing
- Development and research initiatives
- Innovation
- Developing institutional linkages with the existing and proposed clusters
Conditions to be aware of
In order to apply under this scheme, one has to submit a proposal to any of the dedicated nodal agencies as listed in the guidelines, for them to be able to then submit it to the Scheme Steering Committee for final approval. Read more5. Mudra Loans – Pradhan Mantri Mudra Scheme
Who is it for?
The Government of India launched the Pradhan Mantri Mudra Scheme to empower the small, micro and medium enterprises of India by helping them avail a smooth flow of business credit. The word ‘Mudra’ is an abbreviation for Micro Units Development and Refine Agency. Any company which falls under either of these categories, either profit or non-profit, is eligible for this scheme. Following is the list of businesses that are eligible:- Shopkeepers
- Business vendors
- Food production industry
- Agriculture sector
- Small scale manufacturers
- Restoration and repair shops
- Handicraftsmen
- Service-based companies
- Truck owners
- Self-employed entrepreneurs
Key Benefits
- The maximum amount that can be availed through this scheme is Rs. 10 lakhs
- The Mudra loan interest rate doesn’t exceed 1% on a monthly basis
- The withdrawal of the sanctioned loan can be done without the need of visiting a physical branch of the lending bank .
Conditions to be aware of
The Mudra loan can be availed for the following reasons:- Commencing a new business
- Expanding and growing an existing business
- Training as well as the hiring of competent staff
- Purchasing of machinery
- Achieve working capital for business
- Purchase of commercial vehicles
- Purchase of equipment
Get unsecured business loans with UpScale
Despite the government’s efforts to ease the process of raising working capital via MSME loan schemes, small businesses still find it difficult to raise funds. A lot of it can be attributed to the many documentation and eligibility requirements by different banks and other lending institutions, and the MSME loan schemes in particular. With the sole intention of bridging this working capital gap for MSMEs in India, UpScale’s simple 2-step loan application process is a boon for businesses that are looking to raise unsecured loans.A few key benefits and requirements are listed below: – Any business with a GST identification number can apply for a business loan on UpScale – The loan application process requires the borrower to check & add their credit score and upload their bank statements for the last 12 months only – There are mainly two types of loans that are available on UpScale – loans up to Rs. 10 lakhs and loans over Rs. 10 lakhs up to Rs. 50 lakhs – Borrowers can get access to 10+ lenders on the applicationFor more details, watch the video below to understand how easily you can apply for an unsecured business loan with UpScale and grow your business. You can apply for a business loan on UpScale from here. Read about how UpScale can help your business grow, including increasing sales and boosting profit, from here. A fast-paced growing economy like India requires its MSMEs to grow at a scale that can help in raising the GDP. MSME loan schemes have been introduced and implemented keeping in mind the diverse needs of small businesses. However, it is also imperative to remember that before implementing the MSME loan schemes, awareness needs to be built for small businesses to leverage benefits from them. Which are the other MSME loan schemes in India that you would like to have information about? Let us know in the comments section below. If you found this article helpful, don’t forget to share it with your friends and peers.
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Very Interesting! Mudra PM Scheme & the Credit Linked Capital Subsidy Scheme (CLCSS) are to watch out for!