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Ever since PM Modi introduced the Startup India campaign in 2015, several new Micro, Small and Medium Enterprises (MSMEs) have risen significantly. The government launched action plans to promote bank financing for startups and new businesses. It has encouraged startups leading to more job creation and helping the nation with socio-economic growth.
MSME plays a significant role in the Indian economy and contributes about 30 per cent of the overall GDP of India. This sector also creates huge job opportunities for Indians, and consequently, the government launches new schemes to strengthen this sector.
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Government loans for startups in India
Here is the list of government loans for startups in India:
Startup India
Startup India is the Indian government's initiative offering instant loans for the growth and expansion of India. Startup India promotes Startups, wealth creation and employment generation. The Startup India scheme helps grow business loans at attractive interest rates.
Standup India
Stand-Up India scheme offers funds to people under the SC/ST category and women entrepreneurs of the society. The government of India initiated the Stand-up India scheme providing credit services, mainly to SC/ST people. Stand-Up India aims to help banks offering loans between Rs 10 lakh to Rs 1 crore to at least one SC/ST applicant and one woman entrepreneur per bank to help these people begin their entrepreneurial journey.
psbloansin59minutes.com
This is GOI's web portal to approve business loans in just 59 minutes from the time of submission. The loan amount offered under this scheme is between Rs 10 lakh and the maximum is Rs 5 crore. Banks and NBFCs offer loans at a low interest rate, which starts from 8.50 per cent.
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MUDRA Loan
Mudra Yojna offer loans amounting to up to Rs 10 lakh without asking borrowers for any collateral at affordable interest rates. The repayment tenure is up to 5 years, and it charges a nominal amount as processing fees. In this loan scheme, there is no minimum loan amount criteria to borrow, and here interest rates vary from bank to bank.
CGTMSE Scheme
CGTMSE which stands for Credit Guarantee Funds Trust for Micro and Small Enterprises is the government's scheme to offer loans to MSMEs through banks or NBFCs. Under this loan scheme, first-time entrepreneurs and startup enterprises are majorly benefitted. The loan offered under the CGTMSE scheme is free from any collateral.
SIDBI’s Growth Capital and Equity Assistance Scheme
Many banks and financial institutions give loans to specifically design to fund that are specifically designed to fund startup and their unique needs. Different banks assign names for these startups and their special needs. Entrepreneurs can now avail of this funding from the banks.
What is the eligibility for a government scheme startup loan?
To get the loan under the government's funding scheme:
- A person must be an Indian citizen
- Must be self-employed
- The age must be between 25 to 65 years
- Must have a minimum business vintage age of three years
Documents required for business loans for startups
Here are the documents you need to submit while applying for business loans from the government:
- Aadhaar card/passport/driving license
- PAN card
- Bank statement for the last three months
- Also submit business proof like a business existence certificate, tax filings from the last financial year, the last three years profit and loss, etc.
How to apply for business loans for startups?
Here are the steps to apply for business loans for startups in India:
- Visit your bank's branch or official website
- Ask for the required form and fill in the form details such as employment status, desired loan amount, annual gross sales or turnover, years in current business, collateral type, city of residence, and mobile number.
- You further need to share other details like Company type, Nature of business, Gross Annual Profit, Type of industry, Bank Account, any existing EMI, Full name, Gender, Residence PIN code, PAN card, Date of Birth, and Email Address.
- The bank will verify the mentioned details
- Once the form is approved, you will get the business loan for startups within defined working days.
