Use these government loan schemes for business

March 16, 2021 Finance Talk Valli Sarvani No comments

Commencing a business is not an easy task. Especially, acquiring capital is difficult. To help businesses, the government provides loans to small businesses.

The government encourages Micro, Small and Medium Enterprises (MSMEs) for economic growth. Hence, it offers a few loans to businesses. These loan schemes help micro and small businesses to get financial support for their businesses.

Any Indian citizen above 18 years can use these government schemes if they meet other criteria. The borrowers should have a good CIBIL score. The minimum score to avail of a loan is 650. Other essential things include income tax returns for the last two years, address proof of residence and business, identity and income proof, bank statement for the last six months etc.

Here are the various loan schemes offered by the government:

MSME loan is supported by technology since it does not involve human interaction till the final stage. It is one of the fastest loans as one can know the status of approval or disapproval within 59 minutes. If the loan is approved, the loan is disbursed in seven to eight days. One can get a loan of ₹10 lakhs to ₹5 crores under this scheme. The borrower should have GST registration and ITR to avail of this loan.

SMILE refers to SIDBI Make In India Soft Loan Fund For MSMEs. It aims to help new businesses to meet the debt-to-equity ratio. The minimum loan amount is ₹25 lakhs. The loan amount is provided in the form of soft loans and term loans. The loan repayment period is up to 10 years.

CGS (Credit Guarantee Scheme) aims to provide loans to businesses without any collateral. As the government gives a guarantee for these loans, MSMEs can get up to ₹2 crores without any collateral. Both new and existing companies can obtain these loans. The government covers a maximum of 85 per cent of the sanctioned loan. One must have IT-PAN to obtain a loan. A fee of 0.50 per cent if the loan amount is up to ₹5 lakhs should be paid. The fee is 0.75 per cent if the loan amount is above ₹5 lakhs to ₹1 crore.

Stand Up India scheme provides a loan to SC/ST and woman borrowers in the range of ₹10 lakhs to ₹1 crore. It covers 75 per cent of project costs, including working capital.

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