How to Apply for MSME Loan from Government?

The Indian government offers several MSME loans. These MSME loan programs may be of assistance to you if you are planning to launch a business and need money. We will cover the requirements for qualifying, the advantages, and all the information you need to apply for a business loan for your small business in this article. According to statistics, India has about 63 million MSME’s. It also contributes 27 to 30 % to India’s GDP and 45% to Indian exports. The terms and conditions of MSME loans are usually advantageous and are designed to meet the unique needs of small and medium-sized businesses. Depending on the government and the particular loan program, the qualifying requirements, loan amount, interest rates, payback terms, and other parameters may change. These MSME loan programs may be of assistance to you if you are planning to launch a business and need money. We will cover the requirements for qualifying, the advantages, and all the information you need to apply for an MSME loan for your small business in this article. Since the Indian government, SIDBI, and the Ministry of MSME developed the plan, financial institutions evaluate loan applications based on factors such as project viability. More MSMEs are utilizing this initiative because collateral-free loans secured by the financed assets are now available. Due to their ability to create jobs, encourage entrepreneurship, and support economic growth, MSMEs are vital to the economy, and these loans are specifically made to satisfy their funding needs. The era of business is moving forward rapidly In India, everyone is chasing their hopes and now the government will also help you in fulfilling your dreams of owning a business. Now starting your own business can become a reality through the government’s MSME schemes.

Some famous MSME loans by the government:-

Learn about popular government-supported MSME loans online, known for their simplicity and beneficial terms, in our beginner-friendly guide below:

1) Pradhan Mantri Mudra Yojana

This scheme intends to provide semi-small or micro-enterprises with up to ₹10 lakh loans. The Indian government states that providing financial support to business owners is the main objective of this initiative. For loans, borrowers can apply online or through commercial banks, MFIs, and NBFCs. Based on the "Shishu," "Kishore," and "Tarun," loans are granted. Commercial banks, non-bank financial institutions (NBFCs), financial institutions, and other fintech businesses like My Mudra offer these loans. Based on size, the businesses in this system are divided into three groups: Tarun, Kishore, and Shishu. Just by completing an application, you can apply for a Mudra loan and receive funding to help you expand your business even further.

2) Stand-up India Scheme

The second popular scheme is the Stand-up India scheme. The government’s main objective is to ensure that every bank offers a loan of between Rs. 10 lakh and Rs. 1 crore to at least one SC, one ST, and one woman, which helps them fulfill their dreams. However to qualify for this loan, you must work in any of the manufacturing, service, or allied agricultural sectors. In addition to an eighteen-month moratorium, you have seven years to return this debt. You are a few steps away from making your dream come true with My Mudra.

3) Udyogini Yojna

The main objective of this scheme is to empower women entrepreneurs and to help them in their respective businesses. The government gives them interest and collateral-free loans up to Rs 3 lakh but there is a minimal requirement that the average annual family income of that woman should be Rs 1.5 lakh but there is no condition for widows or disabled people. So what are you waiting for? Apply now and enjoy the benefits.

4) Credit Linked Capital Subsidy Scheme (CLCSS)

This government initiative was launched in 2000 to help MSMEs in upgrading their technology. This initiative was started in reaction to the frequent frequency of small businesses going out of business because they were underfunded, lagged behind the competition, or weren't turning a profit. You are eligible for a 15% subsidy on any loan from a financial institution under this program; if you fall into the SC or ST categories, you will also earn an extra 10% advantage, making the total benefit 25%. So, send in your application at this moment.

5) The Credit Guarantee Trust Fund for Small Enterprises

The purpose of CGT MSE is to offer small and medium-sized enterprises financial support without the need for collateral or guarantees from a third party. With guarantees ranging from 50% for retail operations to over 85% for micro-companies, entrepreneurs can approach specific rural financial institutions for financial assistance. The trust will pay for up to 75% of the debt in the case of default.

6) SIDBI Make In India Loan For Enterprises

SMILE was developed to assist MSMEs in promoting the "Make in India" initiative of the Indian government. Soft loans on quasi-equity help qualified enterprises satisfy their debt-to-equity ratio. The principal objective is to provide funding to smaller enterprises, with a maximum repayment length of ten years and a three-month grace period.

7) The Khadi and Village Industries Commission

The Prime Minister's Employment Generation Programme (PMEGP) is eligible for a loan from KVIC. As a form of lending subsidy, the loan is provided as a method of business development to selected groups; 15–35% of the project cost is covered up front, with the remaining funds being disbursed regularly.

There are various other MSME Loans and to get more information visit My Mudra and fill out the application form.

MSME Loan Application Eligibility and Requirements

Eligibility determination is the first stage in applying for an MSME loan. You must be an Indian resident between the ages of 25 and 65, have operated a business for at least three years, and have filed income taxes for at least one year. To be eligible, one must provide basic identity information such as their phone number, email address (optional), and first and last name. Information about the firm includes the nature and scope of operations as well as expected returns over the following 12 months. Businesses can overcome financial obstacles and accomplish their growth goals with the aid of MSME loans.

Documents Required for MSME Loan

Following are the documents required to apply for an MSME loan online: 

1. Identity Proof: Aadhar Card, Driving license, PAN card, Voter’s identity card;

2. Residence Proof: Power bills, Passport, leasing agreement, trade license, power bills, ration card and sales tax certificate;

3. Age Proof: Passport, Voter’s identity card, PAN card.

Process of Applying for an MSME Loan Online

Step 1: Visit My Mudra, locate the MSME loan application form

Step 2: Now, you must provide some basic details. Your date of birth and phone number from your PAN card.

Step 3: Enter your earnings information and business details. For the bank to determine your eligibility, you must submit details about your company as well as additional data like your yearly income.

Step 4: Now you need to fill out your business PAN and relevant details for the loan.

Step 5: Check the offers of MSME loans. The maximum amount you are eligible to borrow as an MSME loan will be displayed to you once you have completed the step. You can examine your monthly EMI here, along with the interest rate and any other pertinent small print.

Step 6: Now you need to finish by selecting one of your finance provider’s offerings and determining the repayment period, or you can get in touch with us, our executives will help you throughout the process.

Step 7: Following verification and acknowledgment, you have applied for an MSME loan online. Examine the loan amount, terms of payment, and details with the financing partner in detail. Once you receive an online confirmation that your application has been approved, you should anticipate having the loan funds in your account within a few working days.

Conclusion

Selecting the appropriate lender and loan type is crucial to guaranteeing that MSME Loans align with your financial circumstances and business requirements. Therefore, My Mudra could be your best financial partner. It is the one-stop solution for MSME loans. India is a nation with enormous potential for international growth. India has plenty of resources, therefore its businesses need the right type of support and guidance to prosper. The government's MSME loan program is an excellent way to support the nation's emerging businesses. Just take our business to the next level with My Mudra.

Also read: Importance of MSME Loan for Small Business Owners