MSME Loan Schemes 2023

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The number of MSMEs in India is estimated to be 6.3 crore, and they participate in both domestic and foreign commerce, contributing around 29% to the country’s GDP. MSMEs play an important role in the nation’s economic and social development. They are also a fantastic approach to combat the problem of unemployment and promote regional goods. Our government is aware of the challenges that each owner of a micro, small, and medium-sized enterprise faces at various points in the course of establishing their company as well as the significance of MSMEs for the growth of the nation. As a result, the government has designed a number of programs to offer MSMEs and aspiring entrepreneurs the utmost support and ease the process of starting and running a firm.

Micro, Small, and Medium-Sized Enterprises (MSMEs) require money to start out and expand. To give financing to MSMEs, the Indian government has undertaken several initiatives and introduced numerous programs. MSMEs make a vital contribution to our nation’s efforts to develop a robust economy. Access to financing is a crucial component of MSMEs. MSMEs need credit or money in order to launch or grow their businesses.

The Indian government has created a number of lending programs, and even the banking industry and financial institutions lend to MSMEs to provide them with credit facilities.

Top 8 MSME Loan Schemes 2022

1. Pradhan Mantri Mudra Yojana (PMMY)

On April 8, 2015, the honorable prime minister introduced the Pradhan Mantri Mudra Yojana (PMMY) program. Small or microbusinesses that are neither corporations or farms are eligible to get loans under this program up to Rs. 10 lakh. Under PMMY, these loans are categorized as MUDRA (Micro Units Development and Refinance Agency Limited) loans.

MUDRA is an NBFC that aids in the growth of MSMEs. Banks, microfinance institutions (MFIs), and non-bank financial companies (NBFCs) are supported by MUDRA by refinancing in order to assist the issuance of loans to micro units with a credit demand of up to 10 lakhs.Loans are offered by Commercial Banks, Small Finance Banks, MFIs, and NBFCs under this program. The borrowers can go to any of these lending organizations or use the UdyamiMitra site to submit an online loan application.

The three distinct PMMY plans, “Shishu,” “Kishore,” and “Tarun,” denote the level of development or growth, the financial requirement of the beneficiary micro-units or entrepreneurs, and they also serve as a benchmark for the following stage of graduation or growth. Assistance Type: “Shishu” provides loans up to Rs. 50,000. “Kishor” offers loans ranging from Rs. 50,000 to Rs. 5 lakhs. “Tarun” offers micro-units loans ranging from Rs. 5 lakhs to Rs. 10 lakhs.

2. Program for Increasing Employment Under the Prime Minister (PMEGP)

A merging of the Prime Minister’s Rojgar Yojna (PMRY) and the Rural Employment Generation Programme created the Prime Minister’s Employment Generation Programme (PMEGP) (REGP). Through micro-enterprise establishments in the non-farm sector, this program aims to create chances for self-employment for young people who are jobless and traditional craftspeople. The Khadi and Village Industries Commission (KVIC), the nodal organization for this program on a national scale, is in charge of carrying it out.

The State Khadi and Village Industries Boards (KVIBs), District Industries Centers, State Khadi and Village Industries Boards (State KVIBs), and banks all have a role in the implementation of this program at the state level. In accordance with this plan, the KVIC distributes government funding to the entrepreneurs or beneficiaries via pre-selected banks.

Anyone who is at least 18 years old is eligible. For projects in the manufacturing sector that cost more than Rs. 10 lakh and in the commercial or service sector that cost more than Rs. 5 lakh, the person or people involved should have at least completed eighth grade.

In accordance with this plan, only new projects are given consideration for approval. The Societies Registration Act of 1860, Institutions registered under it, Production-based Co-operative Societies, and Charitable Trusts are also eligible. Any units already in existence under the PMRY, REGP, or any other plan of the Indian government or a state government are ineligible. Even those units that have already received government subsidies under another program run by the Indian government or a state government are ineligible. The maximum cost of a project or unit that can get assistance under this program is Rs. 10 lakhs for the business or service sector and Rs. 25 lakhs for the manufacturing sector.

In urban regions, the beneficiary rate of the subsidiary is 15%, whereas in rural ones, it is 25%. In urban and rural regions, respectively, the beneficiary rate of the subsidiary for the special category is 25% and 35%.

3. Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT MSE)

Small Industries Development Bank of India (SIDBI) and the Ministry of Micro, Small, and Medium Enterprises (MSME) collaborated to create the Credit Guarantee Fund Trust for Micro & Small Enterprises (CGT MSE) (CGTMSE). To put in place a credit guarantee program for MSMEs, CGTMSE was founded.

Contributors to this scheme’s corpus include the Indian government and SIDBI. This trust’s main goal is to give small and medium-sized businesses financial support without requiring any kind of collateral or third-party guarantee. This program’s guarantee coverage ranges from 85% for Micro Enterprises (up to Rs 5 lakh), 75% for everyone else, and 50% for retail activities.

4. Development of Khadi, Village and Coir Industries

The Ministry of MSME has launched a number of programs to clear the way for rural crafts and goods to contribute to the nation’s economic growth and to uplift the rural people.

Khadi and village crafts need some sort of marketing plan, just like any other business, to attract clients, according to the Market Promotion & Development Scheme (MPDA). This MPDA initiative was created with the intention of promoting Khadi crafts and raising the income of craftsmen.

5. Credit-Linked Capital Subsidy Scheme (CLCSS)

The MSMEs receive funding for technological upgrades under the Credit Linked Capital Subsidy Scheme (CLCSS). With this program, MSMEs may upgrade their technology with an extra 15% subsidy on investments up to Rs. 1 crore. Incorporating cutting-edge or almost cutting-edge technology is known as technology upgrading.

In order to apply for the subsidy under this program, applicants must fulfill the qualifying requirements. They can do so by contacting one of 12 nodal banks or organizations. These twelve nodal institutions or banks are SIDBI, NABARD, SBI, BoB, PNB, BOI, SBBJ, TIIC, Andhra Bank, Corporation Bank, Canara Bank, and Indian Bank.

6. Equity Infusion for MSMEs through Fund of Funds

A major lack of equality exists for MSMEs. Early-stage financing is provided by venture capital (VC) and private equity (PE) organizations, although relatively few of them also give finance during the growth stage. The Fund of Funds offers equity investment for MSMEs that have the potential for development and viability in order to encourage them to expand and list on stock markets.

With the help of the government, this program will be able to channel a variety of financial resources toward disadvantaged MSMEs and take care of the expanding demands of thriving, rapidly expanding MSMEs.

7. Scheme of Credit Guarantee for Subordinate Debt (CGSSD)

The Credit Guarantee Scheme for Subordinate Debt (CGSSD) aims to provide assistance to the owners of running MSMEs that are under pressure and have turned into non-performing assets as of 30 April 2020. The promoters will then inject this sum as equity into the MSME business to improve liquidity and maintain the debt-to-equity ratio.

To support and revitalize MSMEs that have turned bad or are about to turn bad, subordinate debt will be a huge aid. The MSMEs’ promoters will receive credit in the amount of 15% of their ownership holding (equity plus debt), or Rs. 75 lakh, whichever is less.

8. MSME Business Loan for Startups in 59 Minutes

The Indian government recently declared that it will provide MSME Business Loans for Startups in 59 Minutes. To offer loans to MSMEs in 59 minutes, a new website was established. The processing of loans for MSMEs on this internet site is entirely automated. The loans will be processed through this portal in an hour. The loan is disbursed to the loan applicant in the next seven to eight business days after being accepted through this site.

This program attempts to digitize and automate the numerous procedures for business loans provided, including term loans, working capital loans, and mudra loans.