Unlocking opportunities: 5 MSMSE Government Schemes for Entrepreneurs
19 July, 2024
Synopsis:
With a 30% share of India’s GDP, MSMEs are vital contributors to the nation’s economic growth.
Recognising the importance of MSMEs, the Government of India has launched several loan schemes.
The best government schemes for MSMEs include the Credit Guarantee Scheme for Startups, Pradhan Mantri Mudra Yojana, CGTMSE, PMEGP, and the Stand-up India scheme.
Micro, small and medium-sized enterprises (MSMEs) are vital contributors to the Indian economy. As per the Ministry of Statistics and PI, the share of MSME in India’s Gross Domestic Product (GDP) during the financial year (FY) 2019-20 was 30%. Furthermore, as per the Directorate General of Commercial Intelligence and Statistics (DGCIS) data, MSMEs accounted for 49.5% of All India Exports during FY 2020-21.
Recognising the importance of MSMEs, the Indian government has come up with various loan schemes and initiatives to support and nurture budding entrepreneurs. These schemes aim to provide financial assistance at competitive interest rates, flexible repayment terms, and minimal collateral requirements.
In this blog, you will explore the best government schemes meant specifically for MSMEs in India. Keep reading.
1. Credit Guarantee Scheme for Startups (CGSS)
The CGSS is one of the best government schemes for MSMEs. Under the scheme, Indian startups can avail themselves of collateral-free loans. This scheme offers startups a credit guarantee of up to ₹ 10 crores at a nominal fee of just 2% per annum. With the funds received, startups can fulfil several aspirations, including business expansion, buying new equipment, etc.
The Department for Promotion of Industry and Internal Trade (DPIIT) must recognise your startup for you to avail funds under CGSS. Also, to get the required funds under this scheme, your startup must have a stable revenue stream and shouldn't default on any loans taken from any lending institution.
2. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a loan scheme introduced by the Government of India in partnership with SIDBI (Small Industries Development Bank of India). Through it, MSMEs can avail collateral-free Business Loans from the government at a nominal guarantee fee only.
The scheme covers both Term Loans and Working Capital Loans up to ₹ 5 crores, thereby reducing the risk for lenders and encouraging them to extend financial support to MSMEs. The government provides a credit guarantee cover of up to 85% of the sanctioned loan amount.
All eligible businesses in the manufacturing and services sectors can apply for the CGTMSE scheme through a simple online application process.
3. Pradhan Mantri MUDRA Yojana
The Pradhan Mantri MUDRA Yojana (PMMY) is one of the best government schemes for MSMEs in India. Launched in 2015, it aims to promote entrepreneurship among small business owners by providing financial assistance of up to ₹ 10 lakhs in the form of Working Capital Loans, Term Loans, and microfinance.
MUDRA loans are categorised into three categories:
Shishu loans of up to ₹ 50,000
Kishor loans ranging between ₹ 50,000 and ₹ 5 lakhs
Tarun loans ranging between ₹ 5 lakhs to ₹ 10 lakhs
MSMEs into in manufacturing, trading, and service activities can apply for MUDRA loans without any collateral or security.
4. Prime Minister’s Employment Generation Program (PMEGP)
The Prime Minister’s Employment Generation Program (PMEGP) is a credit-linked subsidy scheme under the Ministry of MSMEs. It aims to promote self-employment opportunities by providing financial assistance for establishing new micro-enterprises and generating employment in both rural and urban areas.
Under this scheme, eligible entrepreneurs can get Business Loans of up to ₹ 50 lakhs for establishing manufacturing projects and up to ₹ 20 lakhs for establishing service-sector projects. The subsidy component may vary from 15% to 35%, depending on the category and location of the project.
5. Stand-Up India Scheme
The Stand-Up India scheme is a flagship government initiative launched to promote entrepreneurship among women, Scheduled Castes (SCs), and Scheduled Tribes (STs) by providing them access to financial support and handholding assistance. Under this scheme, eligible borrowers can avail of loans ranging from ₹ 10 lakhs to ₹ 1 crore to set up greenfield enterprises in manufacturing, trading, or service sectors. Beneficiaries can avail of overdraft and cash credit facilities on Working Capital Loans.
The bottom line
These 5 government schemes can fuel the growth and development of MSMEs in India by addressing their concerns about lack of funds. With these schemes, MSMEs fulfil various needs and contribute significantly to the country's economic development. With HDFC Bank, you can apply for these schemes in a convenient and hassle-free manner. Click here to know more.
Disclaimer: *Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
