Subsidy loans or grants are financial aid or support provided to the business or program for sustenance and growth. Subsidy is generally provided by the government. The interest rate applicable on this loan are lower. If you start or grow your small business you can opt for a subsidy loan. There are many benefits provided by both the central and state government to promote the growth of small scale business.
Here is a detail about 5 Best Small Business Subsidy Loan Schemes in India.
5 Best Small Business Subsidy Loan Schemes in India
#1 The Credit Guarantee Fund Scheme (CGTMSE) for MSMEs
The CGTMSE scheme is applicable to micro and small enterprises as per MSMED act. You can avail loan up to 100 Lakh under this scheme. No collateral deposit required in order to avail this loan. This loan is given to new as well as existing enterprise. Loan can be in the form of working capital loan or term loan.
Manufacturing and service both sectors are covered under this scheme. This scheme excludes retail trade, education institute, agriculture, training institute etc.
This loan cannot be avail online. You need to apply offline at nearby banks. 140 Banks and financial institution offers this type of loan. The interest rate applicable on this loan is very low around 3%.
There are three steps for applying for loan under this scheme.
Forming the Business Organization
This step is applicable only if you are forming a new business. You need to register your business and obtain applicable approval and license from the government authority. You also need to open current bank account and apply for business PAN card.
Prepare Business Plan
You need to prepare your business project plan. Your plan should include which product or services you are offering. The market analysis, fund requirement, fund usage, ROI, Break-even and payback calculations. You can avail help from professional in order to prepare business plan.
Apply for CGTMSE sanction
You need to apply for loan at banks under CGTMSE. Bank may ask for various additional documents for verification. It is advisable to approach 2-3 banks for applying for this loan.
#2 MUDRA Loans
MUDRA stands for Micro-Units Development and Refinance Agency. This agency is established by the government for providing financial support to micro-business. The basic concept behind Mudra loan is fund the unfunded. All banks across India offers MUDRA loans.
MUDRA loans are categorized based on amount. The small amount loan up to Rs.50000 is known as Shishu loans. Loan amount from Rs.50000 to 5 Lakh is called Kishor loans and loan amount from 5 Lakh to 10 Lakh is known as Tarun Loans.
All types of business including proprietary, partnership, private and public company are eligible to apply for MUDRA Loans.
#3 National Small Industries Corporation (NSIC) Subsidy
The NSIC is the government enterprise under MSME. The prime objective of NSIC is to provide support to MSMEs by providing services that includes finance, technology and marketing across country. There are two schemes initiated by NSIC in order to support MSME.
Credit Support Scheme
The NSIC offers financial aids to procure raw material for the business. Financial assistance is provided for the payback period up to 90 days. It also provide support for raw material procurement such as cash discount, bulk purchase. It offers access to tenders free of cost. The MSME need not to pay even security deposit for availing financial aid under this scheme. You can apply for this scheme by downloading form from NSIC website.
Marketing Support Scheme
The NSIC also provides marketing support to MSME business owners to grow in the current competitive market. You can get access to database of bulk buyers & rate contracts of various government department and PSUs. It also provide access to database of international buyers and technology suppliers.
#4 Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS)
The prime objective of CLCSS scheme is help small business in upgrading technology. This technology upgradation can be related to various processes such as manufacturing, marketing, supply chain etc. This scheme is run by the Ministry of Small-scale industries. The CLCSS offers capital subsidy of 15% for eligible business. The maximum loan that can be availed via this scheme is Rs.15 Lakh. Sole proprietor, partnership firm, co-operative, private and public companies can apply for CLCSS.
#5 Support for Entrepreneurial and Managerial Development of SME
This scheme provide early stage funding for nurturing innovative business ideas (product, services, technologies) that can be commercialized in a year. The main objective is to promote development of knowledge based innovative ventures.
The loan amount varies from 4 Lakh to 8 Lakh for each idea. This scheme also offers loan for infrastructure upgrade, orientation cost and administrative expense.
Note – The Government of India offers 149 such schemes for assisting and growing businesses. For more details about all subsidy loan schemes – Click here