As per the Confederation of Indian Industry, the MSME sector of India has seen a consistent growth of more than 10% in recent years. This sector also contributes about 6.11% of India’s manufacturing GDP and provides employment to nearly 120 million people.

In order to grow further in this competitive sector, entrepreneurs are taking the help of different business loans. In this regard, they come across several options in terms of business loan tenor and amount.

Different MSME loan schemes in 2021

Nowadays, the Government, as well as financial institutions, provide several schemes to facilitate MSME growth. 

But, choosing the best MSME loan scheme can be a tedious job. In that case, individuals can go through this curated list of loans and schemes to find the one best suited for their business needs-

Pradhan Mantri Mudra Yojana

This scheme comes in three categories – Shishu, Kishor and Tarun. One can avail any of these based on the growth stage and credit requirement of his or her business.

Entrepreneurs can apply for a credit of up to Rs.10 lakh. Here, the business loan tenor can go up to 7 years.

However, individuals should consider the limitation regarding the credit amount of this scheme.

Prime Minister’s Employment Generation Programme (PMEGP)

The primary goal of this scheme is to encourage young entrepreneurs from both urban and rural areas of the country. With this scheme, business owners can apply for loans up to Rs.25 lakh with the tenor ranging from 3-7 years.

If the project costing is above Rs.10 lakh, entrepreneurs may have to provide security depending on the lender’s terms. 

Credit Linked Capital Subsidy Scheme (CLCSS)

Every business owner needs a solid financial plan. As a result, most of them opt for business loans. However, the interest rates of the loans can be quite steep.

In this regard, CLCSS primarily focuses on micro and small enterprises to help them upgrade their technologies and infrastructure for improving their production.

According to this scheme, micro and small business owners can get a subsidy of 15% up to Rs.15 lakh on machinery and equipment investments of up to Rs.1 crore.

But, the eligibility criteria for this scheme is quite stringent.

Stand-Up India

This scheme encourages women and entrepreneurs from SC/ST backgrounds by facilitating business loans on a branch-wise quota. Every branch of financial institutions should sanction loans to at least one SC/ST and female entrepreneur as per this scheme.

But, if the business is not individually owned, the borrower needs to hold a minimum of 51% stake. 

These Government business loan schemes are popular among MSME owners. However, most of them come with stringent eligibility criteria or longer disbursement periods.

So, individuals can opt for leading NBFCs like Bajaj Finserv that provide business loans to entrepreneurs with higher loan amounts, affordable interest rates and hassle-free approvals.

These financial institutions also present pre-approved offers to make financing quick and easy. Entrepreneurs can find these offers in several financial products, such as personal loans, business loans, etc. Individuals can check their pre-approved offers in a few seconds by providing their names and contact numbers. 

Micro, small and medium enterprises are often in need of credit for their business ventures. In this regard, individuals should always opt for lenders with affordable rates of interest so that they can simultaneously take care of other liabilities. So, compare the different business loan tenors, credit availability and rates of interest before applying for one.