In India, there are more than 39,000 startups that have access to private equity investment sources. For any startup or when the business is at an early stage, it’s a bit challenging to get funding.
The government of India introduced business loan schemes for start-ups and MSMEs, as the Micro, Small, and Medium Enterprises sector has limited options to get loans.
Also, the Small Industries Development Bank of India (SIDBI) has started lending financing to startups and MSMEs. These loans have interest rates of around 300 points, which is less than those provided by other banks.
These are the schemes provided by the Indian Government to MSMEs and Startups:
- Bank Credit Facilitation Program
The scheme is managed by the National Small Industries Corporation (NSIC) to provide credit to MSMEs. In order to fulfill financial needs, NSIC has partnered with various banks. One can repay the loan in 5-7 years, and it can be extended up to 11 years in special cases.
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Credit Guarantee Schemes
New and existing MSMEs that are involved in manufacturing or service activities but exclude agriculture, educational institutions, Self Help Groups, retail trade, etc. can avail of this scheme.
This program is managed by the Credit Guarantee Fund Trust for Micro and Small Enterprises, and borrowers can borrow up to Rs. 2 crore.
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Pradhan Mantri Mudra Yojana
Headed by the Micro Units Development and Refinance Agency, the Pradhan Mantri Mudra Yojana was established in 2015 in order to offer loans to all kinds of trading, manufacturing, and service sector activities.
This scheme lends loans in three categories: Shishu, Kishor, and Tarun, and the loan amount lies between Rs. 50,000 and Rs. 10 lakh. Mudra loans are available to shopkeepers, repair shops, artisans, vegetable vendors, machine operators, etc.
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Startup India
Headed by SIDBI, the Startup India program was started in April 2016 in order to provide loans to businesses engaged in trading, manufacturing, or services. Loans ranging between Rs. 10 lakh and Rs. 1 crore are available under this scheme.
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Sustainable Finance Scheme
The purpose of this scheme is to offer loans to industries that are involved in renewable energy, non-renewable energy, green energy, and technology hardware. This scheme is headed by SIDBI with the purpose of promoting energy efficiency, sustainable development, and cleaner production projects.
| Lender’s Name | Interest Rate |
| TATA Capital | 19% onwards |
| Kotak Mahindra | 17% onwards |
| HDFC Bank | 15% onwards |
| Fullerton India | 17% to 21% p.a |