Indian has become a booming valley of start-ups in the recent past and to promote the start-ups there are many schemes and incentives to the entrepreneurs that make financing the start-ups an easier path today. Most banks provide business loans to entrepreneurs to start a new business but require collateral to take such risk.
There are many cases where the entrepreneurs are not able to provide the necessary collateral and miss out on financial assistance. For such entrepreneurs, the Government of India has launched many schemes that provide collateral-free financial assistance in the form of Start-up Business Loans. Given below are the basic details of such schemes.
Additional Reading: Which Is The Best Way To Get A Start Up Business Loan
Mudra Loans are given under the Prime Minister Mudra Yojana. There are three types of loan schemes that are available under Mudra Yojana. These loan schemes are,
|
SCHEME |
RANGE OF LOAN AMOUNT |
MAXIMUM REPAYMENT PERIOD |
STAGE OF BUSINESS |
|
SHISHU |
UPTO Rs. 50,000 |
3-5 YEARS |
To start a business or needed at the early stage of the business. |
|
KISHOR |
Rs. 50,001 – Rs. 5,00,000 |
5 YEARS (At bank discretion) |
Needed for sustaining an existing business |
|
TARUN |
Rs. 5,00,001 – Rs. 10,00,000 |
5 YEARS (At bank discretion) |
Needed for business expansion, purchase of heavy machinery, equipment or setting up a large business. |
This scheme is initiated by the Government of India for women and SC/ST entrepreneurs. The loan amount under the scheme is between Rs. 10,00,000 to Rs. 1,00,00,000. The maximum tenure of the loans is up to 7 years.
Credit Guarantee Fund Trust for Micro and Small Enterprises
Under this scheme, the lenders provide collateral-free loans to the eligible start-ups and the guarantee for these schemes is backed by the Government under CGTMSE. The maximum loan under this category is up to Rs. 1,00,00,000.
Bank Credit Facilitation Scheme
National Small Industries Corporation is a tie-up with private and public banks to provide loans facility to MSMEs for a maximum period of 11 years. The amount of loans along with interest and tenure is based on many factors like the profile of the applicant, lender guidelines, etc.
Additional Reading: Which Banks Offer Start Up Business Loans
Final Thoughts
Start-ups and MSMEs are fast becoming the backbone of the economy of the country. Start-ups provide employment opportunities to many skilled and unskilled workforce of the country and are therefore nurtured under various financial assistance schemes of the Government.