Which Indian Government Startup Loan For New Business To Consider?

Which Indian Government Startup Loan For New Business To Consider?

India has been moving forward with the startup ecosystem and is doing great in it. The government is also trying to support startup business ideas in the country. This is because it provides new opportunities to aspiring entrepreneurs in the nation. Startups have become a common thing due to the fact that there are several schemes for the same. Moreover, people who like to risk for better returns are the ones who are undertaking such business ideas due to the availability of resources. If you are also looking to start one and are looking for the best startup loan for new business by Indian Government then refer to the article below.

Indian Government Startup Loan For New Business For You

The government schemes that provide loans for startups in India have been discussed below. In addition, the loans that one can apply for have been talked about in brief. The information on the loan amounts and limits has been curated so that it becomes easy for one to choose the best startup loan for new business in the country.

1. National Bank for Agriculture and Rural Development (NABARD)

The National Bank for Agriculture and Rural Development scheme, which is widely known as NABARD, is a bank that majorly focuses on the development of the rural sector in the nation. This is why it can be considered asking for a startup loan for new business if one is from a rural region. It even provides subsidies for such projects that one can definitely look out for. The subsidy schemes under it are:

  • New Agricultural Marketing Infrastructure (AMI) sub-scheme of Integrated Scheme for Agricultural Marketing (ISAM)
  • National Livestock Mission – Entrepreneurship Development and Employment Generation (NLM-EDEG)
  • Interest Subvention Scheme
  • GSS (Government Sponsored Scheme) – Ensuring End Use of Subsidy Released
  • Dairy Entrepreneurship Development Scheme (DEDS)
  • Commercial production units of organic inputs – National Project on Organic Farming (NPOF)
  • AgriClinics and Agri-Business Centres Scheme (ACABC)

However, these can exactly not be considered as a new business start-up loan but an aid from the government as they, in reality, are subsidies for small-scale startups in rural areas. In addition, what makes it similar to loans is that one has to apply for such government aid in a similar manner as one does for a loan.

2. Pradhan Mantri Mudra Yojana

Pradhan Mantri Mudra Yojana is a government scheme in India that was introduced by Prime Minister Narendra Modi in the year 2015 for enabling loans for startup businesses. It is a startup loan for new business by Indian Government that provides a loan of up to ₹10 lakhs. The scheme extends to non-farm and non-corporate that are small to medium-scale enterprises. These loans have been classified under the Mudra loans that are available under the scheme.

The Mudra loan scheme has three variants that are Shishu (that covers lending up to ₹50,000), Kishore (that covers lending from ₹50,000 up to ₹5 lakhs), and Tarun (that covers lending from ₹5 lakhs up to ₹10 lakhs). It signifies the stage of development and the need for funding depending on the scale of operations in the startup businesses in India. It is one of the best small business loans for startups.

3. Credit Guarantee Scheme

The Indian government along with the Ministry of Micro, Small & Medium Enterprises (MSME) and Small Industries Development Bank of India (SIDBI) have introduced a Credit Guarantee Scheme for small enterprises in the country. The main aim of the scheme was to elevate the credit delivery system in the MSME sector in order to aid credit facilities in the domain. This new business start-up loan scheme is beneficial for those who aspire to be an entrepreneur but lack capital requirements.

The lenders that are included under this scheme are public banks in large but it also comprises the regional rural banks, private banks, and even foreign banks. The  Credit Guarantee Scheme accounts as an instrument in enabling guarantee cover to the credit facilities that require collateral security and/or third-party guarantee. These free credit facilities have been availed by the Member Lending Institution for more than 20 years now. However, there is a downside to the scheme that hosts one of the best startup business loans in India. The limitation is that it does not consider enterprises that are based on retail trading, self-help groups, and agriculture or training institutions.

4. Stand-Up India Scheme

The Stand-Up India Scheme was launched by the government of the country to facilitate the Scheduled Caste (SC) and Scheduled Tribe (ST) members. It is the best startup loan for new business for the backward class members of society. The scheme suggests that the loan that ranges between ₹10 lakhs and ₹1 crore is aimed at aiding at least one SC or ST along with at least one woman borrower from each bank branch. This startup loan for new business by Indian Government aims at aiding greenfield enterprises. Any greenfield company that is:

  • going to operate in the services, manufacturing, trading, or agriculture sectors;
  • In which at least 51% shares and controlling stake are inherited by the SCs or STs or;
  • Any woman entrepreneur can apply for this loan.

5. Market Development Assistance Scheme

The Market Development Assistance Scheme is introduced by the Ministry of Commerce that is aimed at supporting exporters in the country to facilitate India’s overseas markets. In addition, the scheme also includes Micro and Small Enterprises. The scheme offers amenities such as funds for participating in international trade that will include study tours abroad, multinational publicity, trade delegations, and international fairs. The SIDBI controls the scheme of direct assistance that involves financing operations for the promotion of MSME products in the international market. It is considered as one of the schemes that host the best small business loans for startups due to its reach.

The objectives of the scheme are:

  • Assist exporters with export promotion activities abroad
  • Assist Export Promotion Councils(EPCs) to undertake export promotion activities for their product(s) and commodities ;
  • Assist approved organization/trade bodies in undertaking exclusive nonrecurring innovative activities connected with export promotion efforts for their members ;
  • Assist Focus export promotion programmes in specific regions abroad like FOCUS (LAC), Focus (Africa), Focus (CIS) and Focus (ASEAN +2) programmes; and
  • Residual essential activities connected with marketing promotion efforts abroad.
  • Exporting companies with an f.o.b. value of exports up to Rs. 15.00 crore in the preceding year will be eligible for MDA assistance for participation in EPC etc. led Trade Delegations/ BSMs/Trade Fairs/ Exhibitions.

Wrapping It Up

Budding entrepreneurs have a lot more opportunities in India now. This is because of the number of schemes that the government of the country has rolled out in order for small enterprise startups. These schemes also offer the best startup business loans. The ones who are thinking that they do not have enough funds or can not start a business without credit facilities can also consider taking a loan through these schemes.

However, we can’t recommend any single startup loan for new business for everyone. This is due to the fact that all the loans are under different schemes that have their own objective, which affects the eligibility criteria for it. This is why we want you to go through the above-mentioned list that contains some of the best small business loans for startups and find the one that is for you.

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Nitin Kapur

Nitin Kapur is an entrepreneur, investor, business advisor and speaker. If you wish to know about businesses and their position then there is no better analyst than him to help you with that.

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