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The growth of an economy depends largely upon its MSMEs (Micro, Small, and Medium enterprises. Small and medium enterprises remedy all economic problems like unemployment, income inequality, regional balances, and more. Not just MSMEs but many small business companies also play a considerable role in balancing local development and income inequality.
In the present economy, the MSME sector is responsible for initiating almost 11.10 crore jobs across the entire country. So when it comes to these startups and MSMEs, the government is quite clear and knows that they need to be nurtured, encouraged, and protected for India’s betterment in the economic sector.
To support the same government of India has proposed several schemes like the CGTMSE loan scheme, MSME loan, and many more to help these businesses overcome all types of hurdles. Here are the top 5 funding schemes from the Government of India to help all these existing MSME for business expansion and activities.
Top 5 Funding Schemes from Government in India
Credit Guarantee Trust Fund For Micro & Small Enterprises or CGTMSE Loan Scheme
CGTMSE loan scheme is one of the biggest startup loan schemes that the ministry of India has launched. This scheme allows collateral-free credit to the MSME sector. The scheme lets the small, medium, and micro enterprises get a collateral-free loan of up to 1 crore.
The loan is dispersed via a trust named under Credit Guarantee Fund Trust for Micro and Small businesses and enterprises (CGTMSE). The guarantee covered under this scheme is available to the extent of 85% of the sanctioned amount. The fee that funds charge is 1% pa.
The MSME’s that are eligible for this scheme are retail trade businesses, educational institutions, self-help groups, and training institutions.
PM Svanidhi Loan Scheme
The government recently launched the PM Svanidhi loan scheme in June 2020 during the coronavirus pandemic. The scheme was established to provide credit for working capital to all the street vendors.
Under this funding scheme, all the street vendors or small business owners can take collateral-free loans with low-interest rates for one year at a minimum. The main objective of launching this scheme was to provide working capital loans at a subsidized rate and to reward digital transactions.
Pradhan Mantri MUDRA Yojana (PMMY)
Under Pradhan Mantri MUDRA Yojana, MUDRA stands for Micro Units Development & Refinance Agency Ltd. This scheme provides refinancing support to various banks and NBFCs for lending to Micro units the loan requirements for up to 10 lakhs.
This loan category is further divided into three categories named “Shishu,” “Kishore,” and “Tarun.” At present, Mudra loan aims to provide business loans for traders, shopkeepers, and vendors. Under this scheme, businesses will be able to get a working capital loan through a mudra card.
Udhyog Adhar or Udyog Aadhaar Memorandum
Udhyog Adhar is a one-page registration scheme form that constitutes a self-declaration format under which all MSMEs will certify their existence. Under this scheme, every small, micro, or medium enterprise gets a 12 digit unique identification number known as Udyog Adhar.
The eligibility criteria for Udhyog Adhar registration are not for businesses but those categorized under micro, small or medium enterprises. This helps small businesses and enterprises in availing loans without any collateral or mortgage.
In addition to that, it also makes the process of availing approvals, licenses, and registrations relatively easy. Other perks include reimbursement of ISO certification, concession in electricity bills, subsidy on NSIC performance, and credit ratings.
National Small Industries Corporation (NSIC)
NSIC or National Small Industries Corporation is an ISO-certified Indian Government enterprise that comes under MSME’s. This acts as a working aid to promote the growth of MSMEs by providing combined and collective support services.
These support services are focused on marketing, technology, finance, and other allied services all across the nation. NSIC also brings up new devised schemes to reduce the burden on small enterprises. Under NSIC, you can avail of two different schemes that include Marketing Support Scheme and Credit Support Scheme.
A credit support scheme helps MSME’s get financial support for further marketing activities, and a marketing support scheme helps with various marketing intelligence steps.
With that said, we can indeed say why these five funding schemes are currently the top schemes initiated by the government for MSME’s. Besides that, there are many other schemes like CLCSS (Credit Linked Capital Subsidy Scheme), MSME Loan in 59 Minutes, ZED certification scheme, and lots more focused on supporting MSMEs.
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