Top 10 MSME Loan Schemes in India 2023

According to a report published by the Ministry of Micro, Small, and Medium Enterprises, India has over 12 million registered MSMEs. The MSME sector is undoubtedly the country's backbone, contributing rapidly to the country's economic prosperity.

As a result, the Government of India and other financial institutions have taken significant steps to ensure that these businesses may obtain proper MSME loans and grow. Here's a quick breakdown of ten such projects that could help this business. 

10 Best MSME Loan Schemes in 2023

1. MSME Business Loans in 59 Minutes

Under this scheme, an eligible MSME can request for a credit amount ranging from one lakh to five crores. This MSME loan can be obtained from both traditional institutional lenders and NBFCs at an annual interest rate of 8.50%. 

2. Growth Capital and Equity Assistance Scheme (GEMs)

This form of funding, which acts as a mezzanine financing instrument, might be helpful for India's micro, small, and medium enterprise (MSME) sector. A company looking to grow or update its mechanism protocols should do well to consider this strategy. The loan amount is flexible, but it is typically at least Rs. 25 lakh.

Surprisingly, this fiscal boost can also be helpful in non-asset producing investment measures, such as one-time costs for R&D or advertising.

3. Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE)

Small businesses frequently lack collateral to offer as security when applying for finance. As a result, they are frequently labeled as high-risk borrowers, and their loan application is denied. 

The Government of India has introduced this business loan for the MSME sector in order to remove such barriers for these enterprises. This policy allows both new and existing enterprises to apply for collateral-free loans (up to Rs. 200 lakh on an outstanding basis) from certain financing institutions in the country.

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  4. Credit Linked Capital Subsidy Scheme for Technology Upgradation

The upfront capital cost necessary to acquire an asset is frequently prohibitively expensive for a small business. However, such assets are inextricably linked to this company's capacity for long-term growth.

With these issues in mind, India's MSME ministry developed the aforementioned initiative. To elaborate, a company that fits the conditions for this scheme can receive a 15% capital subsidy to enhance its technology infrastructure. Notably, the sanctionable amount is limited to Rs. 15 lakh. 

5. Prime Minister Employment Generation Programme (PMEGP)

As a credit-linked subsidy program, this initiative by the Indian government has proven to be rather effective. Essentially, under this plan, the government can foot the bill for a sizable chunk of a business's project costs. The initiative provides loans between Rs.5 million and Rs.25 million. 

The creation of new employment opportunities in rural areas is a key objective of this initiative, which aims to do so by empowering entrepreneurs to grow into sizable businesses that employ many people. For this reason, the initiative has focused on small businesses. 

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6. Pradhan Mantri MUDRA Yojana (PMMY)

The government here has implemented this program with small and medium-sized enterprises outside of the agricultural sector in mind. Therefore, businesses in the retail, manufacturing, and service industries can get unsecured business loans for MSMEs from a variety of financial intermediaries of up to Rs. 10 lakh.

7. National Small Industries Corporation (NSIC) Scheme 

NSIC offers small firms a finance and marketing support strategy that gives them an edge over their competitors in the free market. For those who need it most, this program can provide a one-time cash infusion to help small firms with limited resources increase their marketing efforts. The NSIC specifically hosts technology exhibitions and fairs to support these types of startups.

With interest rates ranging from 9.5 to 12%, micro, small, and medium-sized enterprises (MSME) can borrow up to Rs. 5 crore.

8. Udyogini Scheme 

This plan, spearheaded by the Women Development Corporations, has won worldwide acclaim for assisting the nation's businesswomen. A small or micro firm led by a woman entrepreneur may be eligible for a subsidized MSME loan under this program if it is located in a rural or undeveloped area. Applicants can apply for a loan of up to Rs. 3 lakh.

9. Stand Up India Scheme

The Stand Up India Scheme assists MSMEs in underserved areas of India. According to the loan's objectives, at least one SC/ST and one woman borrower will be able to borrow a specified amount to start their greenfield initiatives. The sanctionable credit is limited between 10 lakhs and 1 crore and is supported by the Small Industries Development Bank of India (SIDBI). 

Also read : Pradhan Mantri Mudra Yojana (PMMY): Empowering Micro-Enterprises in India

10. SMILE Scheme 

Another move adopted by the authorities to provide financial support to small and micro firms is the SIDBI Make in India Soft Loan Fund for MSMEs, also known as the SMILE initiative. New businesses can acquire up to Rs. 50 lakh in loans, while existing businesses can get a minimum of Rs. 25 lakh. An MSME loan under this scheme has very flexible conditions, allowing for a debt-equity ratio balance to be maintained.