The growth of the Indian economy is largely driven by micro, small, and medium enterprises (MSMEs) and small and medium enterprises (SMEs). These businesses contribute almost 40% to India’s Gross Domestic Product (GDP). Additionally, they employ a large part of the total working population and account for significant exports.

SME is a crucial sector when it comes to the country’s development. One major obstacle for this segment is the lack of formal credit facilities. To overcome this hurdle, the government offers several schemes for funding the SME sector.

The top five SME financing schemes include:

1. Pradhan Mantri Mudra Yojana (PMMY)

PMMY offers loans to businesses under the Micro Units Development and Refinance Agency (MUDRA). The primary objective is to provide funding at affordable SME loan interest rates to ventures that do not get financial assistance. These loans are structured as follows:

• Sishu: up to INR 50,000
• Kishor: INR 50,000 to INR 5 lakh
• Tarun: INR 5 lakh to INR 10 lakh

1. Credit Guarantee Fund Scheme for Micro and Small Enterprises

This scheme provides monetary support to the MSME sector. Under this scheme, new and existing businesses can avail of collateral-free MSME loans. These enterprises get working capital finance for up to INR 10 lakh without any security. Additionally, loans exceeding INR 10 lakh and up to INR 1 crore are available against a property.

1. Stand-Up India

The Stand-Up India initiative is governed by the Small Industries Development Bank of India (SIDBI). This scheme offers loans between INR 10 lakh to INR 1 crore. However, the basic MSME loan eligibility under this scheme is that the borrower must belong to the scheduled caste (SC) or the scheduled tribe (ST) category, or a woman must be the business owner.

1. National Small Industries Corporation (NSIC) Subsidy

This subsidy offers marketing and raw material assistance to small businesses. It provides marketing support to improve competitiveness and the market value of the products and services that SMEs offer. Through this subsidy, SMEs get financial assistance to buy domestic and imported raw materials.

1. Credit Linked Capital Subsidy Scheme for Technology Upgradation

With this business loan, businesses can do a technological upgrade of their processes like marketing, manufacturing, or supply chain. The government’s objective behind this scheme is to reduce SMEs’ cost of production and help them remain price competitive in the local and foreign markets.  An upfront subsidy of 15% up to INR 15 lakh is available under this scheme.

Apart from the government, private lenders like Mahindra Finance also offer SME loans at economical interest rates. Visit the lender’s website, check out the various funding options, and opt for a suitable SME loan now!