Small Business Loans By Banks and Government of India Schemes

Small Business, startups or industries need a lot of financial aid and support to grow, flourish and establish itself amongst the MNCs, big organisation and/or companies that are privately funded or already have a well established presence in the local market.

This is the reason why small business loans is the need of the hour as more and more people are looking to start their own business.

Small Business Loans: Financing Facilities

There are various financing options available to startups, small businesses and their entrepreneurs. Below is the list of financing facilities that can be availed from banks:

Working Capital Finance

This type of finance can be availed either through direct funding or by a letter of credit. Working Capital finance helps in purchasing assets and also in the operating expenses of your business. Almost all the Public Sector banks provide Working Capital Finance including State Bank of India, Andhra Bank and Bank of Baroda.

Term Finance

If you are looking to purchase fixed assets for your business like machinery, buildings etc, then ‘Term Finance’ is the loan that you should avail. With floating interest rates, there are different type of term loan – short term (3 years), mid term and long term (10 to 15 years).

Almost all the Public Sector banks provide Working Capital Finance including Andhra Bank and Bank of Baroda.

Corporate Term Loans

Do you already run a business and you are looking to expand or start new venture? Well, then corporate term loans is the one that can be used for expansion, starting new ventures, and/or in the running of your existing business in any particular market. Almost all the Public Sector banks provide Working Capital Finance including State Bank of India, Andhra Bank and Bank of Baroda.

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Small Business Loans Scheme initiated by the Government of India

Apart from banks, the government of India too has initiated facilities and schemes that provides financial support. Here is the list of several.scheme for small and medium businesses in India –

The Credit Guarantee Fund Scheme for Micro and Small Enterprises

The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was launched in the year 2000 by the Government of India to provide collateral-free credit to Indian Micro, Small and Medium Enterprises. Under this scheme, both existing as well as new enterprises are eligible.

The Credit Guarantee Fund scheme provides credit facilities in the form of working capital and term loans of up to Rs. 100 lakh per borrowing unit. The amount is contributed by the Government and Small Industries Development Bank of India (SIDBI) is in the ratio of 4:1. As of May 31,2016, it has contributed Rs. 2477.78 crore. Check out the government website to know more about the scheme

Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCSS)

To help SMEs upgrade their existing plants, machinery and/or process to remain competitive in the international trade markets, the Ministry of Small Scale Industries (SSI) has an extensive scheme for technology up gradation of Small Scale Businesses and Industries.

Known as the Credit Linked Capital Subsidy Scheme (CLCSS), the scheme aims to facilitate technology up gradation by providing upfront capital subsidy of 15% (limited to maximum Rs.15 lakhs) to SSI units for credit availed for modernisation of their plant, process and machinery.

All partnership firms, sole proprietorship, cooperative, public and private limited companies are eligible for this scheme. Check out the government website to know more about the scheme.

Government Subsidy for Small Business from NSIC

The National Small Industries Corporation (NSIC) provides two basic subsidies for small scale businesses – raw material assistance and marketing assistance.

Raw Material assistance helps by financing the purchase of Raw Material (both indigenous & imported) while marketing support gives the MSMEs funds to enhance competitiveness and marketability of their products.

Thus, giving the small businesses an opportunity to focus not just on bettering manufacturing quality products but also in its marketing. Check out the government website to know more about the scheme.

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Mini Tools Room and Training Centre Scheme

Mini Tool Room and Training Centres is set up by the Government of India to assist state governments by providing financial assistance in the form of one-time grant-in-aid.

This financial aid provides up to 90% of the cost of equipment/machinery (maximum to Rs. 9 crore) in case new Mini Tool Room has to be built and 75% of the cost (maximum to Rs. 7.50 crore) in case an existing tool room has to be upgraded.

The main objective of this mini tools room and training centre scheme is to construct more tool rooms to aid technological and training support to the MSMEs in tool manufacturing. Check out the government website to know more about the scheme.

Also Check Out The Eligibility Criteria & Requirements For Small Business Loans!

These are the best small business loans in India for 2017 by banks and Government of India in all sectors.

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About Deepti Verma 299 Articles
Deepti Verma is a Political/Social Writer with an opinion on almost everything! Follow @universal_rover