Adequate Funding Schemes to Run and Operate a Business in any Sector
As per industry reports, SMEs in India employs more than 100 million individuals and contribute around 30% to its GDP. As per NRI Consulting, this sector can create close to 1 crore jobs in the next 4 to 5 years.
Owing to the strong potential of this sector, both the Government of India and private lenders offer small scale industry loans that are specific to MSMEs. Such advances can be utilised by an MSME to run and operate their business.
Few of such loans are as follows –
- Standup India
One of the initiatives initiated by the government is Standup India. This scheme was introduced in 15th August 2015, and it is governed by the Small Industries Development Bank of India (SIDBI.)
Business loans under this scheme are targeted towards individuals belonging to the SC/ST category and women of any segment. Entrepreneurs who are engaged in a Greenfield enterprise can avail up to Rs.1 crore.
- Credit Guarantee Scheme for Micro and Small Enterprises
The Credit Guarantee Scheme for Micro and Small Enterprises was established on 30th August 2000. CGSMSE was crafted to provide collateral-free advances to every entrepreneur. Other than that, under this advance, both working capital loans and term loans are sanctioned. Borrowers can avail up to 75% of guarantee cover by applying under this loan.
- Pradhan Mantri MUDRA Yojana
Another small scale industry loan extended by the government is the Pradhan Mantri MUDRA Yojana or PMMY. This loan is divided into 3 categories to facilitate the different requirements –
- Shishu – This category has been crafted for individuals who aim to initiate a new business. Borrowers can avail up to Rs.50,000 under this category.
- Kishore – Another small scale industry loan extended by the Pradhan Mantri MUDRA Yojana is Kishore. This advance is for the entrepreneurs who wish to expand their organisation. One can avail up to Rs.5 lakh under this category.
- Tarun – The final category of MUDRA loan is Tarun. This advance enables one to avail up to Rs.10 lakh. This advance should be utilised by entrepreneurs for expansion purposes.
The SIDBI Make in India Soft Loan Fund for MSMEs is provided to MSMEs to meet their required debt-equity ratio. The soft loans extended by this advance can be utilised to initiate an enterprise or to expand it.
A. MSME loans
Those who don’t know what is MSME – It is short-term business loans provided specifically to SMEs and MSMEs. Usually, these loans are offered by NBFCs with easy-to-meet eligibility criteria and an attractive rate of interest.
B. Working capital loans
Another small scale industry loan offered by different private lenders is working capital loans. This loan enables an enterprise to meet its daily or short-term projects. A working capital loan enables small businesses to address funding gaps created by non-payment by customers.
Borrowers can utilise such loans in the following ways –
- Purchase raw materials,
- Buy inventory,
- Pay distributors in advance,
- Maintain a steady cash flow,
- Pay electricity bills, rent, etc Financial institutions like Bajaj Finserv provide the loans mentioned above. The company also approves and disburses loans within 24 hours. The NBFC also provide pre-approved offers that simplify the process to avail financing. These offers are available on business loans, personal loans, and several other financial products.
By applying for small scale industry loans, entrepreneurs can avail the required funding to address several requirements. For instance, they can use the loan to either expand their business or cater to financial emergencies.