3 Great Small Business Loans Offered By the Government of India

15 Tips to Manage Business Debt Like a Pro

Are you a small business looking for capital to boost your business or start one? While several private banks offer MSME loans, you could consider taking a look at these small business loans by the government of India.

What Kind of Loan Do You Need?

Broadly, there are three loan categories that you could borrow into. These loans are specific to what your business currently needs. You can also choose based on the stage of business that you’re in.

1. Working Capital Loan:

Working capital is the money you need to meet your day-to-day business expenses like your monthly electricity bills. All your operational costs come under working capital and some loans are crafted to suit your working capital needs alone. The loans are offered typically for a 12-month tenure and have an interest rate of 12% to 16%. These can be either secured or unsecured.

2. Corporate Term Loan:

Term loans are used to start a venture or expand a business. Therefore, if you are starting up, you may want to look at term loans/funding. These are large sums of money borrowed from banks or financial institutions that are expected to be repaid over a longer time. These loans are secured (company assets) and have a longer tenure and the interest rate is negotiable. They can be converted into equity options and also have tax benefits.

3. Term Loan:

These loans are used to buy fixed assets. If you want to put up an office, you could consider borrowing a term loan. Typically, these loans are secured with a tenure of 1-10 years and a floating interest rate between 10 and 20%. 

3 Govt. Small Business Loans you should know about:

The government of India has partnered with financial bodies to make credit availability easy for SMEs in the country. If you are planning on starting something of your own and require money, you can consider one of these small business loans schemes offered by the government of India.

1. The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS)

The credit guarantee fund scheme is run by the government of India in collaboration with SIDBI (Small Industries Development Bank of India) to give unsecured loans to businesses. You can borrow up to Rs.100 Lakh in term loans or working capital loans as per your eligibility and feasibility.

2. The MUDRA Loan Scheme

MUDRA stands for Micro Units Development and Refinance Agency Ltd. It is an agency launched by the government of India to facilitate corporate term loans to entrepreneurs. Take a look at the Mudra Loan Scheme features in this table below:

MUDRA Loan Scheme

3.  Stand Up India Scheme

The Stand Up India scheme is a special scheme started by the government of India to financially empower SC/ST and women entrepreneurs. You can borrow between Rs. 10 lakh and Rs. 1 CR to start a manufacturing, trading or service unit, which is to be repaid in 7 years.

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  3. I am optimistic and wish to start a new business. I would like to start a Book shop. Kindly guide me to move forward.

  4. Your article is very helpful to me. Actually i am was finding article about “Apply for Small Business Loan Easily”. Then i found your article. its great information. Thanks for sharing such a good content.

  5. I need to start a man power supply company I need financial support and I am looking for a loan is it available

  6. Hello mam, we are running a paddy/rice business with small capital for the past 6 months. This business is good and we got some good parties regularly. Now we want to expand our capital. Pl. Advice us on govt. Loan schemes.


  7. My business start in running a 2.6 months and I standing in future I want a loan so please give me loan

  8. sir,
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