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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  1. There are so many business loan providers in India that it might get confusing for new entrepreneurs. This article is really helpful in understanding Small Business Loans offered by the Government of India. Apart from these schemes, you can also opt for startup business loans from Lendingkart. If you are planning to start your own business, you can approach Lendingkart who provides loans up to ₹ 2 Crore. The best part about these loans are that there is no requirement for collateral to get a business loan.

  2. Thanks for sharing such very useful and very educative article like this. This is very helpful. Really nice, Keep it up.

  3. HI,

    I am Shashi. I want start a small restaurant in our city.so please give the information for loan. Because I want start early to small restaurant.
    Thanks. Mob:-+971565608122
    Wts app:-+971521323300

  4. We established a new portal like amazon thatbis alfaaz .in
    We need fund rice our new e com
    business like amazon in their b2c service in all segment plz caal us 9844109109

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

  6. I want to start a preschool, but do not have the relevant amount.
    I am a woman with a child. I am ready to take a loan but with low interest rates.
    Will the government help me?

  7. I want to make agriculture machinery and heavy equipment machinery manufacturing
    I need to create ITI machanical engineering more jobs
    1, engines service
    2,electrical services
    3, hydraulic system services
    4, transmission services

  8. 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.

  9. Its hard to choose best option. Govt has provided various scheme and private lenders also have their strong network. So before applying for small business loans please check the source.

  10. I need a loan for furniture industry which can supply all of Mizoram state and other NE States. I am certain becoz i had many furniture manufacturing ideas which are only available in Europe and US.But I need atleast a standup India scheme loan .

  11. Hi
    This Guru Murthy , From Bangalore , I want startup Business Loan For Run My Teleshoppy Company . I Have Register My Company . I want 5L To Run My Company So Plz Give Me Startup Loan For Running My Company.

  12. I think there is some mistake in this post in Mudra loan – Kishor stage. as I have read at other websites they say you have to have a business running to get this loan up to Rs 5 Lakhs. If someone wants to start a business using this money it is not possible as they have to show the already established company to get the loan.

  13. I want to start a small business. But i have no working capital. Can i get any financial helps with lowest interest? Can you help me ?

  14. I need the loan up to the 10 or 14 lakh for stablish the vacceine house after 8 months so please suggest me.
    Right time my earning is 5000 rs. Per month

  15. Hi, ours is a regd. partnership firm in cochin, kerala. This is a govt. approved MSME manufacturing unit. We are one year old. We manufacture & export various food products. Already exported to Australia, Kuwait etc.

    We presently enjoy OD limit of Rs.30 lakhs from a bank. We urgently need funding of Rs.30 lakhs to better our infrastructure to export bulk quantity to various countries. We are holding confirmed export orders from regular clients. Can any one help us with required funding to take our business to the next level. Thanks

  16. It’s all humbug.
    Mine is 3 months old business with GST registration and current account. I need some fund to expand business. Even after showing turnover of Rs. 20 lakhs so far, my own bank is asking for security for CC and overdraft or any other loan. I confronted several nationalised banks to find out if they could lend me loan under govt scheme, but none gave satisfactory reply. All raised hands saying by business should be atleast 3 years old with 3 years ITR . So, how does a “STRATUP loan” suffice with such conditions?

    Once you apply for loan online, you get hundreds of calls from some loan consulting companies (mostly from Delhi) every day saying that will help you in getting loan under PM Mudra yojna or any other govt. schemes with 35% subsidy. Once your documents are verified and found genuine (which have to be), they inform you that your desired loan could be sanctioned and they send you KYC form and ask you to deposit Rs. 1000 to Rs. 15000 as a their fee to prepare a project report by CA. Then, after your loan is approved, you have to pay them 5% of the loan amount. I have been cheated once for Rs. 1500. The moment you pay them the money, their reply would be “sorry, unfortunately your loan has been declined”.

    So friends, better don’t be greedy and do not keep hope of any such schemes. Just look around you. You would hardly find someone who must have availed loan under these kind of govt schemes. Instead try other sources like borrowing from friends and relatives or selling your ornaments.

  17. Dear concern, my self Rashmi Gupta, I am planning to start my business & need funds. Please suggest me how can I proceed my plan for got loan upto 10 lakhs.

    Thanking you.

  18. We also offer loan for all kinds of legal business. Loan for small business and investments of all kinds are also available. All amounts of loan is available both secured and unsecured. For more info contact us now at

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

  20. 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.


  21. I want to purchase Cnc machine up-to 15 lack. I need loan without mortgage. I have government orders above 10lack and 3year itr and all documents but not any thing to mortgage.

  22. I have Computer & Zerox shop, online application and other online works done here. I need to buy few more computers and Zerox peripherals, So I need loan. Please help me in this regard.

  23. i am running an placement agency from last three years ,now i am thinking to expending
    my busnines plz help to provide a loan

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

  25. I want to start a new business and for that i need a loan of 15 lakhs how can i get it and from where i can get it.

  26. I need finance of 5 lakhs for my manufacturing startup but the banks are not ready to provide any even after so much of initiatives by government.The banks are asking for financial details.To be practical if I have a strong banking why will I go for a loan,its common sense.Kindly advice how and where to proceed

  27. I am in Bangalore my Peenya industrial small company manufacturing bakery equipments but I can improve the company more stock of machines I can want Loan amount approximate 800000 any help with your funding

  28. My business is 6 months old now looking for funds for working capital and expansion as well, so looking for funds for Rs. 5 lacs.

  29. I have a small factory (furniture),I’ve been working,struggling and standing on my own feet for 5 years and now I’m trying to expand my factory,so I need to communicate with any government bank for getting a loan.

  30. sir,
    I am going to develop rural world of India. I left my job currently and now starting my organization Bardhiya Agro Industries Private Limited in rural area of Uttar Pradesh now I required some funds

    1. Me ek 50000 ruPee ka loan cha rha hu mene bank ke kai chakkar lgaya par mujhe loan lene ki kamyabi nhi mili

    2. call me for any loan requirement 7569155155 100% comission free no need to worry we dont take single rupee also
      vijayashri financial services
      cell no ; 7569155155

  31. Hi …! I am looking to get a finance … As per your terms….( term loan ). I need to start my own venture … And I am looking for 30 lakhs of funding … !

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