How to access the Government’s Emergency Credit Scheme to Restart Business

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(Last Updated On: October 19, 2021)

Over the past few weeks, the government has disbursed over ₹3 lakh crore as emergency credit scheme for MSMEs to bring back their businesses.

However, the MSME sector has two main challenges due to the emergency credit scheme:

  1. Uncertainty over which scheme to avail from the Government due to lack of clarity on the measures.
  2. Approaching the right lending institution to avail the scheme.

An Economic Times News Update states how over 35% of MSMEs have begun to shut shop despite the Government announcing the latest loan schemes.

If you are from the MSME sector, do not worry.

Here’s how you can access the emergency credit schemes from the Government.

How to Access Emergency Credit Schemes for MSMEs – Tips

Apply to banks backed by the Government

Public sector banks have already disbursed over ₹ 8000 crores worth of loans to the MSME sector. So, why wait? Stay updated on PSU banks that are currently distributing loans to SMEs. Here are the top 5 banks you can approach:

  • State Bank of India
  • Union Bank of India
  • Canara Bank
  • Punjab National Bank
  • Central Bank of India

Register and address the MSME minister directly on grievance portals

With the world going online to address their grievances, you need to join in as well. The Government recently launched the CHAMPIONS portal, a robust, technology-driven website actively used by MSMEs now to talk about their business problems, financial and technological problems and get the assistance they need.

You can check out the CHAMPIONS portal here. If you feel ambitious, join social media handles like Twitter and Facebook to keep up with the latest MSME updates and loan schemes.

The MSME Ministry is active on Twitter and MSME Minister Nitin Gadkari has insisted that businesses from the sector direct their debts and questions to this portal.

Register your business on Udyog

Maybe this comes as surprise, but it’s always best to register your MSME on the Udyog Aadhar Memorandum website if you wish to approach banks for a loan. The process is quick and requires you to fill only one form. You can find the entire registration process here.

Bonus: Do you know whether you are a Micro, Small or Medium enterprise? The New Classification of MSMEs is as shown in the image below.


Keep documents/credit score intact

Banks (not NBFCs) review a business’s loan application before sanctioning any amount of credit to them under the emergency credit scheme. Before you avail a loan, keep your business documents and credit score with you.

Here’s what you need:

  1. A Profit and Loss statement or audited Working capital statement for the past 1 year
  2. Proof of Business Residence
  3. Personal IDs like a PAN Card, Passport
Review this document to know what you need before applying for a COVID loan scheme

Ensure you have good credit history before applying for a huge loan. If not, we suggest your business apply for a smaller loan scheme to meet immediate requirements.

Borrow small, but long-term

Make sure you get a clear understanding of the MSME schemes. You can read it here.

The Government-approved MSME schemes are updated too. Check them out below.

Make sure to opt for collateral-free loans. Also, if you wish to take care of immediate financial needs, opt for micro-credit. Microfinance lenders should be empathic with providing credit to small businesses. Your customers are struggling too. But they can still buy from you.

For example, a ‘buy-now-pay-later option for customers works well to get back the credit you need to pay back to lenders. You can continue production on credit and have the money paid back later.

The Government misstepping up, but we still need an order for distributing loans to the MSME sector. While the Government and MSME ministry works on that, we suggest you focus on taking your business online. Your loyal customers are now online. Take your business online on platforms that do not charge you for setup. Collect payments online, and slowly, get your business back!


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