5 Government Schemes to Raise Collateral Free Funds for Business Start Ups
Starting up requires funds. And, not all of us can go to Angel Investors. Here are 5 government schemes that can help you get collateral free business loans for your business. This loan comprises of both term loan and working capital.
While starting a business is something many of us dream of, one thing that hold us back is the need for money.
Government of India can be your big support in this process.
Let’s find out some government schemes that encourage entrepreneurship in the country and help you with the business loans from Rs 10,000 - 1 Crore. Under these schemes, government of India supports chosen eligible units with collateral free loans with very nominal interest rates.
1. Mudra Yojana - This scheme caters to the people at the bottom most line in our economy. Under Mudra Yojana, you can get a loan from 10,000 to 10 L to start and expand your business.
There are three sub-schemes here:
i. SHISHU Yojana - SHISHU means infant. This scheme is for those businesses that are in their infancy and need a loan of up to 50K Rs/-.
ii. Kishore Yojana - For business expansion. The loan here can be from 50 to 5 Lakh Rupees.
iii. TarunYojana - When you want to grow bigger or diversify and need a loan from 5 Lakh to 10 Lakh Rupees.
The interest rates here are nominal. And, the loan can be sought from commercial banks, RRBs, Small Finance Banks, NBFCs, Registered Micro Finance Institutions, Private and Publis Banks etc.
So, if you want to start a small bakery, beauty parlour, manufacturing or trading business, buy an e-rickshaw, this can be a suitable business loan for you.
2. Stand Up India Scheme
- Loan Amount: Rupees 10 Lac to 1 crore
- Limitation: Loan available only to SC/ ST/ Women entrepreneurs
- Companies seeking loan under this scheme should have 51% share of the company allotted to SC/ ST/ Women entrepreneurs
- Loan available for Manufacturing/ Services/ Trading activities to the Greenfield project of a new entrepreneur. Existing businesses do not get this loan.
- Up 75% project cost can be sanctioned under this scheme.
- Doesn’t need you to provide collateral.
3. PMEGP - Prime Minister’s Employment Generation Program
- Business loans to set up new business only.
- Loans available for Service based and Manufacturing business only
- Loan for Service based business : Up to Rs 10 Lakh + Subsidy
- Loan for Manufacturing Units – Upto Rs 25 Lakh + Subsidy
- Minimum age to apply : 18 years
- Minimum qualification needed : Class VIII
4. CGTMSE - Credit Guarantee Fund Trust for Micro And Small Enterprises
- Security cover provided to banks by government when they support micro and small businesses with business loans
- Loans available for Manufacturing / Service/ Retail business
- Loans not available for Educational institutes, Agriculture & SHGs
- Scheduled Commercial Banks/NBFCs/ RRBs provide the loans
- Security cover in the range of 75% -85% of project cost.
- Annual guarantee fees to be paid to get the security cover
5. PMFME - PM Formalization of Micro Food Processing Enterprises
- Special scheme to get small food processing units in formal sector.
- Business loan for expansion & upgradation of units working on ODPOP.
- Up to 35% grant to the selected units, limited to a maximum of 10 Lakh Rupees.
- Skill training, Marketing, Branding, Common infrastructure supports also provided to selected units.