MSMEs across the country are offering a constructive solution to several issues like unemployment, poverty, income disparity, regional imbalances, and more. With a contribution of almost 40% to the total GDP of India, almost 50% to exports, and offering employment to over 120 million people, MSMEs are undoubtedly playing a pivotal role in the economy.
The government of India has acknowledged the importance of MSMEs and launched several schemes in support of small businesses. These initiatives have helped small business owners get an MSME business loan that can be further leveraged to expand business operations with ease. In this article, we look at some of the best MSME business loan schemes that have been launched by the government.
Impact of MSMEs on the Indian Economy
MSMEs have emerged as a dynamic and vibrant part of the Indian economy. They have provided significant employment opportunities at a lower capital cost when compared to established industries.
Furthermore, MSMEs assist in the industrialization of the rural areas that contribute towards a more equitable distribution of national income and minimizes regional imbalances. MSMEs act as the support system for established industries and contribute majorly towards the socio-economic development of India.
Ease of Doing Business: A Boon for MSMEs
MSMEs have been provided with access to more credit to help them effectively recover from the damages done during the pandemic. The potential of MSMEs to generate extra exports and employment opportunities in the country necessitates the reassessment of the current business environment and taking active measures to make it conducive for MSMEs in the future. Ease of doing business is focused on enhancing credit availability for MSMEs through various digital channels. Here is a detailed look at some of the best MSME business loan initiatives:
- Stand Up India: Managed by the Small Industries Development Bank of India, Stand Up India was introduced by the government to disburse loans of Rs 10 lakhs to 1 crore to scheduled castes, scheduled tribes, and women .
- CGTMSE: The Credit Guarantee Trust for Micro and Small Enterprises ensures the disbursement of collateral-free MSME business loans for both established and new enterprises. The CGTMSE was revamped in 2022 with an additional credit of Rs 2 lakh crore to help the micro, and small enterprises avail of the Emergency Credit Line Guarantee Scheme.
- Udyogini: The Udyogini scheme is curated specifically for women entrepreneurs to acquire the required amount of capital to commence and expand business operations. The maximum loan amount that can be disbursed under this scheme is Rs 15 lakhs .
NBFCs: An Effective Alternative
While the aforementioned schemes represent the resolve of the government to solidify the financial landscape for MSMEs in the country, they don’t guarantee succes when it comes to acquiring the required amount of funds at the right time.
The fact that the schemes are associated with government banks leads to longer turnaround times. Small business owners can find themselves waiting for weeks and sometimes even months to get the funds credited into their bank accounts.
In contrast, MSME business loans from NBFCs like Kinara Capital are approved quickly and can be disbursed within 24 hours. They serve are a good alternative to the existing government schemes and allow small business owners to address their immediate financial needs.
Here is how you can apply for an MSME business loan from Kinara Capital: Take the one-minute eligibility test on the Kinara Capital website or mobile application, myKinara. If you qualify, you can complete the process yourself or ask for help from a Kinara Capital loan officer. The flexible documentation process easily substitutes some documents for others, subject to availability. Once your application is approved, the loan amount is disbursed into the provided bank account.
To meet the eligibility criteria, your business should be
- At least two years old
- Be a part of the services, trading, or manufacturing sector
- Have a monthly turnover of a minimum of Rs 50,000
- Should fall under the list of sectors and sub-sectors serviced by Kinara