Startup business loans by government: Know eligibility and how to apply

As of June 2022, the number of startups in India was recorded at 72,993, skyrocketing from 471 in 2016 (Source: www.livemint.com). Startup is an important factor in driving economic growth by creating employment and contributing to the GDP. To nurture the startup ecosystem, the Government of India has introduced multiple government loan schemes that extends startup business loans. Startups across the country can apply for these loans online easily if they qualify the eligibility criteria.

List of government startup loans for new businesses

If you need a loan for your startup business, there are many government schemes that extend loans for startup businesses in India. Here are a few startup business loans by Indian government that you can apply for:

1.Startup India Seed Fund Scheme (SISFS)

The SISFS scheme aims to provide financial assistance to startups for development of a Proof of Concept, prototype development, product trials, market entry, and commercialisation. The Seed Fund is being disbursed through select incubators across India. Startups can apply to three incubators simultaneously under this scheme.

If you get selected this government startup business loan, the incubators will provide startups with up to ₹20 lakh for validation of Proof of Concept, prototype development and product trials. Up to ₹50 lakh can be provided to startups for market entry, commercialisation, or scaling up through convertible debentures or debt-linked instruments.

Eligibility:

• The startup must have a business idea to develop a product/service with a market fit, viable commercialisation, and scope of scaling.
• The startup should be using technology in its core product/service.
• A startup, recognised by DPIIT, incorporated not more than 2 years ago at the time of application.
• Startup should not have received more than ₹10 lakh of monetary support under any other Central or State Government scheme.
• Preference would be given to startups creating innovative solutions in sectors such as social impact, waste management, water management, education and agriculture.

How to apply?

1. Visit seedfund.startupindia.gov.in
2. Login with credentials for Startup India portal
3. Click on the apply now button given on the homepage

2.PMMY scheme

The Pradhan Mantri Mudra Yojana (PMMY) scheme is popularly known as Mudra loan and offers short term loans for startup businesses. Mudra loan scheme is one of the most applied for schemes from the ambit of startup business loans by Indian government. The loan scheme is divided into three categories namely Shishu, Kishor and Tarun. These categories signify the requirement of credit facility and the stage of growth development of the borrowing business unit.

Under the Shishu category the scheme extends loan funding of up to ₹50,000 and caters to business owners whose needs are limited. This is an effective financing scheme for startups and entrepreneurs, who are just kick starting their businesses. This is a government startup business loan without collateral that is offered at low interest rates.

Eligibility:

All startups under the ambit of Non–Corporate Small Business Segment (NCSB) including proprietorship/partnership firms running as small manufacturing units, service sector units, shopkeepers, fruits/vegetable vendors, truck operators, food-service units, repair shops, machine operators, small industries, artisans, food processors and others, in rural and urban areas can apply for MUDRA loan for startup businesses.

How to apply?

1. Visit Udyamimitra portal (udyamimitra.in)
2. Register on the portal
3. Login to the portal with the credentials
4. Click on the apply button on the homepage
5. Fill in the form and click on submit

You can also check with relevant banks e.g., SBI e-Mudra loans, for details on the PMMY loan scheme.

3.Stand-Up India scheme

Stand-Up India is a startup business loan for women by Government of India. The scheme provides financial assistance to SC/ST and women entrepreneurs for setting up greenfield businesses involved in manufacturing, services, trading or agri-allied activities.

This startup business loan by Indian government offers term loans and working capital loans between ₹10 lakh to ₹1 crore. This is an unsecured business loan for startups that can finance up to 75% of the project cost.

Eligibility:

• The borrower must be an SC/ST or a woman entrepreneur.
• The minimum age of the borrower should be 18 years.
• The enterprise has to be a greenfield project engaged in manufacturing, service, trading or agri-allied activities.
• If the business is a non-individual enterprise, 51% of the shareholding and controlling stake should be owned by an SC/ST or woman entrepreneur.

How to apply?

• Visit the Stand-Up India portal
• Register on the portal
• Log in with your credentials
• Click on the apply button
• Fill in the form and submit the application

4.Coir Udyami Yojana

This is a credit linked subsidy scheme for setting up of coir units. The maximum cost of the project must be ₹10 lakhs plus working capital, which shall not exceed 25% of the project cost. Banks will lend up to 55% of the project cost and 40% of the project costs will be subsidised.

Eligibility:

Individuals, companies, Self Help Groups, Non-Governmental Organisations, institutions registered under Societies Registration Act 1860, production co-operative societies, joint liability groups and charitable trusts.

How to apply?

• Visit: www.coirservices.gov.in
• Navigate to Coir Udyami Yojana on the homepage from the list of schemes that appear
• Click on the ‘Apply’ button given below the scheme
• Fill in the form and submit the application

5.CGTMSE scheme

Credit Guarantee Fund Trust for Micro and Small Enterprises or CGTMSE scheme is an initiative by the Government of India to help MSMEs and new entrepreneurs avail collateral-free loans for setting up new enterprises.

CGTMSE provides a guarantee cover to loans taken by MSMEs from financial institutions. This means that if you default on your loan, the government will help you pay a major part of your loan repayment amount. Under this scheme, the government will provide guarantee covers for loan amounts up to ₹500 lakh.

Eligibility:

MSMEs involved in manufacturing and services including retail trade are eligible to apply.

How to apply?

1. Identify a lender i.e., bank, NBFC, etc., that offers the scheme
2. Contact the lending institution and get the application form
3. Submit the application

If the bank is satisfied with the application details, the loan is sanctioned as per the policies of the bank. The bank also applies to the authorities at CGTMSE for guarantee coverage.

Business loan for startups is an excellent way to gain the seed money to set up your enterprise. Government startup business loans are one of the best ways to get a business startup loan. This not only gives subsidies for various activities but can also help improve goodwill of the company.

You can even claim tax benefits on business loans sanctioned to you as a part of a government scheme. Additionally, you can try online lending platforms that can give you unsecured business loans at reasonable interest rates.

If you are looking to find an instant business loan for your startup, try Tata nexarc’s Business Loans. We offer an easy application process with loan offers made in just 5 minutes from our reputed lending partners.

Also Read:
Yes Bank MSME Loan
Paytm Business Loan
HDFC Bank Business Loan