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In India, the Pradhan Mantri business loan scheme is a way for the government to support, empower and encourage the ever-growing and resilient MSME sector. The government has introduced an array of business loan schemes to enable entrepreneurs and small businesses bring their business vision to reality. Some of the notable schemes for financial assistance and/or subsidy include – PMEGP scheme, the Pradhan Mantri Mudra Yojana (PMMY), the Stand-up India scheme, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). These actively operational schemes, reflect the government’s commitment to nurturing MSMEs, driving innovation and providing them with the support required to grow and thrive.

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Popular Pradhan Mantri Business Loan Schemes in India

A PM loan scheme is a programme initiated by the government to provide financial assistance to businesses, especially targeted at sectors and businesses (i.e., MSMEs) that otherwise find it difficult to get business loans from banks and NBFCs. The objective of the PM business loan schemes is to stimulate economic growth, encourage entrepreneurship and support specific communities and business entities.

Common features of their loan schemes include: lower interest rates, flexible repayment terms, lesser documentation, and at times collateral-free.

In the next section, we’ll take a quick look at some of the popular Pradhan Mantri business loan schemes in India.

1. Pradhan Mantri Mudra Yojana (PMMY scheme)

The first name on the list is the highly popular Pradhan Mantri Mudra Yojana or PM e Mudra scheme. Launched in 2015, this scheme provides business loans up to ₹10 lakhs to small businesses through the MUDRA banks (Micro Units Development and Refinance Agency).

Mudra loans are categorised into three types:

  • Shishu: Provides funding up to ₹50,000 only to business owners with limited needs. It’s also beneficial for new entrepreneurs and startups who are taking their first steps in business or just starting out.
  • Kishor: Provides funding for up to ₹5 lakhs and is usually availed by businesses looking for additional working capital or have need for credit for other business functions.
  • Tarun: Provides funding for up to ₹10 lakhs and is the preferred by established MSMEs that require additional funding for business growth.

Pradhan Mantri business loan scheme eligibility:

Eligibility for Mudra loans is limited to: manufacturing and services businesses, traders and artisans, and agri-allied businesses.

Large scale businesses, corporates and farm-related and land improvement businesses cannot avail the benefits of the Mudra Yojana.

PM loan scheme online apply:

To apply for the PM e Mudra Yojana loan you can visit any of the following financial institutions: Private or public sector banks (e.g., SBI e Mudra loan), regional rural banks, cooperative banks, small finance banks, NBFCs and MFIs.

2. Prime Minister’s Employment Generation Programme (PMEGP scheme)

Launched in 2008, the Prime Minister’s Employment Generation Programme (PMEGP scheme) is a unique subsidy scheme to help unemployed youth and artisans. It is aimed at generating self-employment opportunities through micro-enterprise establishment.

It is a credit linked subsidy programme that aims to generate employment through the establishment of small businesses in the non-farming sector. The aim is to bring socio-economic growth in rural India, by creating employment in rural areas and preventing migration to urban areas.

PMEGP subsidy is for two areas:

  • Setting up new micro units
  • Upgrading existing MUDRA/REGP/PMEFGP units

PMEGP scheme subsidy for setting up new micro units:

  • General category – 15% (urban subsidy) and 25% (rural subsidy) and 10% (beneficiary’s contribution of project cost)
  • Special category – 25% (urban subsidy) and 35% (rural subsidy) and 5% (beneficiary’s contribution of project cost)

PMEGP subsidy for updating existing MUDRA/REGP/PMEFGP units:

  • All categories – 15% (subsidy rate) and 20% (NER and Hill States subsidy rate) and 10% (beneficiary’s contribution of project cost)

Loan amount and limit for PGEGP scheme:

  • Maximum cost of upgradation projects for manufacturing – ₹1 crore (max. subsidy is ₹20 lakh)
  • Maximum cost of upgradation projects for services – ₹25 lakh (max. subsidy is ₹3.75 lakh)

PM business loan scheme application:

To apply for the PMEGP scheme visit the official portal hosted by the KVIC (Khadi and Village Industries Commission).

Also read: Investment limit in small scale industries

3. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE scheme)

Launched in 2000, the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) provides eligible MLIs (member lending institutions) the credit guarantee to offer business loans to MSEs (micro and small businesses).

Maximum loan amount under PM loan scheme: Up to ₹5 crores (as of April 2023) collateral-free business loans

Max. credit coverage under CGTMSE: MLIs can lend funds to borrowers and avail 75% – 85% coverage on the loan amount under the scheme

Pradhan Mantri business loan scheme interest rate (CGTMSE): Interest rate is charged as per RBI guidelines

Pradhan Mantri business loan scheme eligibility (CGTMSE): Recognising the financial challenges and importance of small scale industries this scheme is open to MSEs only. Micro and Small businesses engaged in manufacturing and services sector including retail (agriculture and SHG not- eligible0029

How to apply for CGTMSE scheme? Prepare a business plan and present it to the credit facility for review. Identify a MLI and apply for the loan. If the lender is satisfied with the application, the loan is sanctioned and the MLI will apply to the authorities at CGTMSE for guarantee coverage. Service charges and guarantee fees will have to be paid by the applicant.

Also read: CGTMSE new member registration process – Steps for lender membership application

4. Stand-Up India scheme

The next PM business loan scheme we will look at is the Stand-Up India scheme. A unique government loan scheme to promote entrepreneurship among women and SC/ST entrepreneurs. The scheme is for greenfield projects on activities in manufacturing, services, trading and agri-allied.

Loan limit: Composite loan between ₹10 lakh and ₹1 crore inclusive of working capital loan

Rate of interest on PM loan scheme (Stand-Up India): Lending bank’s MCLR + 3% tenor premium


  • SC/ST or women entrepreneur (or women/SC/ST should be a 51% shareholder)
  • Must be a greenfield project

Since its launch in 2016, more than 1 lakh women have availed the benefits of the PM loan scheme.

Application process: To apply for the scheme, you can do any of the following:

  • Online process via the Stand-Up India portal
  • Offline process by visiting any scheduled commercial bank to get the application form
  • Apply through Lead District Manager (visit the Stand-Up India portal to view the list of LDMs)

Next steps: Finding the right PM loan scheme for you

There are numerous government loan schemes available today that businesses can avail as per their requirement. The government usually keeps each scheme targeted at a specific audience cohort to keep the schemes specific and purpose driven.

These loan schemes come with perks such as tax benefits, zero collateral and guarantor, flexible repayment plans, lower interest rates, etc. As a borrower, the key is to understand your business requirements and select on a Pradhan Mantri business loan scheme that matches your needs.

At Tata nexarc we have designed a platform that enables small businesses to avail affordable solutions to grow their business. You can register on the platform and get access to logistics services for deliveries across the country, buy steel at competitive prices and more. For more, register today on Tata nexarc.

Sohini Banerjee

Sohini is a seasoned content writer with 12 years’ experience in developing marketing and business content across multiple formats. At Tata nexarc, she leverages her skills in crafting curated content on the Indian MSME sector, steel procurement, and logistics. In her personal time, she enjoys reading fiction and being up-to-date on trends in digital marketing and the Indian business ecosystem.