Startups have been a major contributor to the total GDP of our country and a significant provider of employment. The Indian Government identifies the value small businesses bring to the economy and has several government business loans aimed at encouraging them.

What is a Startup?

To be recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) as a startup and avail tax exemption and other benefits, an enterprise needs to satisfy the following conditions:
  • The company should not be more than ten years old.
  • Must be a Private Limited Company, a Limited Liability Partnership (LLP) or a Registered Partnership Firm.
  • Annual turnover must not exceed Rs. 100 crores for any financial year since incorporation
  • Must not have been established by splitting up an existing business or reconstruction.
  • Must have a scalable model and should be capable of generating employment and wealth creation.

Here are some of the prominent government small business loans for such start-ups.

Pradhan Mantri Mudra Yojana

Micro Units Development and Refinance Agency Ltd. (MUDRA) provides refinancing facilities to micro-businesses and can be further classified into
  • Shishu: loans up to 50,000 rupees
  • Kishor: loans from 50,000 to 5 lakh rupees
  • Tarun: loans from 5 lakh to 10 lakh rupees

Notable Features
  • Loans given to micro-enterprises, generally do not require collateral.
  • The working capital loan can be availed through MUDRA cards.

4E (End to End Energy Efficiency)

This scheme was launched by Small Industries Development Bank of India (SIDBI) on World Environment Day to encourage MSME (Micro, Small or Medium Enterprises) clients to implement energy efficiency measures.

Notable Features
  • The 4E scheme finances the partial expenditure including the cost of equipment, installation and commissioning, machinery and civil works.
  • The scheme takes World Bank’s help to offer loans at concessional interest rates to MSME for Energy Efficiency projects.

Stand-Up India

At least one borrower in SC/ST category and one female borrower per bank branch is eligible for availing government grants for small business under this scheme.

Notable Features
  • This scheme enables SC/ST borrowers and women entrepreneurs to avail bank loans between 10 lakh and 1 crore to set up a greenfield enterprise.
  • A minimum of 51% of the shareholding and controlling stake must be held by an SC/ST or female entrepreneur in non-individual enterprises.

Coir Udyami Yojana (CUY)

This Credit Linked Subsidy Scheme funds coir projects with a maximum cost of 10 lakhs rupees and also finances working capital that does not exceed 25% of the total project cost.

Notable Features
  • Startups must be registered under the Coir Board to be eligible for this scheme.
  • NGOs, Self-help groups and charitable trusts can also avail the benefits of this scheme.

Benefits of Government Schemes

The financial backing given by the Government to MSMEs is a huge boost for startups in India. The schemes help stimulate the development of small businesses and advocate innovation and energy efficiency in such enterprises.

Click here to know more and apply for a business loan

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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