Nearly 30% of India’s total GDP is contributed by SME (small and medium-sized enterprises). This remains the major source of employment in the developing country. Startups can avail business loans either to support launch or accelerate their growth story. The sources for these loans are banks and financial institutions. The interest rates charged by the banks depend on the amount and duration of the loan borrowed. Currently, it’s between 2.54% to 7.02%. Even though banks seem to be a better option for funds than the Venture capital route, given the improper access to formal financing for SMEs, the Indian government has started several new business loan schemes in the post - demonetization era, to boost the development of start-ups at various levels.
The top 7 notable and popular schemes offered by the Indian government for startups and MSMEs are as follows:
Bank Credit Facilitation Scheme
For: targeted at meeting the credit needs (fund & non- fund) of the MSME units
By: National Small Industries Corporation (NSIC)
How: NSIC has MoU with nationalized & private banks
How much: Based on requirement
Tenure: 5 - 7 years (can extend to 11 years in special cases)
Other details: NSIC also assists MSMEs in the completion of the proposal documentation to the banks and follow-up
Documents needed: Identity proof, Residence proof, Business address proof, Liability details, Assets details, Business memorandum, Balance sheet, Application form, Estimated 2 year balance, Credit Monitoring Agreement copy, Bank records, Building plan estimates, certificate of pollution control and sanction letter from electricity and other bodies, Deeds like partnership deed, by-laws, trusts and memorandums
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