When you want to start a new business in India, it is possible to raise funds by applying for low-interest loans. The rate of interest varies depending on the loan amount and the repayment tenure.
The government of India is committed helping entrepreneurs by providing them loans at affordable interest rates. It is because the MSME (Micro, Small, and Medium Enterprise -MSME) has limited access to formal credit. It is the reason; the government has decided to launch startup business loan schemes.
SIDBI(Small Industries Development Bank Of India) gives loans to MSMEs and startups directly. It has lower interest than other banks.
Bank Credit Facilitation
It is the loan scheme by NSIC to meet the needs of MSME units. National Small Industries Corporation partners with several banks. The repayment tenure is five to seven years, extendable up to 11 years in special circumstances.
PMMY
Pradhan Mantri Mudra Yojana was launched in 2015. This scheme is headed by the Micro Units Development and Refinance Agency (MUDRA). It gives loans to trading, manufacturing, and service sector companies. The loan amount ranges between Rs 50000 and Rs 10 Lakh. All types of artisans, shopkeepers, machine operators, vendors, repair shops, etc. can avail the Mudra loans./p>
CGS
The Credit Guarantee Scheme or CGS gives loans to new and existing MSME companies that operate in the service and manufacturing sector, but it excludes agriculture, retail trade, self-help groups or educational institutions.
Standup India
This scheme was launched in the year 2016. It gives loans to manufacturing companies, trading companies, service industries. Loans ranging from 10 Lakh to 1 Crore can be availed under this scheme. The repayment tenure is seven years. The maximum moratorium period is 18 months.
Line of Credit
A line of credit works just like a Credit Card. This card is linked to a business instead of an individual. For the first 9 to 15 months, the borrower does not have any obligation to pay interest on the borrowed sum. Thus, an entrepreneur gets sufficient time to get the business to a good start.
Equipment Financing
In this scheme, the equipment bought to launch the business is pledged as collateral. Therefore, the borrower has to pay a comparatively lower interest rate, but the risk is higher. The borrower has to repay the amount as revenues are generated from the business.
It is essential to know the possibilities of getting loans from several sources. Make a comparison study and choose the most suitable source.