Small Scale Industries Loan
Small-scale businesses in India have recently got the support of the Government as they have introduced new schemes to aid the small industry entrepreneurs and help them grow financially. The schemes provide loans with minimum to zero collateral at low-interest rates designed to reach almost every corner and remote area of the country.
The state and central government specifically designed business loan schemes for small-scale entrepreneurs that help them meet their requirements. Public sector banks also assist small businesses by providing financial support to fulfil their business goals.
The micro and small scale sector have a very competitive and profitable potential, which can give entrepreneurs a chance to grow or upgrade their business so long as they get appropriate financial support from the government. The entrepreneurs in small-scale sectors have 2 options for getting financial support: the government scheme, which is the Pradhan Mantri MUDRA Yojana(PMMY) and other borrowings from lenders like Lendingkart etc.
The government has set up some institutions regarding lending schemes that will provide all kinds of financial assistance to small-sector industries. One such institution is the Small Industries Development Bank of India (SIDBI) which aims to provide finance and help in the growth and development of the small-scale sector, which will build a strong network to address all needs of the sector.
Some of the well-known schemes supported by SIDBI are:
- Micro Units Development and Refinance Agency Ltd. (MUDRA)
This scheme mainly aims at providing support to banks or financial institutions that will facilitate the availability of more funds for loans which are done by 3 main schemes:
- Sishu loan: upto Rs. 50,000
- Kishore loan: upto Rs. 5 lakhs
- Tarun loan: Rs. 10 lakhs
MUDRA ensures financial support and assists in other social services to small-scale sectors.
- Technology Upgradation Fund Scheme for the Textile Industry (TUFS)
This scheme aims to provide upgradation and modernization to the textile industry by making loans available for both new and existing small-scale textile industries.
- Credit Linked Capital Subsidy Scheme (CLCSS)
SIDBI and NABARD are the head institutions that facilitate the process for loans under this scheme. It facilitates the upgradation of technology in specific products for small-scale industries.
- Credit Guarantee Fund Scheme for Micro and Small Enterprises
Loans are given to new and existing small-scale industries in manufacturing or service units without collateral. However, some sectors like educational institutions, retail traders, and agricultural and self-help groups are excluded from taking loans under this scheme.
- SIDBI Make in India Loan for Enterprises (SMILE)
The loans in this scheme are available for new and existing small-scale industries which are in the manufacturing or service sector. The minimum loan amount in this scheme is Rs. 25 lakhs, with a repayment tenure of up to 10 years.
The abovementioned are some of the many schemes that SIDBI supports, but there are other financial institutions set up by the government that provides financial assistance for the development of the small-scale sector all over the country.
- National Small Industries Corporation – This institution was started to provide machinery to small-scale firms, which they achieved by importing, supplying, and distributing raw materials and machines to them to facilitate the export of products.
- National Bank for Agriculture and Rural Development (NABARD) – NABARD was established to provide financial support for the development of agricultural-based small-scale industries like dairy farming, cottage industries, etc.
- Market Development Assistance Scheme for Medium and Small Scale Enterprises – This scheme provides small business loans for showcasing their products and services in major trade fair exhibitions for exposure in the global market. However, it has not been given enough support and funding from the government, so it has been left unexplored.
Eligibility Criteria To Avail Small Scale Industry Loans
The eligibility criteria provided by the government for small-scale loans vary depending on the lender, but some of the basic criteria are:
| Age of Applicant | Must be between the age of 25 – 66 years |
| Status of Business | New or existing enterprises can avail of loans |
| Resident Status of Applicant | Must be a resident of India |
| Type of Business | All small industries in the trade, manufacturing, and service sector are eligible for loans. |
It is important to understand the requirements and criteria of the institution or scheme before applying for a loan, as it differs from lender to institution. Some important documents are required, and the necessary paperwork needs to be done for the application for loans.
The documents required for the application for a loan are:
- Application form
- KYC documentation
- PAN card
- Financials (tax audit reports, balance sheet, etc.)
- Address proof
- Bank statements
- Photographs
How to apply for Small Scale Industry Loans?
Applicants can directly visit financial providers or banks where they will be guided and informed about the loan application process and procedures for taking a loan. Some institutions or lenders have online websites where the application for loans can be processed. For example, Lendingkart is a loan provider where applications for loans can be made online through the official website by filling out application forms, uploading necessary documents, and submitting them. After the application process, the relevant bank is notified about the loan, and the loan amount is credited to the applicant’s bank account within a few days.
Ramp Scheme FAQs:
1. In what way can I pay for small scale business loans?
2. How much is the EMI for business loans?
3. Can I apply for a business loan under the MUDRA scheme to start a small scale business?
4. What is the maximum loan amount offered for a small business loan?
5. Do I need collateral to avail government loans for small scale businesses?
6. How is the loan eligibility calculated for a business loan?
7. Is part payment allowed in small scale business loans?
8. What are the documents required for a small scale business loan?
9. Can the credit limit of my business loan be increased?
10. What are the charges I incur during loan processing?
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