How to Get a Small Business Loan from the Government

If you run a small business in India, you are all too familiar with the trials and tribulations. Perhaps the biggest roadblock to running and growing a business is a lack of funding. Be it for hiring staff or paying vendors, capital is the lifeblood of your venture.

With a small business loan, you cannot just keep the ship afloat but also scale effectively.

The good news is, a variety of government loan schemes are available to help you secure funding your small business. Given the Indian government’s focus on supporting small and medium businesses, this is one of the most practical ways to get capital for your company.

Keep reading to understand how to get a small business loan from the government.

Different government loan schemes for small businesses

Here are some top government loan schemes you can avail of –

• Mudra Business Loan: This scheme offers loans in three categories – Shishu, Kishore, and Tarun. You can avail loans up to Rs. 5 lakhs, depending on the category and your eligibility. The scheme demands no collateral, making it a good fit for small setups that don’t possess sizable assets. The business loan interest rate under the scheme varies across banks.

• MSME/PSB Loan in 59 Minutes: Loan-seekers can apply for this loan online and get sanctions of up to Rs. 5 crores in just 59 minutes. This scheme is just right for entrepreneurs looking for instant business loans.

• National Small Industries Corporation (NSIC) Subsidy: This government enterprise provides loans to assist small businesses with raw material acquisition and marketing.

Additional Read: Steps to apply for collateral-free MSME loans under the COVID-19 Relief package

Check your Eligibility

Business loan eligibility criteria are subject to changes depending on the scheme and financial institution you opt for. However, you should be aware of certain common prerequisites to quicken the process:

• The age limit of the applicant
• CIBIL score
• Annual turnover
• Typically, businesses in successful operation for three consecutive years are eligible
• Other factors specific to the bank and scheme chosen

Documents Required

To avail the government loan of your choice, it would be prudent to have some basic documents in place for a smoother process:

• GST Identification Number (GSTIN) and GST User Name
• Details of the loan required
• Residence and identity proof of the applicant
• Passport-sized photographs
• Business address proof
• Balance sheet of the last three years
• Bank statements of the last six months
• Details of latest three years’ Income Tax Returns

To wrap it up, there are several options when it comes to securing small business loans from the government.

Additional Read: Why should you apply for a small business loan?          

However, this process is often tedious and may only have limited funding available. To be sure of getting a business loan, get in touch with Tata Capital. We offer a simple and easy application process with business loan interest rates starting at 19%. We understand your needs and our specially built tools like business loan EMI calculator help you understand terms and repayments.

For more information on small business loans, contact us today.