Practical 6

Aim : Visit a bank/financial institution to enquire about

various fundingschemes for small scale enterprise.
The small-scale business sector, which is more popularly known
as the Small and Medium Enterprises (SME) sector, is responsible
for contributing around 40% to the total Gross Domestic Product
(GDP) of India. This sector is a key source of employment in India
but faces stiff competition from privately-funded businesses.
Realising this, the Government ofIndia has come forward to offer
many loan schemes to finance the small-scale business sector.
These loans can be availed by the SMEs to fund their day-to-day
operations, expandtheir business, purchase new equipment, etc.

SIDBI Make in India Loan for Enterprises (SMILE)

Features:
 The scheme has been designed to foster innovation,
facilitate investment, protect intellectual property,
enhance skill development, and build the best
infrastructure for MSMEs.
 Under the scheme, loans will be offered in the forms of soft loan and
term loan.
MSMEs engaged in 25 selected sectors will receive financial support at
competitive interest rates as part of the ‘Make in India’ campaign
launched by the government of India.
 New enterprises in the services and manufacturing
 sector will be given importancealong with an emphasis
on smaller enterprises within the MSME.

Eligibility:

New enterprises on board along with the existing manufacturing and

services sectors can apply forthis scheme. Existing enterprises
undertaking up-gradation or starting other projects for expanding their
business will also be covered under this scheme. The maximum loan
repayment tenure is 10 years with 36 months of moratorium period.

Fiscal incentives:

 The loan amount offered under SMILE scheme is minimum Rs.

10 lakh and maximum up toRs. 25 lakh.

Pradhan Mantri Mudra Yojana (PMMY)

Features:
 The scheme will extend loans to activities that
create employment and generateincome in the areas
of services, manufacturing, retail, and agriculture.
 No collateral or security need to be provided to avail the Mudra loan.
 Three types of loans can be availed under Mudra
for different stages of thebusiness, namely,
Shishu, Kishor, and Tarun.
 The loans under the Mudra Yojana will be extended by
public sector banks, private sector banks, cooperative
banks, Regional Rural Banks (RRBs), foreignbanks,
Non- Banking Financial Companies (NBFCs), and
Micro Finance Institutions (MFIs).

Eligibility:

Non Corporate Small Business Segment (NCSB) comprising of

proprietorship/enterprise firms inrural and urban areas can apply for
the loan. Here are some examples of NCSBs:

 Small manufacturing units

 Service sector units
 Shopkeepers
 Fruits / vegetable vendors
  Truck operators
 Food-service units
 Repair shops
 Machine operators
 Small industries
 Artisans
 Food processors and others

Credit Guarantee Scheme for Micro and Small Enterprises (CGSMSE)

Features:
 The scheme was launched with an intent to offer
collateral-free credit to the micro andsmall enterprise
sector.
 Both working capital facility and term loans are eligible to be covered under
the scheme.
 Under the scheme, guarantee cover can be availed up to 75%
of the sanctioned amount ofthe credit facility.
For microenterprises seeking a loan of up to Rs.5 lakh, MSEs owned and
operated by women, and loans in theNorth-Eastern region, guarantee cover of up
to 80% will be provided

Eligibility:

New and existing MSMEs engaged in manufacturing or service

activities, excluding retail trade, educational institutions, agriculture,
Self-Help Groups (SHGs), training institutions are eligible forthis
scheme.

Fiscal incentives:

Here are some details of the scheme:

 This MSME scheme for entrepreneurs includes term loans

and/or working capital loanfacility up to Rs. 2 crore, per
borrowing unit
 The guarantee cover provided is up to 75% of the credit facility up to Rs.
1.5 crore
 85% of credit facility for loans up to Rs. 5 Lakh is provided to micro-
enterprises
 80% of credit facility for MSMEs owned/operated by
women and all loans to NorthEastern Region, including
Sikkim
 For MSME Retail trade, the guarantee cover is 50% of the
amount in default subject to amaximum of Rs. 50 Lakh
Bank Credit Facilitation Scheme
Features:
 The loans under this scheme are facilitated by the National
Small Industries Corporation(NSIC) which has signed a
Memorandum of Understanding (MoU) with banks to offer
loans to meet the credit requirements of SME units.
 The facilitation is carried out by offering MSME units the
option to pick between privateand public sector banks.
 The loans are available in the form of working capital and termloans.
 Through this scheme, the NSIC will also help SME units to
get loans at affordable rates,help with the documentation
process, and other necessary services related to the loan.
Eligibility:
MSMEs registered in India

Stand-Up India Scheme

Features:
 Designed specially to meet the fund requirements of
Scheduled Caste (SC)/ScheduledTribe (ST)/women
entrepreneurs for the purpose of setting up a greenfield
enterprise.
 The enterprise should be engaged in the business of manufacturing, trading,
or services.
 The loan will be of composite nature which means that
the loan will be inclusive ofworking capital and term
loan.

 If the enterprise to be set up is non-individual, the controlling

stake (51%) should be heldby either an SC, ST, or women
entrepreneur.
Eligibility:

Enterprises in trading, manufacturing, or services sectors are considered

eligible for this scheme. . Incase of non-individual enterprises at least
51% of shareholding stake should be with an SC/ST or woman
entrepreneur.
Fiscal incentives:

 It offers composite loans between Rs. 10 lakh to Rs. 1 crore

to cover 75% of the project,inclusive of the term loan and
working capital
 The specification of the loan being expected to cover 75% of
the project cost. It won’t beapplicable if the borrower’s
contribution along with convergence support come from any
other schemes exceeds 25% of the project cost
 The rate of interest would be the lowest applicable rate— base rate
(MCLR) + 3% + tenor premium

MSME Loan in 59 minutes

Features:
 You can avail a loan of up to Rs1 crore where the
amount will be deposited to youraccount in less than
60 minutes.
 A rebate of 2% on loan of up to Rs.1 crore provided your
establishment is registeredwith GST.
 Minimum documents required. You only have to upload
the scanned versions of therequired documents and
upload it online for you to avail the loan.
 You can avail a loan between Rs.10 lakh and Rs.1 crore under
this loan scheme. Since you have the option of availing this
loan from any of the lenders, the rate of interest levied may
differ. The rate of interest however starts at 8%.

Eligibility:

To be eligible for this particular loan, borrower has to be GST, IT

compliant and must have atleast 6 months bank history. The
mandatory parameters for determining the eligibility of one
company are:

1. Income/ Revenue
b. Repayment Capacity
c. Existing credit facilities
d. Any other factors, as set by lenders (banks or NBFCs)

Fiscal Incentives:
Under this scheme, business loans for start-ups are
provided with loan amount from minimum ofRs. 1
lakh and maximum up to Rs. 1 crore. The rate of
interest offered under this scheme is 8% onwards
Eligibility Criteria
The eligibility criteria for government loans for small scale businesses
will vary from lender tolender but the basic ones have been listed
below:

Documents Required:-