Home Business & Management 3 Best MSME Loans for Startups Under Government Scheme

3 Best MSME Loans for Startups Under Government Scheme

There are many loans that banks provide to the citizens of India and for the Industries. Every startup or MSME needs a business loan to grow their businesses. Somehow it depends on bank to bank.

Some private banks even provide this loan at a higher rate of interest. But public banks provide MSME loans for startups at a reasonable rate of interest.

You should also go through:

Today we are going to discuss some of these business loans:

  1. Pradhan Mantri Mudra Yojana (PMMY)
  2. SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)
  3. Loan in 59 Minutes
  4. Conclusion
  5. Frequently Asked Questions (FAQ)
3 Best MSME Loans for Startups Under Government Scheme

MSME Loans for Startups #1: Pradhan Mantri Mudra Yojana (PMMY)

mudra-yojana

It was launched by Prime Minister Narendra Modi. The launch year was April 2015. It is headed by MUDRA Ltd. MUDRA stands for Micro Units Development and Refinance Agency Ltd.

Eligibility:

All the non-corporate small business enterprises are eligible to apply for these loans. It covers partnership and proprietorship firms running in rural and urban areas. The enterprises that are included under non-corporate small business are as follows:

  • Small food offering enterprises
  • Truck operators
  • Small vegetable or Food vendors
  • Small shopkeepers
  • Machine operators
  • Service sector firms or units
  • Small manufacturing firms or units
  • Small industries
  • Artisans
  • Repairing shops
  • Food processors and others

So, Mudra can be availed by all types of trading, service, and manufacturing units.

Overview

Our PM Narendra Modi launched the scheme Pradhan Mantri MUDRA Yojna (PMMY). It provides the loan for startups, non-farm small and micro enterprises, and non-corporate businesses. The loan amount goes up to ₹10 lakh. The RRBs, Commercial banks, MFIs, Small Finance Banks, and NBFCs provide MUDRA loans.

The borrower can approach the nearest Branch office of any of these institutions. They may also apply through the online portal. Under this Yojna loans are classified as follows:

Shishu loan: Shishu loan comprises a loan up to a limit of ₹50000.

Kishor loan: Kishor loan comprises a loan above ₹50000 and up to a limit of ₹5 lakh.

Tarun Loan: Tarun loan comprises the loans that are above ₹5 lakh and up to a limit of ₹10 lakh.

Documents Required for MUDRA loan:

You need to attach some documents with the application form to get Mudra loan. They are as follows:

Identity Proof

You will need an Identity Proof issued by the Government authority. This will include any of the following:

  • Voter ID Card
  • PAN Card
  • Aadhaar Card or
  • Any Photo ID proof issued by any government authority.

Proof of Residence

You have to provide Proof of Residence.  You may give any of the following documents for proof of Residence:

  • The recent electricity bill for the last three months
  • Passport
  • Voter ID Card
  • Aadhaar Card
  • Recent Electricity Bill dated within the last three months
  • Recent six-month bank statement duly attested by bank officials.

Identity and Address proof

Produce Identity and Address proof of the business establishment documents. You may produce any of the documents for this proof: 

  • Business registration and incorporation certificate
  • Documents containing the owner’s name and business address.

MSME registration

You need to do the registration of your startup or small and micro business.

Photographs

You have to give two recent passport size photographs.

Rental Agreement

If the business is established on a rested premise or facility, then you have to submit a rental agreement.

Clearance Certificate

You have to produce a clearance certificate from the pollution board. It is only to be submitted if applicable to your company.

Partnership Deed

For a Partnership firm, you have to give a Partnership Deed.

Memorandum and Article of Association

There will be a need for Memorandum and the Article of Association for a company.

Balance Sheet

A recent three year audited balance sheet of the firm or unit is required. It is to be submitted along with the income tax or sales tax return will be required for the loan above 2 lakh.

Balance Sheet

Projected balance sheet up to two years for working capital limits for loans above 2 lakh.

Projected Loan

A projected loan period is required for term loan above 2 lakh.  

Category Document

There are some people of SC or ST and any other category who want to have a startup or small and micro business. If the applicants belong to such a category should produce their category document.

Such as SC or ST or any other category. It is for those SC or ST or any other category people who want to avail loan benefits under the category.

How to Register?

You may contact any of the nearest RRBs, Commercial banks, MFIs, Small Finance Banks, and NBFCs with all the required documents. Or you may apply online.

MSME Loans for Startups #2: SIDBI Make in India Soft Loan Fund for MSMEs (SMILE)

SIDBI-Business-Soft-Loan

It was launched by Former Minister Mr.Arun Jaitley in the year August 2015. It is headed by SIDBI (Small Industries Development Bank of India)

Eligibility

  1. The new enterprises in the service, as well as manufacturing sectors, can apply for the loan.
  2. Financial smaller Enterprises within MSME are also applicable to apply.
  3. Existing firms or Enterprises trying to expand with the new emerging opportunities, Technology up-gradation, modernization, or trying other projects for the growth of their business are also applicable to apply for this loan.

Minimum Loan Size – ₹ 10 lakh for Equipment Finance & Others : ₹ 25 lakh

Overview

The loan Scheme SMILE was first launched by our Former Finance Minister, Late Mr. Arun Jaitley. 

The Loan was introduced to take forward the Government ‘Make in India’ initiative and help MSME to take part in the initiative. Approximately 13000 enterprises are expected to get the benefit from the scheme along with the employment for approximately 2 lakh peoples.

The objective of the Loan is to provide Soft Loan on relatively soft terms to MSMEs for their establishment and growth.

Time period:

This loan gives a longer time than others for the repayment period up to 10 years, including a moratorium of 36 months.

The minimum Promoter contribution of 15% is there subject to DER of 3:1

Documents Required:

Identity Proof 

You will need an Identity Proof issued by the Government authority. This will include any of Voter ID Card, PAN Card, Aadhaar Card, or any of the Photo ID proof issued by any government authority.

Proof of Residence

Provide Proof of Residence.  You may give any of the following documents for proof of Residence:

  • Recent electricity bill within the last three months
  • Passport
  • Voter ID Card
  • Aadhaar Card
  • Recent Electricity Bill dated within the last three months
  • Recent six-month bank statement duly attested by bank officials.

Identity and Address proof

Identity and Address proof of the business establishment documents is also required. You may produce any of the documents for this proof:

  • Business registration and incorporation certificate.
  • Documents containing the owner’s name and business address.

MSME Registration

MSME registration/ UAM ( Udyog Aadhaar memorandum) Registration.

Photographs

You have to give two recent passport size photographs.

Rental Agreement

If the business is established on a rested premise/facility, then you have to submit a rental agreement.

Clearance Certificate

You have to produce a clearance certificate from the pollution board if applicable to your company.

Partnership Deed

For a Partnership firm, you have to give a Partnership Deed.

Article of Association

There will be a need for memorandum and the Article of Association for a company.

Balance Sheet 

A recent three year audited balance sheet of the firm/unit along with the income tax or sales tax return will be required.

Projected Balance Sheet

Projected balance sheet up to two years for working capital limits.

Loan

The projected loan period is required for the term loan.

Category Document

If the applicants belong to any category like SC or ST or any other category who want to avail loan benefits under the category should produce their SC or ST or any other category document.

Manufacturing Process details

Profile of the Unit

Net Worth Statement of promoters

Bio-data of promoters or Guarantors

How to register?

The concerned MSME enterprises have to visit the concerned branch with the application filled and along with all the required documents.

MSME Loans for Startups #3: MSME Loans for Startups in 59 Minutes

MSME-loans-for-Stratups-in-59-minutes

It was launched by PM Narendra Modi in September 2018. It is headed by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

Eligibility :

A borrower having the GST, six-month statements, and IT compliant are eligible to apply for the loan.

Overview:

This initiative by the Government simplifies the process of Fundraising. It has been designed to make it easy to access credit to individuals and MSMEs.

This initiative aims at digitization and automation of several types of Business loans. Such as Term Loan, Mudra loan, and Working Capital loan.

59 minutes loan ensures seamless In-principle loan approval. This initiative helps the borrower to get an In-principle approval letter in less than 59 minutes. The borrower has the flexibility to choose the lender.

With or without collateral, business loan approvals are given the value ranging from ₹1 lac to ₹5 crores. To check the eligibility Platform is integrated with the CGTMSE. Mudra Loan with In-principle approvals is given the value ranging from ₹10000 to ₹10 lacs.

Documentation:

You should have the following documents ready to apply for the loan:

  1. GST Identification Number (GSTIN) 
  2. Income tax return (ITR) of minimum one-yr=ear in XML format.
  3. Bank statement of past six-months in PDF format
  4. Businesses that do not have GST registered should provide other business details manually.

How to Register?

You will be able to apply for the loan by registering yourself.

Conclusion

I hope you have understood all about the MSME loans for startups. I tried to cover and explain everything about the source of loans and its process.

Hope these information will be helpful to you.

Frequently Asked Questions (FAQ)

How do I submit an MSME loan for startups application proposal on 59 minutes loan proposal? 

1. Go to the official website.
2. Register on the platform using your Name, Email Id, and Mobile Number.
3. After Registration, you can select the funding requirements that is for business purpose or retail.
4. You select “Business Loan.”
5. After selecting your fund requirement, provide the necessary details to get the In-principle business loan approval within 59 minutes.

What if I don’t have the GST return or ITR or Banking details?

You are eligible to register with/without GST registration. However, you have to submit your other business details if you don’t have GST registration.

But if you don’t have ITR or Banking Details, then you are not eligible to register.

How do I check the status of application on 59 minutes loan approval portal?

You have to sign-in with the credentials during registration, then click on my application tab on the dashboard to check the status of your application.

How much time will it take to get disbursal on 59 minutes loan portal?

After In-principle approval, time taken off loan disbursal depends on the more accurate information and documentation provided by you.

Generally, it takes 7-8 working days for loan disbursal after In-principle approval. The more precise data you provide, the sooner you will get disbursal.

OTP not received during the registration process on 59 minutes. What should I do?

Generally, OTP is sent to your mobile number for mobile verification and on email id during email id verification. If you didn’t receive OTP at either stage, You might contact on customer care number on 07941055999.

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