This entire site is about exploring different business ideas, and you are getting the business plans from this site, right?
But the most important and necessary thing to start any business is the investment, it could be a little, medium or huge, but you need investment to start any physical production business.
Many people withdraw before starting any business due to lack of funding for business, or having insufficient investment to start a business.
I have seen many people around me who have a brilliant business idea, but due to not having sufficient funding for a business startup, they don’t initiate and a great business idea does not get executed.
Anyone who starts a new business, whether it is a small business, medium small business, or huge scale business, needs certain mandatory things.
- A good business idea
- Proper and right mindset
- Marketing skills and strategies, and
- Investment to start the business
Now, the first three things can be obtained easily from free sources, or anywhere, but the last one called “investment to start a business” is difficult to arrange.
Either you bet your savings, or borrow from someone, or do a partnership with anyone, or borrow a loan from the private banks on high interest, right?
But apart from all these costly ways, there is also another way from where you get funding to start a startup, and this is the center point of this article in which we are going to cover from where you can get the funding for your startup business in India.
How Will You Get Funding For Business Startups in India
For funding for the business, there are only a few organizations that are popular like angel investors. But if you are having a small business project, you hesitate to approach them.
Or else a second possibility is that this kind of big investor may not be interested in your small business plans, and refuse to sponsor or fund your business idea. What should you do in this condition?
Does it mean that you would drop your business dream? No, you should never quit if you have an awesome business idea.
You don’t need to go on the backfoot due to lack of investment, because the government of India is going to support you to achieve your dreams of starting your own business.
Yes, there are some schemes of the government that are specially for the MSME business sector and great startups can take place in our country.
Do you know that MSME business models are the backbone of the economy of any country, and that is why the government is totally involved in developing them and offering great support to grow them?
So, in this article, we are going to explore those schemes for funding for the business in which you can get the loan from Rs 10,000/- to Rs 1,00,00,000/- from the government with subsidy.
You can apply online for all the loans which I am going to explore here.
Benefit of Getting Government Loans
Money is money, what matters if you borrow the loans from either the government or any private bank, right?
But, here you have one benefit that the rate of interest for any government is very low, and you can afford it very easily. It is the biggest benefit of taking loans from the government.
Before You Apply For The Government Loans For Startup Business
As the interest rates of the loans offered by the government are very minimal, and that is why thousands of people apply for the loan.
Hence, the application of many people gets rejected due to a lack of plan in the business model.
When you apply for a government loan, you must have the road map and blueprint of your business.
You must be clear with what is your business idea, how it will work, from where you will be purchasing the materials or machinery or components of the business, what will be your revenue model, how much profit is possible in how much time, etc… all the aspects must be transparent.
If you are not clear with all these factors, authorities will not sanction your loan, because they are paying the money, and the intent of them is to develop the Indian economy along with yours.
Mudra Loan Yojana
The first scheme of government that you should know is the Mudra Yojana. Mudra Yojana is for bottom-line people economically.
The bottom line stands for those people who are able to start and run the business, they have the talent as well but can not take initiative due to the lack of investment.
And that is why the government has been invited to stand up for this kind of business so that they can contribute to the development of India.
You can get a loan from Rs 10,000/- to Rs 10,00,000/- to start your small business under the Mudra Yojana scheme from the government of India.
The most beneficial aspect of the Mudra Yojana scheme is that you do not have to provide any security or collateral to the bank to obtain a loan.
There are three types of loans under the Mudra Yojana scheme which are as mentioned below.
- Shishu Yoajna
- Kishor Yoajna
- Tarun Yojana
The sanctionable loan amount differs with the type, investment, and plan of your business, and that is why the mudra yojana loan has been divided into three types.
The name of this mudra yojana indicates the purpose of this scheme is a scheme for a small business which needs less investment.
Under the Shishu Yojana, you will get a loan of Rs. 10,000/- to Rs 50,000/- to start your small startup business.
If you want to start a small business like a homemade chocolate business, or Tiffin Service Business, or any other business which can be started with a very low amount of investment, you can apply for a loan under Shishu Yojna Scheme.
If you want to start a business that needs a medium range of investment, or else if you want to upgrade your business, you can apply for the Kishor Yojana under the Mudra Yojana loan scheme.
Under this scheme, you are eligible to get a loan amount from Rs 50,000/- to Rs 5,00,000/- from the government.
Now, if your business is running at its peak, and you want more money to diversify it, you can apply for a loan under the Tarun Yojana scheme.
You can get a loan of amount from Rs 5,00,000/- to Rs 10,00,000/- from the government to enlarge your business.
Standup India Scheme
The second-best scheme of the government to support the make-in-India startup is Standup India Scheme.
You can get the loan amount from Rs 10,00,000/- to Rs 1,00,0,000/- from the government under the standup India scheme.
There is a small restriction here that only SC/ST individuals and women entrepreneurs are eligible for the loan from the standup India scheme.
If you are an SC/ST individual or a woman entrepreneur and want to start a business of your own, then you can apply for this loan.
In the case of the company, how could you obtain this loan? In this case, if an SC/ST individual or a woman entrepreneur holds 51% or more shares of your company, then also you become eligible for the loan under the Standup India Scheme.
Under this scheme, you can apply for the business of manufacturing, service, and trading. You will be sanctioned for 75% of your total product cost.
You will not need to provide the collateral or security for the government chosen projects because it is covered under the CGFSEL scheme of the government.
PMEGP – Prime Minister Employment Generation Program
PMEGP is also one of the best schemes from the government for setting up new businesses which provide you the loan amount with a subsidy as well.
If you want to enter the business of the manufacturing sector, you can get a loan up to Rs 25,00,000/- with low interest and subsidy, and if you want to enter the service-based business then you are eligible to get the loan amount of Rs 10,00,000/-.
PMEGP is only for a new startup, you are not eligible to get this loan if you want to upgrade or enhance your existing business.
There are some criteria for making yourself eligible to get this loan. You must be passed out with 8th standard and you must be 18+ as a loan applicant.
The PMEGP is a very interesting scheme launched with the intent of starting up new businesses and units on a local level to avoid the relocation of people in search of employment.
Many people get rejected for getting this loan due to some sensitive reasons, so you should avoid them, and you can know those reasons by clicking here.
CGTMSE Scheme is a very special and interesting scheme that is only for small and micro-enterprises. If you are a medium or large enterprise, you are not eligible for this scheme.
Generally, the banks are not interested in micro and small enterprise businesses because they are worried about the repayment of the loan.
Because they don’t want to commit a loss, and they also are not sure whether the loans will be repaid or not. And that’s why they always hesitate while sanctioning the loans for small and micro-enterprise businesses.
There is also one so-called negative thought: banks adopt that if you are thinking of starting a small business then you might not have the collateral or security to provide the banks, so they don’t get interested in your project.
In this situation, the government was invoked to be a problem solver for these kinds of business startups and committed to providing financial support to them.
The government started to provide the covers to the banks and approached them to provide the loans for micro and small businesses so that these kinds of business units can be set up, and the securities will be provided by the government to banks.
If your project gets selected by the government, you can be sanctioned for 70% to 80% coverage of loans from the banks.
Food Processing Business Scheme
The schemes mentioned above in this article are focusing on the different types of businesses like the manufacturing sector, service sectors, trading sectors, but here is one special scheme which focuses on the food processing business.
If you want to do business related to food processing, whether you want to set up a new unit, or want to expand the existing food processing business, you can be granted loans for both cases.
In the food processing business scheme, you will be sanctioned for 35% of your total project amount if you are coming inside the regular region or state.
And if you are coming under difficult states like Jammu & Kashmir, Himachal Pradesh, or Uttarakhand, then you will be granted 50% of your project’s total cost.
For example, if you are about to start a vegetable business, mushroom processing business, restaurant business, and other food processing businesses, you are eligible for this loan.
Conclusion on Getting Funding For Business Startups in India
Starting a business is easy, but it becomes very difficult when we are struggling with the investment despite having brilliant business ideas.
Banks and VCs are not supposed to be interested in the small or micro and medium scale of businesses and either you have to take a loan on high interest or else you need to sacrifice your savings.
If you have neither of the options mentioned above, still you can start a business by partnering with someone willing to invest some amount in your business.
But what if you don’t have either savings or banks are not trusting you and not sanctioning the loans? You can’t even offer a partnership to anyone because you don’t have money to invest.
The only way you have is that you need to quit a business and look for something else, right?
Yes, it was, but now it isn’t.
You can opt for the loans mentioned in this article and start your business and make it scalable, profitable, and successful.