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Fincash » Business Loan » Government Business Loan

Government Business Loan

Updated on May 14, 2024 , 7654 views

Government Business loans are special types of government-initiated loans that are provided to MSMEs (Micro, Small, & Medium Enterprises) for supporting their businesses. There are several varieties of the given scheme. Given the huge variety, modern business owners can make the decision of choosing the right one as per their requirement.

Government Business Loan

In this post, we will help you unravel the meaning and types of government business loans to start business in detail.

Types of Government Business Loan Schemes

The government business Loans for Women to start business or even general business loans are designed to help the entrepreneurs in financing the respective business. The given schemes tend to be specific towards the specific requirements of the enterprise. All such schemes can be categorized on the following types of business-specific loans:

Working Capital Loans

It is a type of Capital that is required by businesses for conducting as well as managing the day-to-day activities. It is known to be categorized into two types –secured & unsecured. The given activities happen to serve as relevant business expenses –including debt management, utility bills, inventory management, salaries of the workers, operating costs, and others. To be specific, a working capital loan is all known to entail all types of operating costs & other loan schemes catering to the specific needs of business organizations.

Corporate Term Loan

There are many types of government loan schemes that fall under the category of corporate term loans. Corporate term loans are mostly availed for the purpose of business expansion. Therefore, it is regarded as one of the important loan categories that startups & MSMEs should consider. The amount of money that is involved in the given types of corporate term loans tends to be quite large. Moreover, these are also allowed to be repaid over a longer period of time. The given type of government business loan features an interest rate that can be negotiated.

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Term Loans

As per its name, term loan serves to be a monetary instrument that can be repaid within the fixed tenure by the given lender. Term loans are known to allow business enterprises to buy fixed assets, property, plant & machinery, and also for paying salaries of the existing staff or hiring new staff. It can be referred to as a type of funding that is provided by the NBFCs and banks to business owners, individual entrepreneurs, large enterprises, or MSMEs for allowing them to meet the specific business requirements.

Leading Government Business Loan Schemes

There are several types of government business loan for new business schemes that are provided by the government to the all-new entrepreneurs or business enterprises. Some of these are:

MUDRA Loan

The given scheme has been set up by the Government for providing financial aid to non-farm micro or small enterprises, non-corporate organizations, and others. The Mudra Loan scheme can be made available by the respective public as well as private sector banks. The applicants or enterprises that might be interested can approach the respective lending institutions or can even look forward to applying online through MUDRA’s official website.

Features

  • Three categories of loan schemes –Tarun, Kishor, and Shishu
  • No requirement of security or Collateral
  • No processing charges
  • No criteria for minimum loan amount
  • Maximum loan amount of around Rs. 10 Lakh
  • Up to 5 years of repayment tenure
  • Most availed by organizations or businesses involved in the trading & service and Manufacturing Industry
  • All small or micro enterprises or non-farm enterprises that are involved in some sort of activity for generating Income can make use of MUDRA loan
  • The given loan amount can be utilized for overdraft and term loan facilities

PSB Loans

On 5th November 2018, the Prime Minister of India went ahead with unveiling a centralized platform –referred to as PSBloansin59minutes.com. The given digital platform aims at enabling loans of up to Rs. 5 Crores within a span of 59 minutes. The government had launched the given scheme for providing financial assistance to MSMEs (Micro, Small, & Medium Enterprises) across the country.

Some of the unique features of the govt business loan scheme are:

  • Usually business loans are known to take around 7-10 working days for the overall processing. However, with PSB loans, businesses can avail the desired loan amount within 59 minutes.
  • The loan that is offered under the given scheme is between Rs. 1 Lakh and Rs. 5 Crores.
  • The rate of interest under the given loan scheme is around 8.5 percent onwards.
  • Once the loan has been given approval in an hour, you can expect the desired amount of loan or money to reach in the respective Bank account within 7 working days.

How to Get Government Business Loan?

You should implement the following steps to get this loan:

  • Enter the GST number of your business
  • Upload ITR files or documents for verification
  • Upload the respective bank statements for verification
  • Enter the owner’s or director’s details of the business
  • Submit the application offline or online for the overall ease

Documents

  • Passport-size photos
  • A proper business plan
  • ID proof
  • Address proof
  • ITR files
  • Financial statements
  • List of the type of loan you want

FAQs

1. What is the minimum loan amount for government business loans?

A: The minimum loan amount of 10,000 INR per borrower

2. How many government loans schemes are there?

A: There are several types of government business loans –including, Credit Guarantee Fund Scheme, MSME Loan Under 59 Minutes, and so more.

3. How can I get the government business loan?

A: You can get it for visiting the official website of the provider and applying for the loan through the online application form.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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