Entrepreneurship Development

PRACTICAL NO :- 05
VISIT A BANK / FINANCIAL INSTITUTION TO
ENQUIRE ABOUT VARIOUS FUNDING SCHEMES
FOR SMALL SCALE ENTERPRISE.

NAME :- ROLLNO:-

UNDER THE GUIDANCE OF

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 of India 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, expand their business,
purchase new equipment, etc.SIDBI Make in India Loan for Enterprises (SMILE)Features:The
scheme has been designed to foster innovation, facilitate investment, protectintellectual
property, enhance skill development, and build the best infrastructurefor 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 importance along with an emphasis on smaller enterprises
within the MSME.
SIDBI Make in India Loan for Enterprises (SMILE)Features:

The scheme has been designed to foster innovation, facilitate investment, protectintellectual
property, enhance skill development, and build the best infrastructurefor 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 importance along with an emphasis on smaller enterprises
within the MSME.

Some of the most significant kinds of Government loan schemes for small
businesses are explained.

MSME Business Loans in 59 Minutes

MSME business loan in 59 minutes is one of the most loan schemes introduced by the
government in September 2018. The loans sanctioned under this scheme are to boost financial
assistance to the growth of the country and to also encourage their growth in the country. The
scheme allows new and existing businesses to utilize the financial assistance that is provided by
the scheme. The loans provided under these schemes extend up to Rs. 1 crore and take about 8
to 12 days to complete the process, wherein the approval for the loan is received within 59
minutes which is primarily why the name of the scheme is known as MSME business loan in 59
minutes. The rate of interest depends on the nature of the business that is carried on by the
applicant of the loan. The interest of such loans begins at 8.5%, and the loan amount granted
under this scheme can range from 1 lakh to 5 lakh. The following are the requirements for
obtaining a loan under this scheme:

GST verifications

Income tax verifications

Bank account statements for the last 6 months

Ownership related documentation

KYC details
MUDRA Loans:-

The MUDRA loans are sanctioned by the Micro-Units Development and Refinance Agency
organization that has been established by the government of India for providing finance to units
of micro-business. The theme behind MUDRA loans is to “fund the unfunded”. All bank
branches across India provide MUDRA loans. Such loans have created the low-cost credit
concept for micro and small businesses. The MUDRA loans are categorized as under:

Stand-Up India :-

Stand-up India scheme introduced by the Government to provide loans for businesses run by
Scheduled Castes/ Scheduled Tribes and women. Small Industries Development Bank of India
(SIDBI) governs this scheme. The loan granted under this scheme can range from Rs. 10 lakhs
to Rs. 1 crore. Every bank must provide this loan to a minimum of one Scheduled
Caste/Scheduled Tribe or woman entrepreneur. According to this loan, the fund is expected to
cover about 75% of the cost of the total project.
Eligibility

Those businesses engaged in trading, manufacturing or other sectors relating to services are
eligible to avail loan under this scheme. If the business is not an individual undertaking, then a
minimum of 51% of the shares must be held by an individual who is a woman or who belongs
to Scheduled Caste/ Scheduled Tribe.

National Small Industries Corporation Subsidy:-

The NSIC is a Government enterprise under the MSMEs, and it is ISO certified. One of its
primary functions is to aid the growth of MSMEs by providing services including finance,
technology, market and other services across the country. The NSIC has initiated two schemes
in order to promote the growth of MSMEs, which are:

 Marketing Support Scheme – The scheme supports in development any business by

 Credit Support Scheme – The NSIC provides for financial aid to procure raw materials,
for activities in relation to marketing and for financing with banks through syndication to
MSMEs.

The benefit of this scheme is that it offers the small-scale industries access to tenders without
them having to bear any costs, and the MSMEs also do not have to pay the security deposits for
availing financial aid under this scheme.
Credit Link Capital Subsidy Scheme for Technology Upgradation

This scheme allows small businesses to upgrade their process by financing technological
upgradation. The technological upgradation can be related to numerous processes within the
organization, such as manufacturing, marketing, supply chain, etc. Through the CLCSS scheme,
the government aims to reduce the cost of production of goods and services for small and
medium enterprises, thus allowing them to remain price competitive in local and international
markets. The scheme is run by the Ministry of Small-Scale Industries. The CLCSS offers an up-
front capital subsidy of 15% for eligible businesses. However, there is a cap to the maximum
amount that can be availed as a subsidy under the scheme, which is set at ₹ 15 lakhs. Sole
proprietorships, partnership firms, co-operative, private and public limited companies come
under the ambit of this business loan scheme.

Udyogini:-

Udyogini, meaning women empowerment, is a scheme that has been initiated for empowering
Indian women. The scheme has been introduced under the Government of India by the Women
Development Corporation. The funding under this scheme is granted in order to support women
in meeting their capital requirements for starting a business.

The maximum loan that can be granted under this scheme is Rs. 15,00,000. For a woman
entrepreneur to be eligible to apply for this scheme, the woman must be between the age of 18
years to 55years and the annual income of the family of the woman must not be above Rs.
15,00,000.

There is no limit of income for women who are physically challenged or widowed. There is no
processing fee or collateral that is required for availing loan under this scheme.

Women who apply for this loan will have to provide passport-sized photographs, birth
certificate, Below Poverty Line Card, Aadhar Card, Caste Certificate, passbook or bank
account, ration card and certification of income to avail of the loan. There are about 88
categories of businesses that are mentioned for which loans can be availed by eligible women.
An Alternative: Quick Business Loans from Lendingkart

While all these schemes display the commitment of the past and present Indian governments to
develop the nation’s economy, there is much that needs to be done to make the schemes
effective. For example, the refinancing and subsidy model used by the government takes away
the ‘quick’ factor from business loans touted by the schemes.
Since these loans are essentially funded by government-sponsored banks, the turnaround time is
in weeks or even months, which is detrimental for a small business owner looking for quick
business finance. Even the most ambitious of all these schemes, the 59 Minutes Loan for
MSMEs, takes up to 2 weeks in reality.

On the other hand, MSME finance by non-banking financial companies like Lendingkart is

Simply log in to apply for a business loan, get a same-day approval, accept the quote and
upload your documents digitally for verification. The entire process hardly takes 10-minutes of
your time and the verification is completed within 3 working days by Lendingkart. So, you have
the funds ready for use within a quarter of the time it takes a government scheme to disburse a
loan.