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Benefits of Mudra Loan in India to MSME Sectors

The Indian Government of India offers numerous financing schemes that have benefitted numerous small businesses in times of downturns or other economic disruptions.

For instance, the CLCSS or Credit Linked Capital Subsidy Scheme (CLCSS) for up-gradation of technology in small-scale industries has helped businesses by offering an up-front capital subsidy of 15% or Rs.15 lakh, whichever is lower, for a maximum business loan of Rs.1 core.

This scheme aids small organisations to upgrade their technology and equipment. It initially covered 9 sub-sectors and products, which later increased to 51.

The MUDRA loans scheme has also been exceptionally beneficial to help small businesses arrange capital to establish or expand their operations.

This scheme offers three types of loans viz. Tarun – between Rs.5 lakh and Rs.10 lakh, Kishor - Rs.50,000 to Rs.5 lakh, and Shishu - up to Rs.50,000. Borrowers of Kishor and Shishu loans also don’t have to pay any processing fees to apply.

To address working capital shortages, SIDBI offers MSME loans with in-principle approval in 59 minutes.

Businesses can apply for loans between Rs.1 lakh and Rs.5 crore and receive approval in less than an hour. However, it should be noted here that the loan disbursal can take more time.

For quick financing needs, small firms can avail a business loan from NBFCs, which are usually disbursed in one working day.

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