Top 4 Government Loan Schemes For Startups In India
Updated: 21-02-2025 at 12:31 PM
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Starting a business requires substantial financial support, although some entrepreneurs lack the necessary funds. The Indian government offers multiple funding opportunities and loan schemes intended to enhance startup development and establish reasonable lending options, empowering new businesses to avoid financial challenges as they expand their operations.
1. Pradhan Mantri Mudra Yojana (PMMY)
The Pradhan Mantri Mudra Yojana started in 2015 assists micro small and medium enterprises (MSMEs) plus startups by providing money. This programme gives small businesses from the trading manufacturing and service sectors easy access to loans worth up to 10 lakh rupees without collateral. Loan options under PMMY are arranged in Shishu (up to ₹50,000), Kishor (₹50,000 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh). PMMY allows entrepreneurs to grow their companies through a comfortable loan payment period of 3 to 5 years and prime interest rates. India now offers better job opportunities for its self-employed citizens.
Objective:
Launched in 2015, PMMY offers financial support to micro, small, and medium enterprises (MSMEs) and startups.
Key Features:
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The programme requires no collateral when giving loans to smaller sums.
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Loan rates change according to the individual financial background of loan seekers and the lending institution.
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The payment term of this programme extends from 3 years to 5 years.
Also Read: Credit Enhancement Guarantee Scheme For The Scheduled Castes
2. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
The Credit Guarantee Fund Trust for Micro and Small Enterprises helps businesses obtain loans without asset collateral through this scheme. Under this scheme, organisations can secure funds without requiring outside assistance to develop their business operations. CGTMSE helps banks provide loans to startups and MSMEs because it protects lenders from default risks.
Objective:
The scheme delivers unsecured loans to MSMEs by participating banks.
Key Features:
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Loan coverage up to ₹2 crore.
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The loan credit guarantee programme from the government extends coverage reaching 85% of complete loan debt.
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Available for both new and existing MSMEs.
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Banks can extend loans to their clients without requiring any kind of security assurance.
3. Stand-Up India Scheme
The Stand-Up India Scheme runs as a government plan that supports women business owners and adds money to SC/ST people to build their businesses. Under this programme, the government enables less-represented business owners to start new projects across production services and trade while obtaining financial assistance.
Objective:
The initiative functions to extend money-based support for women and SC/ST business owners seeking business funding opportunities.
Key Features:
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Storage facilities between ₹10 lakh to ₹1 crore exist for starting new businesses.
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New manufacturing establishments along with trading firms and service companies qualify for this financing.
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Each borrower needs to invest at least ten per cent of the total project expense before receiving funds.
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Repayment tenure of up to 7 years with a moratorium period of 18 months.
Also Read: Top 6 Government Loans to Support Women Entrepreneurs in 2025
4. Startup India Seed Fund Scheme (SISFS)
The Startup India Seed Fund Scheme (SISFS) operates as a government-supported programme which offers capital assistance to early-stage startups to deploy their proof of concept and conduct prototype development and commercialization activities. Through this scheme, the government supports innovative startups from transforming concepts into market-ready commercial businesses. The programme accepts DPIIT-recognised startups that follow the two-year age limit provided they present a functional product or prototype during the application process. Through its early-stage funding mechanisms, SISFS lowers startup financial risks which in turn increases self-reliance throughout the Indian startup environment.
Objective:
Financial support enabled through this programme helps businesses in their proof of concept stage and prototype engineering along with commercialization activities.
Key Features:
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Grants up to ₹20 lakh for idea validation and prototype development.
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This programme provides banks up to ₹50 lakh for businesses that want to scale up their operations.
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Disbursed through incubators across India.
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Encourages innovation and promotes self-reliance.
Conclusion
The support through government-backed loan programmes launched by India has established fresh possibilities which benefit new businesses by offering better financial security alongside growth prospects. These initiatives serve financial support for both new and existing MSMEs through programmes that minimise funding risks. Indian startups utilise these schemes to enhance their capacity while driving innovation toward national economic expansion. Efficient scheme selection requires startup owners to examine their business requirements and find the best option for lasting achievements.
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