Practical No 5
Visit a bank/financial institution to enquire about various funding
schemes for small scale enterprise
Introduction:
Small and medium-sized enterprises (SMEs) play a crucial role in India's economic
growth and development. However, many small businesses struggle to access
financing due to a lack of collateral or a credit history. To address this issue, the
Indian government and various financial institutions have introduced several
funding schemes specifically designed to support SMES.
Various Funding Schemes :
Here are some of the most popular funding schemes available for small scale
enterprises in India:
• (CGTMSE)
The CGTMSE is a loan guarantee scheme that provides collateral-free loans up to
Rs. 2 crore ($275,000) to micro and small enterprises. The scheme covers up to 75%
of the loan amount in case of default, making it easier for SMEs to access credit from
banks and financial institutions.
• Pradhan Mantri Mudra Yojana (PMMY)
The PMMY scheme provides loans up to Rs. 10 lakh ($14,000) to micro and small
enterprises through various financial institutions such as banks, NBFCs, and
microfinance institutions. The loans are categorized into three segments: Shishu (up
to Rs. 50,000), Kishore (Rs. 50,000 to Rs. 5 lakh), and Tarun (Rs. 5 lakh
to Rs. 10 lakh).
• Stand-Up India Scheme
The Stand-Up India scheme is a government initiative that provides loans up to Rs.
1 crore ($137,000) to women and SC/ST entrepreneurs for setting up greenfield
enterprises in manufacturing, services, or trading sectors. The loan amount can be
used for capital expenditure or working capital requirements.
• National Small Industries Corporation (NSIC) Subsidy
The NSIC subsidy scheme provides financial assistance to small enterprises in the
form of marketing support, raw material assistance, and credit facilitation. Under the
scheme, SMEs can access raw material at a subsidized rate and also receive a subsidy
on the cost of procurement.
• SIDBI Make in India Soft Loan Fund for MSMES (SMILE)
The SMILE scheme is a soft loan fund for MSMEs introduced by the Small
Industries Development Bank of India (SIDBI). The scheme offers loans up to Rs.
10 crore ($1.4 million) at an interest rate of 8-9% for financing machinery and
equipment. The loan is repayable over a period of 7-10 years.
• Technology Upgradation Fund Scheme (TUFS)
The TUFS scheme aims to promote the modernization and upgradation of
technology in the textile and jute industries. Under the scheme, SMEs can avail of a
capital subsidy up to 15% for modernizing their existing machinery or
setting up new units.
• Scheme chosen for Digital Marketing small enterprise: MUDRA Loan
The MUDRA loan scheme was launched by the government of India to provide
financial assistance to micro and small enterprises. The loan is provided by vakous
financial institutions such as banks, NBFCs, and MFIs. Under this scheme, loans of
up to Rs. 10 lakhs are offered to micro-enterprises engaged in non-farming activities,
including digital marketing.
• Here are some key features of the MUDRA loan scheme:
Types of Loans: MUDRA loan offers three types of loans based on the
stage of the business - Shishu, Kishor, and Tarun. Shishu loan is for businesses in
the initial stage, Kishor loan is for businesses that have established their operations,
and Tarun loan is for businesses that require funds for expansion.
Loan Amount: The loan amount offered under the MUDRA loan scheme ranges
from Rs. 50,000 to Rs. 10 lakhs, depending on the stage of the business and the
financial institution providing the loan.
Interest Rates: The interest rates for MUDRA loans are generally lower than other
types of loans. The interest rates vary from 9.75% to 11.50% per annum.
Collateral: MUDRA loans are collateral-free, which means that the borrower does
not need to provide any security or guarantee to avail of the loan.
Repayment: The repayment period for MUDRA loans ranges from 3 to 5 years,
depending on the loan amount and the financial institution providing the loan.
In conclusion, the MUDRA loan scheme is a suitable funding option for a digital
marketing small enterprise. The loan offers affordable interest rates, flexible
repayment options, and does not require collateral. However, before applying for the
loan, it is important to carefully read and understand the terms and conditions,
eligibility criteria, and application process. The borrower should also prepare a
detailed business plan and financial projections to present to the financial institution.
