MSME Loan Schemes – Government MSME Loans List for 2025

In India, there are approximately 6.3 crore MSMEs which involve in national and international trades, contributing about 29% towards GDP. MSMEs contribute to the economic and social growth of the nation and are a great way to decrease unemployment issues and promote local products. Our government understands the difficulties that every micro, small and medium business owners face in various stages of their business development process and the importance of MSMEs for the development of the country. Hence has structured various MSME Loan schemes to provide maximum support for each and every budding entrepreneur and MSME in every possible way to ease out every phase of their business.

What is an MSME Business Loan?

An MSME business loan is designed to support small, micro, and medium enterprises in meeting various business-related financial needs. Whether it is to start a new business or expand existing ones, these loans provide essential financial support without the need for collateral. The Government of India defines MSME loans as unsecured, making them more accessible to businesses that meet the eligibility criteria. Various financial institutions in India offer these Government schemes for MSMEs in India. They offer flexible repayment terms ranging from 12 months to 5 years, depending on the loan’s purpose. A business can do MSME registration and apply for such loans and schemes through the Udyamimitra portal.

The MSME categorisation includes:

What is the Purpose of MSME Loans?

The various purposes of MSME loans include:

• Start a New Venture: Secure funding to launch a new business or enterprise. 

• Expand Operations: Finance the growth of existing operations, including entering new markets or scaling up production. 

• Purchase Machinery and Equipment: Acquire essential machinery, tools, and equipment to enhance productivity and efficiency. 

• Acquire Commercial Properties: Invest in commercial real estate or build new office spaces.

• Cover Operational Expenses: Manage day-to-day expenses such as salaries, marketing, and other administrative costs. 

• Launch New Products: Obtain capital for developing and introducing new products or services. 

• Additional Working Capital: Access extra funds to maintain smooth business operations and address any financial shortfalls.  

Different Types of MSME Loans

1. Prime Minister Employment Generation Programme and Other Credit Support Schemes

With the education rate increasing year by year, unemployment problems are also soaring high. This scheme is structured with the motto of eradicating the unemployment issue and motivating emerging new businesses by providing necessary financial support.

Prime Minister Employment Generation Programme (PMEGP):

Implemented by the Khadi and Village Industries Commission (KVIC) at the national level and through State KVIC Directorates, State Khadi and Village Industries Boards (KVIBs), District Industries Centres (DICs), and banks at the state level, the motto of this scheme is to make every eligible thriving entrepreneur get a subsidy in their bank account for developing a new business. Under this scheme, any new project in the manufacturing sector worth up to ₹ 25 lakhs and a new business/service sector worth up to ₹ 10 lakhs gets covered.

Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE):

The Credit Guarantee Scheme for MSME businesses has a promising scheme for micro and small enterprises, this CGTSME scheme provides credit-guaranteed funds to eligible beneficiaries from a Trust that is jointly established by the Ministry of MSME and the Small Industries Development Bank of India (SIDBI).

Interest Subsidy Eligibility Certificate (ISEC):

To promote Khadi and Village Industry products, the government has shaped this effective scheme. With this scheme, any registered institution of KVIC or KVIB can avail loan from banks at a 4% p.a interest rate to develop their business. The lending bank gets the 4% interest from the beneficiary and the remaining part of the interest is remitted by the Central Government through KVIC.

Furthermore, this initiative supports MSMEs, offering competitive interest rates and financial aid. It seamlessly aligns with prevailing MSME interest rate frameworks, ensuring a conducive environment for sustainable growth.

2. Development of Khadi, Village, and Coir Industries

In support of fostering rural crafts and products to play a pivotal role in national economic advancement and bolstering rural communities, the Ministry of MSME has introduced various initiatives tailored to empower small and medium enterprises (MSMEs).

Market Promotion & Development Scheme (MPDA):

Like any other business, Khadi and village crafts need some marketing strategy to reach potential customers. With the motive of promoting Khadi crafts and increasing the income of artisans, this MPDA scheme is developed.

Revamped Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

With the motto to regenerate traditional industries, emphasize traditional skills, and ensure long-term sustainable income for rural artisans, the Ministry of MSME has designed this scheme. Under this scheme, artisans will be clustered and importance is given to enhancing product development, productivity, competitiveness, product intervention, and even packaging and marketing. Local artisans and entrepreneurs are provided with sufficient training and improved tools to face the upcoming challenges to optimize their income.

Depending on the number of artisans, the clusters are classified as

• Heritage cluster which includes 1000-2500 artisans
• Major cluster which includes 500-1000 artisans
• Mini cluster which includes up to 500 artisans

Based on its functionality, this Scheme can be classified as “soft interventions‟, “hard interventions” and “thematic interventions‟.

• Soft interventions include awareness training and marketing strategies like providing general awareness, counselling, skill development, organizing exposure visits, market promotion campaigns, product development, training programs, etc.
• Hard Interventions include physical structures like the creation of facilities for multiple products, packaging, common facility centres (CFCs), Raw material banks (RMBs), developing infrastructure like training centers and warehouses, etc.
• Thematic interventions emphasize both domestic and international markets and implement new strategies for brand building, media marketing, and e-Commerce.

Coir Vikas Yojana (CVY):

Coir industry is yet another rural business that profits around 7 lakh artisans by providing them employment and livelihood. In our country, coir and coir-related products are exported to 110 countries. Though benefiting the development of the country by making a huge profit in export, the coir industry needs attention and support for its survival and improvement. Hence several schemes are devised as action plans.

Coir Industry Technology Upgradation Scheme (CITUS)

A replacement of the “Development of Production Infrastructure” of Coir Vikas Yojana, CITUS provides financial support for entrepreneurs for procurement of machinery in establishing new plants or for upgrading/modernizing existing plants.

Science and Technology (S&T) for Coir:

The main aim of this scheme is to ensure proper research work and training of entrepreneurs to stay in line with the current technology. The twin research institutes: the Central Coir Research Institute located in Kalavoor and the Central Institute of Coir Technology that is located in Bangalore receive funds under this scheme to undergo the latest research works whose outcomes serve as an aid to train entrepreneurs in the Coir industry for improved productivity and quality of products and thereby increased income.

Skill Upgradation and Mahila Coir Yojana (MCY):

A scheme for providing self-employment opportunities to women in coconut-producing states, this MCY scheme strives to educate rural women about coir processing and coir-products manufacturing. The National Coir Training and Design Centre (NCT&DC), Kalavoor, Alleppey and Research-cum-Extension Centre, Thanjavur, and Field Training Centres of Regional Officers/ Sub Regional Offices of the Board located in various parts of the country play an active role in training women entrepreneurs.

Export Market Promotion (EMP):

Apart from marketing the coir products locally, exporting those locally-made products to various countries is sure to reap the artisans with higher profits. Understanding this, the Coir Board is implementing various export market promotion activities such as funding for publicity, participating in seminars, conferences and international fairs and presenting awards in the export sector as a token of recognition.

Domestic Market Promotion (DMP):

This scheme is a milestone of the Coir Board in popularizing coir products within the country to help workmen and entrepreneurs in the coir industry. As part of this scheme, high-end showrooms are established, maintained and renovated. To showcase the products to local customers, various fairs and exhibitions are conducted, exclusively for coir products, and are publicized by newspapers, television, radio and other media. Apart from that, the board takes steps in improving the quality of the products by fixing quality standards and regularizing inspection and certification processes.

Trade and Industry-Related Functional Support Services (TIRFSS):

Statistics is the backbone for the good planning of any business. As part of improving the coir industry, a reliable IT-related management information system is built for collecting and processing data related to production, productivity, labor infrastructure, raw material, marketing, etc. In the coir industry and to provide feedback for futuristic planning.

Welfare Measures -Pradhan Mantri Suraksha Bima Yojana (PMSBY):

Accidents and unexpected incidents are part of every business. To make sure the workers and their families are protected against accidental death, permanent total disability, and permanent partial disability, the Coir Board has been implementing Coir Board Coir Workers Group Personal Accident Insurance Scheme since 1998 which provides insurance coverage under such circumstances.

3. Technology Upgradation and Quality Certification:

Quality and continuous improvement have a major impact on the development of any business/industry. While there should be a proper channel for quality certification to ensure reliable outcomes each time and every time, up-gradation in terms of technology, marketing, and resources make the industry bloom to its highest potential. Hence, certain schemes are established to pave the right path in technology and upgradation.

Financial Support to MSMEs in ZED Certification Scheme:

“Make in India” is a great revolution that supports the local artisans and makes us feel proud to be Indians. While artisans are provided with the necessary funds and support to establish new MSMEs and continue traditional businesses under various MSME schemes, it is also necessary to ensure the quality of their outcomes.

Aiming toward flawless products is the Zero Defect & Zero Effect (ZED) manufacturing system which targets in reducing waste thereby increasing productivity and income. By providing Financial Support to MSMEs in ZED Certification Scheme, every MSME will work towards complying with quality standards, adopt new quality tools & systems and frequently upgrade their quality standards.

A Scheme for Promoting Innovation, Rural Industry & Entrepreneurship (ASPIRE):

To facilitate innovation in the MSME sector, especially promoting new businesses for unmet social needs and providing employment to fresh minds is the motto of ASPIRE.

National Manufacturing Competitiveness Programme (NMCP):

This scheme aims at enhancing the competitiveness of the manufacturing units in the MSME sector.

Credit Linked Capital Subsidy for Technology Upgradation (CLCSS):

To let every entrepreneur in the MSME sector upgrade their technology wing, this scheme is a great boon.

Marketing Support/Assistance to MSMEs (Bar Code):

The main aim of this scheme is to encourage MSMEs to use bar codes. Seminars are conducted to train the importance and the registration fee for barcoding is reimbursed to initiate active participation.

Lean Manufacturing Competitiveness for MSMEs:

Lean is a technique that is widely accepted by successful manufacturing units to improve productivity and work style. To introduce and make effective use of Lean in MSMEs, the ministry has devised this scheme.

Design Clinic for Design Expertise to MSMEs:

New design strategies are sure to give a new dimension to any business.  To motivate new strategies in MSMEs, the ministry has formulated this scheme.

Technology and Quality Upgradation Support to MSMEs:

Making improvements is an unavoidable part of a successful business. Hence to motivate MSME entrepreneurs to take necessary steps towards technical ad quality improvement, this scheme is formulated. The scheme aims mainly toward using energy-efficient technologies (EETs) in manufacturing which will drastically decrease the cost of production.

Entrepreneurial and Managerial Development of SMEs through Incubators:

This scheme is a welcome note for new ideas in the MSME sector in terms of technology, process, product, etc. that can be implemented within a year time span.

Enabling the Manufacturing Sector to be Competitive through QMS&QTT:

Be it a product or a service quality matters. That is why these schemes are established to motivate the manufacturing sector to adopt the latest Quality Management Standards (QMS) and Quality Technology Tools (QTT).

Building Awareness on Intellectual Property Rights (IPR):

This initiative aims to raise awareness among MSMEs regarding Intellectual Property Rights (IPR) and the importance of safeguarding them. It emphasizes the significance of protecting innovative business ideas, which add uniqueness to a business. By educating MSMEs about IPR, this scheme empowers them to secure their intellectual assets and foster a culture of innovation within their enterprises.

4. Marketing Promotion Schemes:

To enhance the marketing strategies for the betterment of MSMEs, a few schemes are established by the Ministry of MSME.

International Cooperation Scheme:

Though hitting the international market is a bit tricky, it is worth the investment of money, time and energy. The same is applicable to the development of MSMEs too. The government has devised this scheme to enhance international marketing by providing support for MSMEs to participate in international exhibitions/ trade fairs, conferences/ summits/workshops, etc. To explore more about the industry and to market the products abroad.

Marketing Assistance Scheme:

Organizing exhibitions, buyer-seller meets, intensive campaigns and marketing promotion activities are the major emphasis of this scheme apart from co-sponsoring exhibitions and participating in exhibitions abroad as part of marketing the products of MSMEs.

Procurement and Marketing Support Scheme (P&MS):

This scheme is an initiative to encourage Micro and Small Enterprises (MSEs) to develop domestic markets and to educate MSMEs about the possibilities of business development, trade fairs, latest market techniques.

Entrepreneurship Skill Development Programme (ESDP):

Skill development is an important aspect that helps you stay on track with the latest trend and competition. This scheme nurtures natural talent and educates young entrepreneurs about the latest strategies to help them create successful businesses.

• 20 % of the ESDPs are conducted exclusively for weaker sections of the society i.e. (SC/ST/women and PH).
• A stipend of Rs.500/- per month per candidate is provided.
• Candidates are not charged fees.

Assistance to Training Institutions (ATI):

National-level training institutions operating under the Ministry of MSME, namely, NIMSME, KVIC, Coir Board, Tool Rooms, NSIC & MGIRI, who take part actively in training young entrepreneurs, are provided funds to develop and improve infrastructure.

Micro & Small Enterprises Cluster Development (MSE-CDP):

While working as a cluster productivity and competitiveness is sure to boost up a notch. Hence this scheme provides financial support for the establishment of Common Facility Centres (CFCs) for testing, training centers, R&D, Effluent Treatment, raw material depot, complementing production processes, etc., and improving existing industrial areas/clusters.

On what basis do enterprises categorized as micro, small, and medium enterprises?

Both manufacturing and service sectors are categorized as micro, small, and medium based on their investment as shown below.

How can Lendingkart help?

Although LendingKart does not offer government loans, being an NBFC we offer other easy alternatives. While the processing time of an MSME loan is long, we at LendngKart can process an alternative loan within 72 hours. Our online document submission process facilitates us to complete the verification process quickly. In addition, using our financial data analytics we make sure to provide the lowest interest rate. Looking for an alternative to MSME loans? Try LendingKart.

Government MSME Schemes for Entrepreneurs FAQs:

Latest MSME Loan Scheme News

Government Boosts MSMEs: $808 Million Initiative Approved to Accelerate Growth

In a landmark move, the Indian government’s Cabinet has approved an $808 million initiative aimed at empowering the Micro, Small, and Medium Enterprises (MSME) sector. This decision marks a pivotal step towards enhancing the competitiveness of MSMEs in the global market.

This substantial investment is set to be deployed through the Raising and Accelerating MSME Performance (RAMP) program. The initiative is designed not only to bolster the existing framework supporting MSMEs but also to introduce innovative strategies to enhance productivity, modernise equipment, and expand market access.

Such a hefty infusion of funds is expected to ignite significant developments in the MSME sector, which is often considered the backbone of the economy due to its vast contributions to employment and GDP. By accelerating the performance and sustainability of these enterprises, the government aims to stimulate economic growth and enhance the sector’s resilience against global economic shocks.

This initiative is a part of a broader strategy to foster a supportive ecosystem for small businesses, ensuring they have the necessary tools and resources to thrive in an increasingly competitive market.

News Updated Date: 08 May 2024

Sidbi to finance 50,000 EVs for MSMEs

Sidbi has collaborated with the Niti Aayog, World Bank, Korea-World Bank partnership facility and the Korean economic development cooperation fund to sponsor electric vehicles for small and medium industrial units.

The financing will be accomplished under a pristine project named Evolve, which is electric vehicle operations and lending for an energetic ecosystem, under which Sidbi will give a permit to inexpensive commercial financing for EVs, the national bank said in a statement on Monday. 

While Niti Aayog will provide technological aid to Sidbi, financial aid will arrive from the World Bank, Korea-World Bank partnership facility and the Korean economic development cooperation fund, Sidbi said.

The bank has already established two financing schemes — direct lending to MSMEs and a scheme for lending to N, to support them deliver lower-cost financing.

The new scheme aims to finance 50,000 EVs, S Ramann, chairman and managing director of Sidbi, said.

Kim Kisang, the chief representative from the Korean economic development cooperation fund, said his government will augment aid for the Sidbi program to talk over the fundamental boundaries to the adoption of EVs as well as understanding sharing between both countries.

Gerald Ollivier of the World Bank said Evolve is developed to support around 1.5 million EVs and create an ecosystem in the mobility element.

News Updated Date: 12th June 2023

E New Schemes Launched to Strengthen MSMEs in Pharmaceutical Sector

On Thursday, the government announced 3 brand new schemes that focus on the MSMEs in the pharmaceutical sector. This step is taken in order to strengthen the Micro, Small, and Medium Enterprises in the country. Assistance to Pharma Industries for Common Facilities Scheme (API-CF) will be more focused on the existing cluster. The Pharmaceutical and Medical Devices Promotion and Development Scheme (PMPDS) will have its focus on preparing a database for the pharma and medical device sectors. Lastly, the Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS) will be providing 10% of subsidy on loans of up to Rs. 10 crores.

One MSMEs will be given immense opportunities for growth and various other business ventures to try out.

News Updated Date: 26th July 2022

MSMEs’ access to credit is being made easier by the government: Official

A top official said that the government is working towards facilitating greater access to credit for Micro, Small, and Medium Enterprises (MSMEs). Access to affordable credit remains a challenge for all, especially MSMEs, MSME secretary BB Swain said. 

India’s Small and Medium Enterprises (MSME) minister Swain has said the government is working towards bringing the tiniest of the micro-enterprises into a formal framework. He was speaking at a summit organized by the industry body CII on International MSME Day.

Finance Secretary Arun Jaitley outlined the key facts: 

• Amount earmarked for MSMEs is Rs 2.31 lakh crore.
• The total amount of loans guaranteed under ECLGS (Emergency Credit Line Guarantee Scheme) is Rs 3.47 lakh crore.

India’s MSME Ministry to unlock the true potential of MSMEs in manufacturing said at an MSME summit in Kolkata on Thursday.

News Updated Date: 1st July 2022

Tamil Nadu Government Announced an Allotment of Rs 100 Crore Under TNCGS to Support MSMEs

Under Tamil Nadu Credit Guarantee Scheme, the government of Tamil Nadu has set a package of Rs 100 crore to support MSMEs through guaranteed loans. For loans worth Rs 40 lakh, the guarantee percentile is 90, while for loans up to 2 crores, the guarantee percentile is 80. A website will get developed for this online scheme. The scheme will be enforced within six months jointly by the Tamil Nadu MSME department and Credit Guarantee Fund Trust for Micro and Small Enterprises. The chief minister of Tamil Nadu, Stalin, inaugurated a coconut coir manufacturing plant in Thanjavur that can provide direct and indirect employment opportunities to 200 people. CM Stalin received a report from the expert committee formed to support the recovery of the MSMEs after the pandemic.

News Updated Date: 07-02-2022

MSMEs Constitute 95% of FY21 Loans in the Electrical Machinery Industry: Report

During FY21, in the Electrical Machinery Industry of 3 lakh credit borrowers, MSMEs made 95% of the overall loans and 30% of the overall credit value. 

The credit bureau CRIF High Mark and SIDBI also said in a report that while INR 94,800 crore was the total credit value, the overall active loans were 1,99,490. The annual growth of 3.2% was recorded, while a 5.5% quarterly decline was recorded. During FY21, the total disbursed loans were 1,16,080, and INR 34,320 crore was the total credit value.

With an installed power capacity of 383.37 BW as of May 2021, India is currently the third-largest producer and the second-largest electricity consumer globally. 

Sivasubramanian Ramann, CMD, SIDBI, said that the sector contributes to 8% of the country’s manufacturing production. With 1.5% to the country’s GDP and 1.5% to the country’s exports, the sector contributed to the country’s manufacturing production. 

Ramann also added that by 2030, the government is targeting electric vehicle penetration of up to 30% to make domestic manufacturing economically feasible. This will ensure exponential growth for domestic manufacturers in the electrical machinery sector.

Updated Date: 07-02-2022

MSMEs ask for extending the credit guarantee scheme and a complete loan waiver

The MSME association of Pimpri-Chinchwad has requested the Union Commerce Minister Piyush Goyal for loan waiver and ease of credit. The association has also asked for an extension of the credit guarantee scheme of scheduled and cooperative banks. 

President of the association Sandeep Belsare spoke of the issues faced by the industry due to the two-month lockdown in Maharashtra. Banks asked for regular servicing of loans while there were zero outputs in the industry. 

Belsare also mentioned that the scheme only covered nationalized banks. The units lending from banks other than national banks did not get the benefits of the scheme. Additionally, for working capital, Belsare asked for a 1% relief in the interest rate the banks extend to them.

During the interaction with Goyal, Belsare requested special guidelines for the easier availability of loans. The reluctance of nationalized banks to provide loans is also a major issue.

Updated Date: 26-01-2022