If you want to start or grow your business, having steady cash flow is very important. Business loans provide the funds you need to keep things running smoothly. In India, besides private lenders, the government offers several business loan schemes with affordable interest rates, often without needing collateral.
Understanding Government Business Loan Schemes in India
India has about 40 million Micro, Small and Medium Enterprises (MSMEs), both registered and unregistered. MSMEs play a big role in providing jobs and contribute nearly 40% to India’s GDP. They help address issues like poverty, unemployment, income inequality, and regional gaps. To support these businesses, the government offers various loan schemes made to help MSMEs grow and succeed.
Purpose of Government Business Loan Programs
The government’s business loan schemes aim to provide easy access to funds for MSMEs and other businesses to keep their operations going. Entrepreneurs can pick financing options that fit their needs. Many of these schemes are available online now, which makes applying simple and quick.
Top 7 Government Business Loan Schemes in India 2025
Here are some government business loan schemes you should know about:
- MSME Loan Scheme
- MUDRA Loan
- Credit Guarantee Fund Scheme
- National Small Industries Corporation (NSIC) Subsidy
- SIDBI Loan
- Credit Link Capital Subsidy Scheme (CLCSS)
- Udyogini Scheme for Women Entrepreneurs
1. MSME Loan Scheme
The MSME Loan Scheme helps businesses in the MSME sector with working capital needs. Both new and existing businesses can apply for loans up to Rs. 1 crore. You get loan approval or rejection within 59 minutes, and the full process finishes in 8–12 days. Loans come with a low interest rate of 8%, making it easier to repay. Women entrepreneurs get a 3% interest discount and simpler loan approval.
2. MUDRA Loan Scheme
MUDRA (Micro Units Development and Refinance Agency) loans offer low-cost credit to micro and small businesses involved in manufacturing, trading, or services. These loans are available through public and private banks, cooperative societies, and other financial groups. MUDRA loans have three categories:
| Category | Loan Amount |
| Shishu Loans | Up to Rs. 50,000 |
| Kishor Loans | Rs. 50,000 to Rs. 5,00,000 |
| Tarun Loans | Rs. 5,00,000 to Rs. 10,00,000 |
Eligibility: Sole proprietorships, partnerships, private or public companies, and other legal entities can apply.
3. Credit Guarantee Fund Scheme
This scheme offers unsecured loans to MSMEs without needing collateral. It supports both new and existing businesses with working capital loans up to Rs. 2 crore. Women entrepreneurs get preference under this scheme. The Ministry of MSMEs manages the Credit Guarantee Fund Trust.
Eligibility: Businesses in manufacturing, retail, education, self-help groups, training institutes, and service sectors can apply.
4. National Small Industries Corporation (NSIC) Subsidy
NSIC, a government agency with ISO certification, helps MSMEs grow by providing financing, technology support, and market services. It offers:
- Marketing Support Scheme: Helps businesses grow by enabling them to take part in tenders and marketing activities.
- Credit Support Scheme: Provides finance through bank syndication for raw material purchase, marketing, and other needs.
5. SIDBI Loan
The Small Industries Development Bank of India (SIDBI) caters to MSME financing needs. SIDBI offers direct loans and works with NBFCs and Small Finance Banks to provide loans. Loan amounts range from Rs. 10 lakhs to Rs. 25 crores, with repayment terms up to 10 years. MSMEs can get loans up to Rs. 1 crore without collateral.
SIDBI also offers special schemes like SPEED, SMILE, and SEF made for different business needs.
6. Credit Link Capital Subsidy Scheme (CLCSS)
This scheme helps small businesses upgrade their technology by giving a 15% upfront subsidy on the cost of plant and machinery, up to Rs. 15 lakhs. It helps MSMEs lower production costs and stay competitive in markets. The Ministry of Small Scale Industries runs CLCSS.
Eligible Entities: Sole proprietors, partnerships, co-operatives, private and public limited companies can benefit.
7. Udyogini Scheme for Women Entrepreneurs
Udyogini supports women entrepreneurs by offering loans up to Rs. 15 lakh without collateral or processing fees. Women aged 18 to 55 with a family income under Rs. 15 lakh can apply. Physically disabled or widowed women have no income limits.
You’ll need documents like passport-size photos, birth certificates, Aadhaar card, caste certificates, bank passbooks, ration cards, and income proof. Loans are available for 88 types of businesses under this scheme.
Look into these government business loan schemes and pick the one that suits your business needs best. These schemes make it easier to get funds for your business growth and can be applied for online with ease.