Starting or growing a business takes more than just a good idea—it takes money. In India, many entrepreneurs, especially small and medium businesses, face challenges in getting financing. But here’s the good news: the Government of India has introduced several Business Loan schemes to help startups, MSMEs, and even women entrepreneurs.
In this 2025 guide, we’ll explore the top government business loan schemes in India, who can apply, how to apply, and the benefits of each. Whether you’re running a kirana shop, tech startup, or manufacturing unit, this article will help you understand your options.
Why Choose a Government Business Loan?
Government-backed business loan schemes are designed to support businesses that may not have access to traditional bank financing. Here’s why they are worth considering:
- Low interest rates
- No collateral required (in most cases)
- Faster approval
- Support for women, SC/ST, and rural entrepreneurs
- Training and mentorship included
Now let’s dive into the top government schemes available in 2025.
1. Pradhan Mantri MUDRA Yojana (PMMY)
MUDRA (Micro Units Development & Refinance Agency) is one of the most popular business loan schemes in India. It supports micro and small enterprises under three categories:
📌 Loan Categories:
- Shishu – Up to ₹50,000
- Kishor – ₹50,001 to ₹5 lakhs
- Tarun – ₹5 lakhs to ₹10 lakhs
✅ Key Features:
- No collateral required
- Easy application through public/private banks, NBFCs, and MFIs
- Ideal for small businesses like tailors, shopkeepers, repair shops, small manufacturers
🔍 Who Can Apply:
- Small manufacturers
- Artisans
- Food vendors
- Service providers
Keyword Used: Business Loan under PMMY
2. Stand-Up India Scheme
Launched to empower women and SC/ST entrepreneurs, this scheme offers a business loan for starting a new enterprise in manufacturing, services, or trading.
💰 Loan Amount:
₹10 lakhs to ₹1 crore
✅ Key Features:
- 75% of the loan can be funded by the bank (rest by the borrower or other schemes)
- Credit guarantee and hand-holding support
- Loan tenure up to 7 years
👩💼 Who Can Apply:
- SC/ST entrepreneurs
- Women entrepreneurs
- Individuals starting a greenfield project
Keyword Used: Government Business Loan for Women and SC/ST Entrepreneurs
3. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
The CGTMSE provides credit guarantees to banks and financial institutions offering business loans to MSMEs without asking for collateral.
💼 Loan Coverage:
Up to ₹5 crore
✅ Benefits:
- No need for third-party guarantees or collateral
- Widely accepted by commercial banks and NBFCs
- Encourages formal credit access to first-time borrowers
🏢 Ideal For:
- Startups and small businesses needing working capital
- Enterprises expanding their operations
- Businesses lacking physical assets
Keyword Used: Business Loan without Collateral
4. Prime Minister’s Employment Generation Programme (PMEGP)
This is a credit-linked subsidy program for generating self-employment opportunities through micro-enterprises in rural and urban areas.
💰 Loan Range:
Up to ₹25 lakh for manufacturing
Up to ₹10 lakh for service sector
🎯 Subsidy:
- 15% to 35% of the project cost, depending on location and applicant category
✅ Features:
- Training programs included
- Must contribute 5%–10% of project cost
👤 Who Can Apply:
- Anyone above 18 years with at least 8th-grade education
- New entrepreneurs only (no existing unit)
Keyword Used: Government Subsidy Business Loan
5. SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE)
Launched by SIDBI, this scheme supports MSMEs in manufacturing, especially those under the Make in India initiative.
💸 Loan Amount:
Minimum ₹10 lakh
✅ Benefits:
- Flexible repayment (up to 10 years)
- Covers capital expenditure
- Promotes new businesses in semi-urban and rural India
🧩 Eligibility:
- Existing and new MSMEs
- Priority to underdeveloped states and women-owned businesses
Keyword Used: SIDBI Business Loan Scheme
6. TReDS (Trade Receivables Discounting System)
Though not a traditional business loan, TReDS helps small businesses get paid faster for their invoices. It is a digital platform approved by RBI that allows MSMEs to get their receivables financed by banks/NBFCs.
✅ Features:
- Improves working capital
- Payment within 45 days
- Transparent and digital
🏭 Who Can Use:
- MSMEs selling to large corporations
- Businesses with long payment cycles
Keyword Used: Working Capital Business Loan
7. PSB Loans in 59 Minutes
This is a fast-track business loan approval scheme initiated by the government. Entrepreneurs can apply for loans up to ₹5 crore and get in-principle approval within 59 minutes.
🕒 Speed:
Approval in under an hour
Disbursement within 7–10 days
✅ Key Benefits:
- Minimal paperwork
- Linked to GST, IT returns, and bank statements
- Available via SIDBI and public sector banks
👤 Who Can Apply:
- GST-registered MSMEs
- Businesses with good repayment history
Keyword Used: Instant Business Loan in India
How to Apply for Government Business Loans
📌 Step-by-Step Guide:
- Identify your business needs – working capital, machinery, expansion, etc.
- Check eligibility for various schemes
- Prepare documents – Aadhar, PAN, business plan, bank statements, etc.
- Apply through official portals:
- Track your application and be ready for any verification calls or follow-ups
Documents Needed for Business Loan Application
- Aadhaar Card and PAN Card
- Bank statements (last 6–12 months)
- ITR returns (last 2–3 years if applicable)
- Business registration proof
- Project report or business plan
- GST registration (if applicable)
Final Thoughts
India’s government has made huge efforts to empower businesses—especially micro, small, and medium enterprises—through innovative business loan schemes. Whether you’re a first-time entrepreneur, a woman leading a startup, or a small-town business owner with big dreams, these loan programs can give your idea the wings it needs.
