Government Loan schemes for Small Business
Moreover, it will be even more beneficial if the source of getting a loan is from government backed program or financial institute as cost of funding is lower. The advantage of it is not only at the time of starting up a business but also for the improvisation and successful operation.
Central and state government has introduced some policies and schemes to align with the needs of small businesses. Some of the public banks like State Bank of India (SBI), Andhra Bank, and Bank of Baroda offer various kinds of financial schemes which may help business owners to get a wide range of financial products and services to help in meeting their business requirements. These public sectors banks’ following schemes can indeed assist the financial challenges faced by SMEs:
Working capital finance: It is available to meet the operating expenses, receivable financing, direct funding or by letter of credit.
Corporate term loans: Such loans are useful for any new venture or expansion of business.
Term finance: For modernization or diversification the capacity of existing units e.g. land, building, plant and machinery etc.
Apart from public sector banks some government financial institutions also play a vital role for financing and development of small businesses. Some of the key names are as follows:
Small Industries Development Bank of India (SIDBI): It had started its financial assistance to small business enterprises in 1990 and was established by an act of Parliament. In India SIDBI has now become the vertex among the government financial institutions. It is actively taking part in promotion and development of small business industry. Various schemes those come under SIDBI are Direct Assistance Scheme, Indirect Assistance Scheme, Promotional and Development Activities, National Equity Fund, Scheme, Technology Development and Modernization Fund Scheme, Single Window Scheme, Mahila Udyam Nidhi (MUN) Scheme and Equipment Finance Scheme.
National Small Industries Corporation Limited (NSIC): It was set up in 1999 to encourage and advance the growth of small scale business industry. One of the major features of NSIC is to import machines on hire-purchase terms. It also focuses to supply and distribute indigenous and imported raw materials and export the product of small business unit, at the same time NSIC creates awareness of technological advancement like software technology.
National Bank for Agriculture and Rural Development (NABARD): It is for the promotion of rural business enterprises especially in agriculture sector. It offers support to small industry like cottage and village industry using credit and not credit approaches.
World Association for Small and Medium Enterprises (WASME): In India WASME is the only non-governmental organization for SMEs with the intent to develop the action plan for the small and medium businesses. It grants some subsidized schemes for growth of rural enterprises as well.
Broadly, these government and public sector bank schemes are helpful not only for the modern small scale industry but also to the rural business industry. So that it will help to bring change in the economic development of our country.