finance
Published on 8 May 2025
Government Funding Schemes for Start-Ups in India: A Comprehensive Guide
Introduction
Launching a business or embarking on a new venture necessitates an initial capital investment. Entrepreneurs can begin on a modest scale and grow as their products or services gain popularity and reach wider audiences. Regardless of the size of your investment, funds are crucial for personal development, whether that involves acquiring new skills or honing existing ones necessary for effective business management.
In addition to personal development, start-up costs such as purchasing software, marketing, and, for those dealing in physical goods, initial inventory investment are essential before establishing lines of credit with suppliers. In simple terms, "money is the lifeblood of business." However, entrepreneurs have the option to start small based on their budget and expand by reinvesting profits into the business.
Funding Options for Start-Ups
To facilitate funding for small and micro-enterprises, the Government of India has implemented several financial schemes.
1. Pradhan Mantri MUDRA Yojana (PMMY)
Launched by the Hon’ble Prime Minister on April 8, 2015, PMMY aims to provide loans up to Rs. 10 lakh to non-corporate, non-farm small and micro enterprises classified as MUDRA loans. Borrowers can approach:
- Commercial Banks
- Regional Rural Banks (RRBs)
- Small Finance Banks
- Microfinance Institutions (MFIs)
- Non-Banking Financial Companies (NBFCs)
PMMY offers three loan products:
| S. No. | Product | Explanation |
|---|---|---|
| 1. | Shishu | Loans up to Rs. 50,000, targeting entrepreneurs in their early stages or with minimal funding needs. |
| 2. | Kishore | Loans up to Rs. 5,00,000, designed for entrepreneurs wishing to expand established businesses. |
| 3. | Tarun | Loans up to Rs. 10,00,000 for those meeting eligibility criteria, representing the highest loan amount under PMMY. |
Eligibility includes businesses like small manufacturing enterprises, shopkeepers, artisans, and activities allied to agriculture.
2. Stand-Up India (SUI)
The Stand-Up India scheme, initiated by the Hon’ble Prime Minister on April 05, 2016, is aimed at providing financial support to Scheduled Caste (SC), Scheduled Tribe (ST), and women entrepreneurs. The scheme facilitates bank loans ranging from Rs. 10 lakh to Rs. 1 crore, with at least one SC/ST and one woman borrower per bank branch for greenfield enterprises in sectors such as manufacturing, services, or trading.
Specific criteria include:
- Majority (at least 51%) shareholding by SC/ST or women entrepreneurs in non-individual enterprises.
- Borrowers should not be in default of any Bank/Financial Institution.
Applications can be made through various lending institutions or online at the Stand-Up Mitra portal.
3. PM SVANidhi
Street vendors contribute significantly to the urban informal economy, providing accessible goods and services at affordable rates. This sector, composed of vendors known by various names (hawkers, rehriwalas, etc.), offers an array of products including fresh produce, street food, and services like barbering and laundry.
The COVID-19 pandemic has severely impacted the livelihoods of street vendors, who often operate with minimal capital. Thus, providing access to credit is essential for them to rebuild their businesses. The PM SVANidhi scheme offers working capital loans up to Rs. 10,000 with a repayment period of up to 7 years.
For all loans, it is crucial that the necessary business documents are complete and accurate.
Conclusion
In conclusion, starting a business requires initial capital investment, and there are several government schemes available to support aspiring entrepreneurs. Understanding and utilizing these financial resources can significantly ease the challenges of launching and growing a new business.