Quick take
The Indian government offers 10+ loan schemes for small businesses — from ₹50,000 street vendor loans to ₹5 crore collateral-free credit. This guide ranks the top 10 by usefulness, covers exact eligibility criteria, interest rates, and step-by-step application process for each.
Finding the right government loan is overwhelming. Banks push their own products, agents charge commissions, and most online guides list schemes without explaining who actually qualifies. This is the most comprehensive, no-BS guide to government business loans in India — with real eligibility criteria, actual interest rates, and where to apply.
⚠️ Important note
All government loans are available through official bank branches and government portals. You do NOT need to pay any agent or middleman to apply. If someone asks for money to “process” your government loan application, it’s likely a scam.
The 10 Best Government Business Loans
#1 Most Popular
Mudra Loan (PMMY)
The most widely used government loan for small businesses. Available at every bank branch in India. Three categories based on loan amount: Shishu (up to ₹50K), Kishor (₹50K–5L), Tarun (₹5L–10L).
No collateral
8.5–12% interest
Eligibility: Any Indian citizen with a business plan. No minimum turnover. Apply at: Any bank branch or mudra.org.in • Complete Mudra guide →
#2 Largest Amount
CGTMSE (Collateral-Free up to ₹5 Crore)
Government guarantees your loan so banks don’t ask for property or assets as collateral. Works with all scheduled banks and NBFCs. The single most powerful scheme for growing MSMEs.
No collateral
Bank rate + guarantee fee
Eligibility: MSMEs (manufacturing & services). Need Udyam registration. Apply at: Any bank branch • Collateral-free loan guide →
#3 Women & SC/ST
Stand-Up India
Dedicated loan scheme for women and SC/ST entrepreneurs. Every bank branch must give at least one Stand-Up India loan to a woman and one to SC/ST borrower. Composite loans covering term loan + working capital.
Women / SC/ST only
Base rate + 3% max
Eligibility: Women or SC/ST, 18+ years, new (greenfield) enterprise. Apply at: standupmitra.in or any bank branch
#4 New Businesses
PMEGP (Subsidy up to 35%)
Not just a loan — a subsidy. Government gives you 15–35% of your project cost as grant (you don’t repay this). Manufacturing projects up to ₹50L, service projects up to ₹25L.
15–35% subsidy
KVIC/DIC route
Eligibility: New units only (not existing businesses). 18+ years, 8th pass minimum. Apply at: kviconline.gov.in
#5 Street Vendors
PM SVANidhi
Micro-credit for street vendors. ₹10K first loan, ₹20K second, ₹50K third (on timely repayment). 7% interest subsidy. Digital payment incentive ₹1,200/year.
No collateral
7% interest subsidy
Eligibility: Street vendors with vending certificate or LoR. Apply at: pmsvanidhi.mohua.gov.in
#6 Artisans
PM Vishwakarma Yojana
For traditional artisans (18 trades) — carpenters, blacksmiths, goldsmiths, weavers, etc. Toolkit grant ₹15K + loans at 5% interest + skill training + ₹500/day stipend during training.
5% concessional interest
₹15K toolkit grant
Eligibility: Traditional artisans in identified trades, 18+ years. Apply at: pmvishwakarma.gov.in
#7 Startups
Startup India Seed Fund
Grants up to ₹20 lakh for proof of concept and up to ₹50 lakh as loans for prototype development and market entry. Available through DPIIT-approved incubators.
Via incubators
Eligibility: DPIIT-recognised startups, incorporated <2 years, turnover <₹25Cr. DPIIT registration guide →
#8 SC/ST Entrepreneurs
NSFDC / NSKFDC Concessional Loans
National SC/ST Finance Development Corporations provide business loans at 4–6% interest through state channelising agencies. Much lower rates than bank loans.
4–6% interest
Eligibility: SC/ST individuals, family income below ₹3L (rural) / ₹3.5L (urban). Apply at: nsfdc.nic.in
#9 59-Minute Loan
MSME 59-Minute Loan (psbloansin59minutes.com)
In-principle approval for MSME loans up to ₹5 crore in 59 minutes through a digital platform. Links to GST returns and IT returns for automated underwriting. Works with 12+ public sector banks.
59-min approval
Eligibility: 3+ years in business, GST registered, ITR filed. Apply at: psbloansin59minutes.com
#10 SIDBI Loans
SIDBI Direct Lending
Small Industries Development Bank of India provides direct term loans and working capital to MSMEs. Multiple products: SMILE (equipment loans), SIDBI Make in India (manufacturing), and SAFE (energy efficiency).
Multiple products
Eligibility: Registered MSMEs with 2+ years operations. Apply at: sidbi.in or udyamimitra.in
Quick comparison table
| Scheme | Amount | Collateral | Best for |
|---|---|---|---|
| Mudra | ₹50K–10L | None | Everyone |
| CGTMSE | Up to ₹5Cr | None | Growing MSMEs |
| Stand-Up India | ₹10L–1Cr | Flexible | Women/SC/ST |
| PMEGP | Up to ₹50L | Varies | New units |
| SVANidhi | ₹10K–50K | None | Street vendors |
| Vishwakarma | ₹1L–3L | None | Artisans |
Confused about which loan to apply for?
OpenBiz matches you with the right government loan in minutes
Answer a few questions about your business and our AI engine identifies every loan and scheme you qualify for. We also connect you with verified professionals who help with documentation.
FAQ
Can I get a government loan without collateral?
Yes. Mudra, CGTMSE, SVANidhi, and Vishwakarma all require zero collateral. Full guide here.
What CIBIL score is needed?
Most government schemes don’t have a strict CIBIL requirement. Mudra Shishu has no CIBIL check. For larger loans, 650+ is generally expected.
How long does approval take?
Mudra Shishu: 7–14 days. CGTMSE: 2–4 weeks. Stand-Up India: 2–6 weeks. PMEGP: 30–60 days. The 59-minute portal gives in-principle approval instantly.
Related guides
- Mudra Loan: Complete Application Guide
- Collateral-Free Business Loans in India
- All Government Schemes for Small Business
- MSME Registration Guide (Required for Most Loans)
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