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Govt business loan schemes in India: which scheme fits your business

A govt business loan is a loan, guarantee or subsidy that the Central Government backs but a lender delivers. Mudra covers non-farm loans up to ₹20,00,000. CGTMSE guarantees collateral-free loans to micro and small enterprises. PMEGP adds a subsidy for new units. The lender still decides every loan.

Loan products, rates, and eligibility are determined by the lenders on our panel. Capnix is not a lender and does not lend its own capital. We run your loan journey end to end.

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Govt business loan schemes at a glance

Most govt business loan schemes in India are not loans from the government. The government backs them, and a bank or another lender delivers them. Each scheme does one of three jobs: it sets up a loan product, it guarantees a lender against loss, or it pays a subsidy. The lender still assesses the business and decides the loan.

Scheme What it is Amount Who qualifies Status on the last-checked date Source
Mudra (PMMY) A loan scheme. MUDRA refinances lenders and does not lend itself Up to ₹20,00,000, in four categories Non-corporate, non-farm income-generating activity Running Mudra loan categories, PIB press release, Mudra performance data
CGTMSE A guarantee to the lender, not a loan Cover up to ₹10,00,00,000 at public sector, private sector and foreign banks New or existing micro and small enterprises, loan without collateral Running CGTMSE scheme document
PMEGP A subsidy on a bank loan for a new unit Project up to ₹50,00,000 in manufacturing, ₹20,00,000 in services New non-farm micro enterprises Running in 2026-27 on the current terms Union Budget 2026-27, demands for grants, Ministry of MSME annual report 2025-26
Stand-Up India Bank loans for SC, ST and women first-time founders Was ₹10,00,000 to ₹1,00,00,000 Women and SC/ST entrepreneurs, greenfield units Ended in March 2025, a new version is being drafted All India Radio, 16-Mar-2026
PSB Loans in 59 Minutes A portal for in-principle approval from public sector banks Set by the banks MSMEs Counts still reported to June 2026 PIB press release, 01-Jul-2019, Department of Financial Services
Micro Credit Card A revolving card with CGTMSE cover Up to ₹5,00,000 Udyam-registered micro enterprises Cover in force from 18-Mar-2026, issuing banks not confirmed CGTMSE circular 259
MCGS-MSME A 60% guarantee on machinery loans Up to ₹1,00,00,00,000 Micro, small and medium enterprises buying equipment Modified on 21-Mar-2026 to include services PIB press release, 21-Mar-2026
PM Vishwakarma A collateral-free loan for artisans ₹1,00,000, then ₹2,00,000 Artisans in 18 trades Running PIB explainer, 16-Sep-2025

Which scheme fits you

Your situation Where to look first Source
I am starting a new unit and want a subsidy PMEGP PIB press release
I need up to ₹20,00,000 for a non-farm business Mudra loan Mudra FAQ
I need a larger loan and have no collateral A lender that offers CGTMSE cover CGTMSE
I am a woman or SC/ST first-time founder Stand-Up India has ended. See the women's table below All India Radio, 16-Mar-2026
I am a traditional artisan PM Vishwakarma, below PIB explainer, 16-Sep-2025
I run a micro unit and want a revolving limit The Micro Credit Card, on the CGTMSE page CGTMSE circular 259
I am buying machinery MCGS-MSME, on the CGTMSE page PIB press release, 21-Mar-2026

This table names where to read, not what to choose. A scheme works only if a lender agrees to lend. Capnix is not a lender and cannot get a scheme loan for you.

Govt business loan for women

Several schemes give women entrepreneurs better terms. No scheme guarantees a loan.

Scheme What women get Source
CGTMSE 90% cover for the lender, against 75% for most borrowers, and a 10% fee concession CGTMSE scheme document
PMEGP Special-category subsidy of 25% in urban and 35% in rural areas, and 5% own contribution PIB press release, PMEGP guidelines compendium
Mudra Nearly 68% of Mudra loan accounts have been sanctioned to women PIB press release

Is there a subsidy on a govt business loan?

Only some schemes pay one.

  • Mudra has no subsidy. A Mudra loan linked to a capital-subsidy scheme can still qualify (Mudra FAQ).
  • PMEGP is the main subsidy scheme: 15% to 35% of project cost on a new unit (PIB press release).
  • PM Vishwakarma charges artisans 5%, and the government pays up to 8% of the interest (PIB explainer, 16-Sep-2025).
  • CGTMSE is a guarantee, not a subsidy. If a covered loan fails, the borrower still owes the debt (CGTMSE, CGTMSE scheme document).

PM Vishwakarma

PM Vishwakarma is for traditional artisans and craftspeople in 18 trades. It gives a collateral-free loan of ₹1,00,000, then ₹2,00,000 at 5% interest, with the government paying up to 8% of the interest. It also gives a ₹15,000 toolkit voucher and a ₹500 daily stipend during training (PIB explainer, 16-Sep-2025).

By 01-Dec-2025, 30,00,000 artisans had registered and 23,09,000 had been trained. In 2025, collateral-free loans were sanctioned to 2,62,000 beneficiaries (PIB, Union Budget 2026-27 note).

Collateral rules for every bank loan to a micro or small enterprise

Banks must not take collateral on loans up to ₹20,00,000 to micro and small enterprises, for loans sanctioned or renewed from 01-Apr-2026. A bank may go up to ₹25,00,000 for a unit with a good track record (RBI notification, 09-Feb-2026). Older pages say ₹10,00,000, which was the rule before 01-Apr-2026. For loans up to ₹25,00,000, RBI sets a credit decision within 14 working days (RBI Master Direction, lending to MSME sector).

How to apply for an MSME loan from the government

  1. Register on Udyam. It is free, paperless and Aadhaar-based. Only the government portal can do it, and nobody else may charge for it (Udyam Registration portal).
  2. Pick the scheme from the table above.
  3. Apply at a lender branch or on an official portal. JanSamarth is a single portal for 16 credit-linked schemes, including Mudra, PMEGP and PM SVANidhi (PIB press release, 05-Jun-2026, PIB press release). Each scheme's page names its own route.
  4. The lender assesses and sanctions. Mudra appoints no agents or middlemen (Mudra). Do not pay anyone to "arrange" a scheme loan.

Which businesses count as micro or small

From 01-Apr-2025 a micro enterprise has investment up to ₹2,50,00,000 and turnover up to ₹10,00,00,000. A small one has investment up to ₹25,00,00,000 and turnover up to ₹1,00,00,00,000 (Udyam Registration portal). CGTMSE covers only these two (CGTMSE scheme document). See MSME classification.

What changed in 2025 and 2026

Your next step

Before you approach a lender, run the free loan readiness check. It shows how a lender is likely to read your banking, filings and repayment record. Read about government-backed business loans and unsecured business loans, or see how Capnix is paid.

Scheme guides

In this section

CGTMSE scheme The CGTMSE scheme is a government guarantee on collateral-free loans to micro and small enterprises. The lender applies for cover after sanction. Loans from public sector, private sector and foreign banks can be covered up to ₹10,00,00,000, at 75% to 90% of the lender's loss. Other lender types have lower ceilings. Mudra loan A Mudra loan is a business loan of up to ₹20,00,000 under the Pradhan Mantri MUDRA Yojana (PMMY), for non-farm, income-generating work in manufacturing, trading or services. MUDRA refinances lenders; banks, NBFCs and microfinance institutions give the loan. There are four categories, Shishu, Kishor, Tarun and Tarun Plus, and no collateral. PMEGP PMEGP, the Prime Minister's Employment Generation Programme, helps people set up new non-farm micro enterprises with a bank loan plus a margin-money subsidy of 15% to 35% of project cost. Projects can cost up to ₹50,00,000 in manufacturing and ₹20,00,000 in services. KVIC runs it nationally with state agencies. PSB Loans in 59 Minutes PSB Loans in 59 Minutes is an online portal, run by a company majority-owned by SIDBI and public sector banks, that gives MSMEs an in-principle loan approval in 59 minutes. It is not a sanction or a payout. The bank still checks the file and decides before any money is disbursed. Stand-Up India scheme Stand-Up India was a Government of India scheme under which scheduled commercial banks lent ₹10,00,000 to ₹1,00,00,000 to SC, ST and women entrepreneurs above 18 for a first-time, greenfield enterprise. The scheme ended in March 2025, and the Finance Minister said in March 2026 that a revamped version is being drafted. MSME schemes by state Every state runs its own MSME schemes on top of the central ones. Most are a subsidy or an interest subvention on a bank loan, not a loan from the state, and each has its own age, residence and project-cost rules. This hub covers five states with the most registered MSMEs, from each state government's own scheme pages. TReDS for MSMEs TReDS, the Trade Receivables Discounting System, is an electronic platform authorised by RBI on which an MSME sells an invoice its buyer has accepted, and banks and other financiers bid to pay it early. Only MSMEs can be sellers, and the deal is without recourse to the MSME. Five platforms hold RBI authorisation.

Frequently asked questions

It is a business loan that a Central Government scheme supports through a loan product, a guarantee or a subsidy. The loan itself comes from a bank, NBFC or microfinance lender.

Register on Udyam first, then apply at a lender or on an official portal such as JanSamarth (Udyam Registration portal, PIB press release).

Sarkari loan ke liye pehle Udyam registration karein. Phir scheme ke hisaab se bank branch ya official portal par apply karein. Bank hi loan par faisla leta hai (Udyam Registration portal).

PMEGP pays 15% to 35% of project cost on a new unit (PIB press release). Mudra and CGTMSE carry none (Mudra FAQ, CGTMSE).

CGTMSE, PMEGP and Mudra, as the women's table above shows. Stand-Up India ended in March 2025 (All India Radio, 16-Mar-2026).

No. The Finance Minister told the Lok Sabha on 16-Mar-2026 that it ended in March 2025 and is being redrafted (All India Radio, 16-Mar-2026). Some portals still show an Apply button.

Sources

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