Government Loan Schemes for Business in India: 10 Compared, and How to Choose
CGTMSE, Mudra, PMEGP, Stand-Up India, PM Vishwakarma, the Startup India Seed Fund, CLCSS, SIDBI, JanSamarth, PSB Loans in 59 Minutes—most lists stop at naming these. What they fail to mention is that you are not choosing among ten competing loan products.
Instead, you are choosing among four different kinds of support, and most businesses qualify for exactly one combination, not all ten.
Government loan schemes in India are central programmes designed to help MSMEs, startups, and underrepresented entrepreneurs access institutional credit with lower costs, less collateral, or faster approval. These support systems take four forms: credit guarantees, subsidies, direct micro-loans, and digital application platforms.
They are not interchangeable. Each one targets a specific business stage, applicant category, or funding purpose. Applying for the wrong one is the single most common reason a perfectly eligible business gets rejected.
This guide categorises all ten schemes by their true function rather than their name. This helps you identify the exact support you qualify for before you ever step foot in a bank branch.
What "Government Loan Scheme" Covers—and Why These 10 Aren't Interchangeable
Most of the ten names on this list fall into one of four categories: a direct loan or grant, a guarantee that sits on top of someone else's loan, a subsidy on an existing loan, or a digital channel that routes you to one of the other three. Knowing which bucket a scheme belongs to tells you immediately whether you are applying for it or applying through it.
Three names on this list aren't credit products at all—they are how you reach one. JanSamarth, PSB Loans in 59 Minutes, and SIDBI do not have a single "loan amount." JanSamarth and PSB 59 Minutes are application gateways, and SIDBI is the lending institution running several separate products underneath. Two more—CGTMSE and CLCSS—are not loans either. They make a loan cheaper or collateral-free, but you still need a bank to sanction the credit.
| Category | What it means for you | Schemes in this group |
|---|---|---|
| Direct loan or grant | The scheme itself hands you money or credit | Stand-Up India, PMEGP, PM Vishwakarma, PM Mudra Yojana, Startup India Seed Fund |
| Guarantee on a loan | Reduces or removes collateral on a bank loan you still apply for separately | CGTMSE |
| Subsidy on a loan | Cuts your effective cost on a bank loan you still apply for separately | CLCSS |
| Application channel / institution | Routes you to one of the above, or lends directly under its own products | JanSamarth, PSB Loans in 59 Minutes, SIDBI |
Key Takeaway:
Confusing these categories—for instance, going to a bank asking to "apply for CGTMSE" as if it were a standalone loan—is a documented friction point that even bank staff run into. This is a primary reason why so many applications stall on the wrong paperwork rather than on genuine ineligibility.
All 10 Schemes Compared at a Glance
The fastest way to narrow ten options down to one or two is to check your business stage and category against the table below, then read only the section that matches.
Note: Figures below are sourced from each scheme's official portal as of June 2026. Confirm current terms before relying on any single number, as several of these get revised midyear.
| Scheme | What it is | Amount | Who it's for | New or existing business |
|---|---|---|---|---|
| CGTMSE | Credit guarantee on a bank/NBFC loan | Guarantees up to ₹10 crore (₹20 crore for DPIIT startups) | Any micro/small enterprise | Both |
| Stand-Up India | Direct composite loan (term + working capital) | ₹10 lakh – ₹1 crore | SC/ST individual or woman entrepreneur (51%+ stake if non-individual) | New (greenfield only) |
| PSB Loans in 59 Minutes | Digital application channel | Routes to whatever you qualify for, roughly ₹1 lakh – ₹5 crore | GST/ITR-compliant businesses | Both |
| SIDBI | Lending institution (SMILE, Express 2.0, ARISE, etc.) | Varies by product, typically ₹10 lakh upward | Existing MSMEs (vintage varies by product) | Mostly existing |
| Startup India Seed Fund | Grant + convertible debt | Up to ₹20 lakh grant, up to ₹50 lakh convertible debt | DPIIT-recognised tech startup, under 2 years old | New (early-stage) |
| JanSamarth | Digital application gateway | Inherits the amount of whichever of its 15 linked schemes you apply for | Anyone eligible for a linked scheme | Both |
| CLCSS | Capital subsidy on a machinery loan | 15% subsidy, capped at ₹15 lakh, on loans up to ₹1 crore | Existing MSEs upgrading approved technology | Existing |
| PMEGP | Credit-linked subsidy (margin money) | Project cost up to ₹50 lakh (manufacturing) / ₹20 lakh (services); subsidy 15–35% | First-time entrepreneurs, 18+ | New units only |
| PM Vishwakarma | Direct loan in two tranches, plus grants | ₹1 lakh, then ₹2 lakh (₹3 lakh total) at 5% concessional interest | Artisans in 18 named traditional trades | Both |
| PM Mudra Yojana (PMMY) | Direct micro-loan ladder | Shishu ≤₹50,000; Kishor ₹50,000–5 lakh; Tarun ₹5–10 lakh; Tarun Plus ₹10–20 lakh | Any non-farm micro/small enterprise | Both |
Almost all ten are collateral-free for the borrower in practice, but that protection comes from a guarantee mechanism (CGTMSE for general loans, CGFMU for Mudra, NCGTC/CGFSI for Stand-Up India), not from the scheme waiving security on its own. That distinction matters: it explains why a bank can still ask hard underwriting questions on a "collateral-free" loan.
Matching the Scheme to Your Business Stage
Starting a New Business
If you haven't started trading yet, four of the ten schemes are built specifically to bridge that gap. Which one fits depends on who you are, not just what you are building.
- PMEGP: The general-purpose option for any new manufacturing or service unit, offering a direct, non-repayable subsidy of 15–35% of the project cost depending on your category and location. However, it has zero tolerance for existing businesses; even opening a second branch of a running unit disqualifies you.
- Stand-Up India: Exists in parallel for the same greenfield stage, but only if you are a woman entrepreneur or an SC/ST individual (or hold a 51%+ stake in a non-individual enterprise). It funds a much wider range—₹10 lakh to ₹1 crore—as a single composite loan covering both term loans and working capital, with margin money as low as 10% of your own contribution.
- PM Vishwakarma: Exclusively for artisans practising one of 18 recognised traditional trades, such as carpentry, blacksmithing, pottery, and tailoring. The credit support here is smaller (₹3 lakh total) but pairs with a non-repayable ₹15,000 toolkit grant and a daily training stipend, which PMEGP and Stand-Up India do not offer.
- Startup India Seed Fund Scheme: The only one of the four aimed at tech-driven startups rather than general enterprises. It operates entirely differently: you apply through a DPIIT-approved incubator, not a bank, and the first ₹20 lakh is a genuine grant.
Growing an Existing Business
If your business is already running, PMEGP and Stand-Up India are off the table. Instead, four other routes open up. Three of these exist specifically to make an existing-business loan cheaper or easier to secure, rather than handing you new capital outright.
- PM Mudra Yojana: This is the most accessible route. Any non-farm micro or small enterprise can apply, with no minimum vintage required for the smaller Shishu and Kishor brackets. The loan is collateral-free under the CGFMU guarantee.
- CGTMSE: For loans larger than Mudra's ₹20 lakh ceiling, this is the mechanism most existing MSMEs rely on, even if they don't realise it. You apply to a bank for a term loan or working capital facility, and the bank separately registers it for CGTMSE cover. This allows them to waive the collateral demand on loans up to ₹10 crore.
- SIDBI: It is worth approaching SIDBI directly once your business has 2–5 years of stable, profitable operating history. Its direct products (SMILE, ARISE, Express 2.0, STEP, etc.) are structured for expansion, machinery purchases, or modernisation rather than first-time setups. They often offer rates a percentage point or two below standard bank MCLR.
- CLCSS: If your capital need is specifically for upgrading plant and machinery to a newer, listed technology—not just buying more of the same—this scheme is built for you. It offers a 15% upfront subsidy, capped at ₹15 lakh, credited straight against your loan account.
Applying Directly vs. Through a Digital Platform
JanSamarth, PSB Loans in 59 Minutes, and going straight to a bank branch are three different doors into largely the same set of schemes. The right choice depends on how complicated your file already is.
JanSamarth is the Department of Financial Services' single-window portal covering 15 credit-linked central schemes, including Mudra, PMEGP, and Stand-Up India. It is highly useful if your need is straightforward and under roughly ₹20 lakh, as the portal's rule engine matches you automatically. (Note: We cover the step-by-step process and the five mistakes that get JanSamarth applications rejected in our dedicated JanSamarth portal guide).
PSB Loans in 59 Minutes, run by SIDBI, is built for speed rather than scheme-matching. It pulls your GST, ITR, and bank-statement data automatically to give an in-principle decision in under an hour, with final disbursal in 7–8 working days once approved. It works across the same general loan range as a direct bank application, but with less human back-and-forth at the front end.
Neither platform replaces a banking relationship once your situation gets even slightly non-standard. If you have multiple business entities, partial collateral, a previous rejection you need to fix, or a requirement above ₹1 crore, a digital portal isn't enough. At that point, a loan consultant who can prepare CMA data and negotiate directly with a bank's credit committee tends to move faster than either portal on its own.
A Worked Example: Choosing Between Three Routes
Take a Howrah-based foundry unit needing ₹70 lakh to add a CNC machine line. This is an existing business, not a category-specific applicant, looking at a fairly typical mid-size MSME credit need. PMEGP and Stand-Up India are both ruled out immediately: the unit already exists, and unless ownership specifically sits with an SC/ST or woman entrepreneur, Stand-Up India's eligibility doesn't apply.
That leaves three realistic combinations. A bank term loan registered for CGTMSE cover removes the collateral demand on the full ₹70 lakh. If the CNC line qualifies as an approved technology upgrade under CLCSS's list of sub-sectors, the same loan can also carry a 15% capital subsidy, capped at ₹15 lakh, on top of the CGTMSE cover. These are two schemes stacking on one loan, not competing for it. (For the machinery financing structure itself, our machinery and equipment loan guide walks through how lenders price this kind of purchase).
Insider Insight: Why Scheme-Stacking Applications Stall
When files stall for months, it is rarely due to initial ineligibility. Instead, it happens because the machinery cost, project timeline, or promoter's contribution doesn't align perfectly across the bank's appraisal, the CGTMSE registration, and the CLCSS subsidy claim.
CGTMSE, CLCSS, and the lending bank each work from their own version of the project report. Furthermore, a branch credit officer's internal portfolio-quality scorecard still gets dinged by a default on a guarantee-backed loan, even though the guarantee covers the financial loss. Because of this, officers scrutinise these files more carefully, not less, despite the "collateral-free" label.