TOP 5 GOVERNMENT SCHEMES YOU CAN ACCESS AFTER MSME REGISTRATION

INTRODUCTION

Micro, Small, and Medium Enterprises (MSMEs) form the backbone of the Indian economy. To promote entrepreneurship, encourage self-employment, and reduce dependency on formal employment sectors, the Government of India has launched several targeted schemes. These initiatives aim to provide financial support, collateral-free loans, grants, and technical assistance to MSMEs at various stages of their business journey. Read here:-Scheme-booklet-Eng.pdf

In this article, we explore five major government schemes designed to empower MSMEs and startups. Whether you’re a first-time entrepreneur or looking to expand an existing business, these schemes can offer the financial foundation you need.

TMWala can assist in identifying the right scheme, preparing required documents, and guiding you through the application process for smoother approvals.

GOVERNMENT SCHEMES FOR MSME

India’s MSME sector benefits from a wide range of government-backed initiatives that provide both funding and operational support. From collateral-free loans to startup subsidies, these schemes are tailored to meet the unique needs of businesses at various growth stages. Some of the most prominent schemes include

• Pradhan Mantri Mudra Yojana (PMMY)
• MSME Subsidy 2025
• Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
• Prime Minister’s Employment Generation Programme (PMEGP).

These schemes serve one common purpose to foster economic participation through accessible finance, reduce credit dependency, and support India’s growing base of micro and small enterprises.

1. PM Mudra Yojana Loan

The Pradhan Mantri Mudra Yojana (PMMY), launched in April 2015, is a flagship initiative of the Government of India aimed at supporting non-farm micro and small enterprises through collateral-free loans of up to ₹20 lakhs. It targets a broad spectrum of beneficiaries, including individuals, proprietors, self-employed professionals, partnership firms, and companies engaged in income-generating non-farm activities.

Eligibility requires a clean credit history, and lenders may assess technical capabilities for specialized sectors.

This scheme is particularly attractive because it removes the biggest barrier many small businesses face i.e., collateral.

Mudra loans are classified into three categories:

• Shishu (up to ₹50,000)
• Kishore (₹50,001 to ₹5 lakhs)
• Tarun (₹5 lakhs to ₹10 lakhs)
• Some banks also offer Tarun Plus for loans beyond ₹10 lakhs up to ₹20 lakhs.

Application Process: Applicants must register on the Udyami Mitra portal, create a business profile, select the appropriate loan category (Shishu, Kishore, Tarun, or Tarun Plus), choose a lending institution, upload required documents, and submit the application online. A unique application number is generated for tracking purposes.

Required Documents: Documents vary by loan category, but generally include

• Identity and address proof,
• Business-related documents,
• Bank statements,
• Financial reports for higher loan amounts.

TMWalacan assists you by determining the right loan category, preparing detailed documentation, and improving your chances of loan approval by aligning your business proposal with required compliance requirements.

2. How to Apply for MSME Subsidy

The MSME Subsidy 2025 is a government initiative offering a non-repayable financial grant of up to ₹5 lakh to eligible startups and small businesses classified under the MSME category. The scheme is designed to support newly registered ventures by helping them manage initial setup costs, invest in essential machinery, or adopt new technologies and infrastructure. Unlike loan-based schemes, this grant does not require repayment. It is implemented to encourage innovation and entrepreneurship across manufacturing, services, Agri-processing, textiles, and tech-based sectors.

This subsidy is ideal for early-stage startups that may not be ready for debt-based funding. By offering upfront capital, it significantly reduces the initial burden of launching a business.

Eligibility Criteria:

• Business Registration: Must be a newly registered MSME on or after January 1, 2025.
• Udyam Registration: Mandatory registration on the Udyam portal.
• Investment Cap: Initial capital investment should not exceed ₹1 crore.
• Turnover Limit: Projected annual turnover must be below ₹5 crore in the first year.
• Sector Coverage: Open to all sectors defined under the MSME classification.
• Eligible Entities: Individual proprietors, partnerships, LLPs, and private limited companies.

Application Process:

• Register on Udyam Portal– Ensure the business is officially Udyam-registered.
• Visit the MSME Subsidy 2025 Portal– Apply through the dedicated government portal.
• Fill in the Application Form– Provide business details and investment plans.
• Upload Required Documents– PAN, Aadhaar, Udyam certificate, business plan, and bank details.
• Submit & Track– Submit the form and monitor application status using the application ID.

This scheme serves as a direct boost for early-stage MSMEs, aiming to reduce credit dependency and promote sustainable business growth.

3. CGTMSE Scheme for MSME

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a government-backed scheme jointly launched by the Ministry of MSME and SIDBI to facilitate collateral-free credit to Micro and Small Enterprises (MSEs). It provides a guarantee cover to banks, NBFCs, and other eligible financial institutions, encouraging them to extend credit without demanding tangible security.

Eligibility Criteria: The scheme is open to both new and existing Micro and Small Enterprises engaged in manufacturing or service-related activities. However, it specifically excludes businesses involved in agricultural activities, Self-Help Groups (SHGs), and Joint Liability Groups (JLGs). Loans of up to ₹2 crore are eligible under the scheme.

How to Apply:

• Identify a Participating Lender– Approach a bank or NBFC that participates in the CGTMSE scheme. Comparing terms across multiple lenders is recommended.
• Submit a Loan Application– Provide a detailed loan proposal, including your business plan, KYC documents, financials, and project reports if applicable.
• Loan Appraisal– The lender assesses the business viability and decides on the loan amount.
• CGTMSE Guarantee Application– Once the loan is sanctioned, the lender applies for guaranteed coverage from CGTMSE on behalf of the borrower.
• Loan Disbursement– After the guarantee is processed, the loan is disbursed to the borrower.

This scheme greatly enhances the bankability of micro and small units that might otherwise be denied formal credit due to a lack of collateral.

4. PMEGP Loan Eligibility

The Prime Minister’s Employment Generation Programme (PMEGP) is a credit-linked subsidy scheme aimed at promoting self-employment through micro-enterprise development in both rural and urban areas. The scheme is open to individuals and entities looking to establish new manufacturing, service, or business units.

Eligibility Criteria:

• Age & Education: Applicants must be at least 18 years old and have passed at least Class VIII.
• New Units Only: Only new projects are eligible for funding; existing businesses are not covered under this scheme.
• Eligible Entities: Individual entrepreneurs, self-help groups (not availing benefits under other schemes), cooperative societies, charitable trusts, and production-based institutions are eligible.
• No Income Cap: There is no upper limit on income for eligibility.
• Bankable Projects: The business proposal must be financially viable and acceptable to banks.
• Caste/Category Consideration: Special category applicants (SC/ST/OBC/minorities, women, ex-servicemen, differently-abled, etc.) are eligible for higher subsidies with lower margin money contributions.
• No Prior Default: Applicants should not have defaulted on any loan from a bank or financial institution.

Eligible Sectors:

• Manufacturing: Food processing, textiles, wood/bamboo products, chemicals, etc.
• Services: Transport, healthcare, education, and repair services.
• Business/Trade: Select retail and wholesale trade categories.

Application Process:

• Register on the PMEGP portal PMEGP Home.
• Fill out the application form with personal, educational, and project details.
• Upload necessary documents:
  • Educational certificate (Class VIII pass),
  • ID/address proof, caste/category certificate (if applicable),
  • Project report, bank details,
  • Photographs.
• Submit the form online for screening and bank processing.

PMEGP plays a significant role in reducing unemployment by enabling individuals to start viable businesses. For additional working capital needs post-approval, entrepreneurs may explore personal loans for expansion.

5. MSME LOAN SCHEMES

Beyond grants, the government also facilitates a wide array of MSME loan schemes. These include term loans, working capital financing, equipment financing, and credit guarantee-backed lending through CGTMSE. Whether you’re scaling production, purchasing new machinery, or hiring staff, these loan schemes are structured to provide affordable credit options with minimal security requirements.

Most MSME loan schemes can be accessed through participating financial institutions, both public and private. These schemes are designed to suit different business models, from manufacturing units to service-based operations.

CONCLUSION

MSME loan schemes are a crucial pillar in India’s push to strengthen its micro, small, and medium enterprise ecosystem. From offering collateral-free loans under the Pradhan Mantri Mudra Yojana, to non-repayable grants through the MSME Subsidy 2025, and credit-backed support via CGTMSE and PMEGP, the government has created a comprehensive framework to support every stage of business development.

These schemes serve one common purpose to foster economic participation through accessible finance, reduce credit dependency, and support India’s growing base of micro and small enterprises. By addressing capital, credit, and operational challenges, they empower entrepreneurs across manufacturing, services, and trade sectors to start, sustain, and scale their ventures with confidence.

Entrepreneurs and MSME owners are encouraged to assess their eligibility, utilize official portals for applications, and take full advantage of these financial tools to build sustainable and competitive enterprises in today’s economy.

With digital guidance, expert advisors, and real-time application tracking, TMWala helps simplify the application process, ensuring entrepreneurs make the most of the government’s support ecosystem.