Service-sector MSMEs can now avail collateral-free loans
Big update for India's small businesses: The government just widened its collateral-free credit scheme.
Now, service-sector MSMEs and exporters can get easier access to loans: no property or assets needed as security.
With MSMEs making up 30% of the country's GDP and employing millions, this could be a real game-changer.
For service-based MSMEs
Service-based MSMEs can now join manufacturers in applying for loans under the revamped plan.
The cost of machinery that counts toward eligibility is lowered from 75% to 60% of project cost.
Loans up to ₹100 crore get a 60% guarantee from the National Credit Guarantee Trustee Company (NCGTC).
There's a 5% upfront fee, but you'll get some back after four years if you stick with it.
Export-focused MSMEs get even better terms
Export-focused MSMEs (profitable, with at least 25% export turnover in the last three financial years) can snag loans up to ₹20 crore with a generous 75% guarantee.
Upfront contribution: 2% (capped at ₹40 lakh) with partial refunds in later years.
Guarantee fees are waived in the first year and set at 0.50% annually thereafter.
All these upgrades build on recent moves like higher coverage limits for small businesses looking to grow fast.