MSME Loan Schemes: A Complete Guide to Financial Support for MSMEs

PM’s Employment Generation Programme (PMEGP)

The PMEGP combines the Prime Minister’s Rojgar Yojna (PMRY) with the Rural Employment Generation Programme (REGP). Its goal is to create self-employment options for jobless youngsters and traditional craftspeople by developing microbusinesses in the non-farm sector. The Khadi and Village Industries Commission (KVIC) implements the initiative at the national level, while State KVIC Directorates, District Industries Centres (DICs), and banks carry it out at the state level.

Eligibility: over 18 years of age.

A minimum of an eighth-grade education pass is required for manufacturing projects costing more than Rs. 10 lakh and business/service projects costing more than Rs. 5 lakh.

new projects only. Self-help groups, organisations established under the Societies Registration Act of 1860, production-based cooperative societies, and charity trusts are also eligible.

Assistance: Maximum project cost: Rs. 25 lakh for manufacturing and Rs. 10 lakh for the service sector.

Subsidy rates: 15% in urban and 25% in rural regions for the general category; 25% in urban and 35% in rural areas for the special category.

Credit Guarantee Trust Fund for Micro- and Small Enterprises (CGTMSE)

The Ministry of MSME and SIDBI established CGTMSE to provide MSMEs with credit guarantees that enable financial institutions to lend without requiring collateral.

Eligibility: new and established MSMEs.

Applicants approach banks and financial institutions.

Assistance includes guarantee cover of 85% for micro-enterprises up to Rs. 5 lakh, 75% for others, and 50% for retail operations.

In the event of a default, the trust will reimburse up to 75% of the amount owed for credit facilities worth up to Rs. 200 lakh.

Credit-Linked Capital Subsidy Scheme (CLCSS)

CLCSS provides a 15% subsidy for technological upgrades in MSMEs, encouraging the use of cutting-edge technologies.

Eligibility: MSMEs, except those upgrading existing equipment using the same technology or utilising second-hand machinery.

Assistance: 15% upfront capital subsidy for institutional financing up to Rs. 1 crore.

 Credit Guarantee Scheme for Subordinate Debt (CGSSD).

CGSSD assists stressed MSMEs’ promoters by providing subordinate debt, which they can reinvest as equity to increase liquidity and preserve the debt-equity ratio.

Eligibility: Operational MSMEs designated as NPA or stressed by April 30, 2020.

Promoters may obtain credit amounting to 15% of their shareholding or Rs. 75 lakh, whichever is lower.

Assistance: The scheme guarantees 90% coverage, with the promoter contributing 10%.

maximum payback period of ten years, with a seven-year moratorium on principal payments.


The Indian government’s many credit programmes, such as PMEGP, CGTMSE, CLCSS, and CGSSD, give critical financial assistance to MSMEs. These efforts help MSMEs overcome financial constraints, encourage technology adoption, and assure long-term success. By utilising these programmes, MSMEs may improve their operations, contribute considerably to the economy, and achieve long-term success.

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