Corporate and Business Sectors | Aware of These Financing Schemes

Financing Schemes

Financing Schemes

There are around 51 million MSME entities in India, employing over 117 million individuals across different sectors. Since MSMEs generate employment for at least 40% of the workforce, both governments of India and leading financial institutions extend credit facilities to promote them. Notably, to benefit from such facilities, MSME owners should learn about them in detail and proceed accordingly. Aware of These Financing Schemes.

Channel finance

Channel financing is a credit facility under which financial institutions extend short-term financing assistance to improve the overall efficiency of a firm’s supply chain.

Mostly leading institutions extend this credit, which accompanies the following features –

Corporate finance

In the general sense, corporate finance is responsible for the capital structure in a corporate setup.

The primary motive of corporate financing is to optimize the value of the business through effective planning and implementation of proper resource allocation.

In the broad sense, the components of corporate finance include –

  1. Capital investments Helps decide which project to invest in.
  2. Capital financing – Helps fund capital investments.
  3. Dividends and return of capital – Deals with the management and distribution of capital returns and dividends.

Nevertheless, individuals may also look for government financing schemes to meet their business-oriented requirements. For example, the following are a few –

  1. Credit Guarantee Scheme (CGS)

This scheme was initiated to strengthen the credit delivery system pertaining to the MSME sector. Generally, both new and existing MSME entities involved in sectors like manufacturing and service-oriented activities are considered to be eligible to become its beneficiaries.

Under the CGS scheme, business owners are entitled to avail of financial assistance in the form of term loans.

  1. Credit Linked Capital Subsidy Scheme for Technology Up-gradation

This particular scheme is initiated by the Ministry of Small Scale Industries and functions with the motive to help financial institutions improve their existing technology. It has extended a subsidy of over Rs.1600+ crore to over 28000 business entities.

In turn, it helps business owners to upgrade their scale of production and further aid them to optimize their production capacity. Under this scheme, partnership firms, sole proprietorship, co-operatives, and both private and limited companies are considered to be eligible under the Credit Linked Capital Subsidy Scheme designed for technology up-gradation.

  1. Pradhan Mantri Mudra Loan Yojana

Small-scale and start-up business ventures are the primary beneficiaries under this scheme. Based on the size of the venture, a business entity can avail credit of up to Rs. 10 lakh which is forwarded under 3 categories, namely – Sishu, Kishor, and Tarun.

Such a loan facility is extended to business owners through designated public, private, and scheduled commercial financial institutions, co-operative societies, etc.

Typically, trading, manufacturing, and service sectors are considered eligible to avail of the benefits extended under the MUDRA scheme.

  1. Small Industries Developmental Bank of India

One of the significant benefits of this MSME loan is that it extends indirect finance through NBFCs, SFCs, and other financial institutions. The primary aim of the scheme is to strengthen the entire MSME sector by improving the credit flow and skill development opportunities.

MSMEs, original equipment manufacturers, and energy service companies are generally deemed eligible for availing credit under this scheme.

  1. Standup India

This particular scheme was launched to provide financial assistance to entrepreneurs who are women and/or SC/ST. Under this scheme, eligible candidates can avail of financial assistance between Rs.10 lakh and Rs.1 crore. Mostly, enterprises in sectors like manufacturing, trading, and service are considered to be eligible under this scheme.

In case MSME owners fail to meet the eligibility criteria of any of these government launched schemes they may look for alternative financing options. For instance, individuals can apply for a Business Loan from leading financial institutions like Bajaj Finserv at a competitive rate of interest. It serves as an exceptional source of channel financing and helps them to expand their venture and overall production capacity successfully.

The NBFC also extends pre-approved offers on business loans, personal loans, and several other financial products. These offers make the process of availing a loan straightforward and less time-consuming. You can also check your pre-approved offers in a few simple steps by offering necessary information like name and contact number.

Regardless, to proceed with the application process smoothly, intending applicants should find out the documents required for a business loan. Subsequently, it would help them avail of the loan quickly and will, in turn, enable them to make the most of the credit amount.

Other than these, several other channel financing schemes can be availed by eligible MSME owners to expand their quality of production significantly. Nonetheless, they should apply for a scheme that is suitable for them and helps meet their requirements perfectly.

Read More About : Why Industrial Design is Vital for Businesses

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