India is home to a vibrant and diverse ecosystem of small businesses, each contributing significantly to the country's economic growth. Recognizing the challenges these businesses face in securing capital, the Indian government has rolled out several schemes that aim to provide financial support, ease of access to credit, and a better environment for growth.
If you are a small business owner in India in 2025, this guide will introduce you to the best government schemes designed to help your business thrive.
1. Pradhan Mantri Mudra Yojana (PMMY) – A Gateway to Financial Empowerment
For many small business owners, especially those running micro-enterprises, securing a loan can be a daunting task. The Pradhan Mantri Mudra Yojana (PMMY) has emerged as a game-changer for small businesses. It provides loans under three categories—Shishu (up to ₹50,000), Kishore (₹50,000 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh), depending on the growth stage of the business.
The best part? These loans are offered at relatively low-interest rates (7% to 12%) with flexible repayment terms, making it easier for small businesses to manage their finances. Eligible businesses include individuals, partnerships, and MSMEs operating in sectors other than agriculture.
2. Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) – Collateral-Free Financing
One of the most common barriers small businesses face when applying for loans is the need to provide collateral. CGTMSE solves this issue by offering collateral-free loans to MSMEs. This scheme is ideal for businesses seeking working capital, machinery, or expansion loans.
Eligible businesses can borrow up to ₹2 crore under this scheme. The interest rates typically range between 8% and 12%, and the repayment period usually spans up to five years. If you run an MSME and need a loan but don’t have assets to pledge as collateral, this scheme could be your ideal solution.
3. Stand-Up India Scheme – Empowering Women and Marginalized Communities
Launched to promote entrepreneurship among women and Scheduled Castes (SC) and Scheduled Tribes (ST) individuals, the Stand-Up India Scheme provides financial assistance to set up greenfield businesses. If you belong to these groups and are looking to start a business in manufacturing, services, or trading, this scheme offers loans ranging from ₹10 lakh to ₹1 crore.
The scheme promotes inclusive growth by ensuring that marginalized sections of society have access to funding. Loan interest rates typically range between 9% to 13%, with repayment periods of up to 7 years. A moratorium period of up to 18 months is also available to help ease the burden of loan repayments in the initial stages.
4. National Small Industries Corporation (NSIC) Subsidy Scheme – For Industrial Growth
Small-scale manufacturing businesses will find the NSIC Subsidy Scheme particularly helpful. This scheme provides financing for raw materials, machinery, and working capital, along with financial assistance for setting up new manufacturing units. By providing subsidized interest rates (usually around 5% to 8%), the NSIC makes it easier for businesses to upgrade their facilities and expand their operations.
Businesses involved in manufacturing and services can avail themselves of this scheme. The loan amounts vary depending on the specific needs and the scope of the project.
5. SIDBI Make in India Soft Loan Fund for MSMEs (SMILE) – Boosting Innovation
For MSMEs engaged in manufacturing, innovation, and technology development, the SMILE scheme by SIDBI offers an excellent funding option. This scheme focuses on helping businesses increase their competitiveness through modern technology and innovation.
With loan amounts of up to ₹25 crore, this initiative provides competitive interest rates tailored to the project’s risk profile. The repayment term generally ranges from 5 to 7 years, making it a solid option for businesses looking to expand their technological capabilities.
6. Technology Upgradation Fund Scheme (TUFS) – Modernizing Manufacturing Sectors
For businesses in sectors like textiles, garments, and other manufacturing industries, the Technology Upgradation Fund Scheme (TUFS) offers financial support for the modernization of operations. Through this scheme, small businesses can access funds to upgrade their technology and improve production efficiency.
The loan amounts vary depending on the nature of the project, and interest rates are preferential—usually between 7% to 9%. Repayment terms typically span 5 years, with a moratorium period of 1 to 2 years.
7. Atmanirbhar Bharat Rozgar Yojana (ABRY) – Employment Generation through MSMEs
The Atmanirbhar Bharat Rozgar Yojana (ABRY) is aimed at businesses that focus on creating new jobs. By supporting MSMEs in expanding their workforce, this scheme not only helps businesses but also contributes to job creation in the country.
With subsidized interest rates, businesses can access loans and subsidies to hire new employees. Repayment terms are flexible, making it easier for small businesses to grow without the burden of fixed payments.
8. Startup India Seed Fund Scheme – Supporting Early-Stage Startups
If you’re an early-stage startup with an innovative idea but need financial assistance to take it to the next level, the Startup India Seed Fund Scheme could be your perfect match. This initiative provides seed funding to startups working in technology, manufacturing, and services sectors, with loans of up to ₹20 lakh.
These funds are specifically designed to help startups cover costs like proof-of-concept, prototype development, and product trials. Interest rates vary based on the lender, and repayment terms are flexible.
9. Women Entrepreneurship Program (WEP) – Empowering Female Entrepreneurs
The Women Entrepreneurship Program (WEP) is a government initiative that provides financial support, training, and mentoring to women entrepreneurs. This program is part of various schemes like PMEGP, Mudra, and Stand-Up India, ensuring women have access to both capital and guidance to grow their businesses.
Loans available under PMMY (Mudra) for women entrepreneurs can go up to ₹10 lakh, while under Stand-Up India, loans can range from ₹10 lakh to ₹1 crore.
10. Prime Minister’s Employment Generation Programme (PMEGP) – Financial Support for Rural MSMEs
The PMEGP scheme is designed to promote small businesses in rural areas, particularly in manufacturing and agro-processing industries. Through this scheme, businesses can access loans of up to ₹25 lakh for manufacturing units and ₹10 lakh for service-based businesses.
The interest rates generally range from 8% to 12%, and the repayment term is typically 3 to 7 years. This program plays a crucial role in creating employment opportunities in rural areas.
11. Rural Employment Generation Programme (REGP) – Fostering Rural Entrepreneurship
Similar to PMEGP, the Rural Employment Generation Programme (REGP) provides financial assistance to rural entrepreneurs involved in industrial activities. The loans, which can go up to ₹25 lakh, help establish small businesses in rural areas, contributing to local economic growth.
Interest rates are subsidized, typically ranging from 7% to 10%, and repayment terms are flexible, generally extending up to 7 years.
The year 2025 brings with it numerous opportunities for small businesses in India. With a wide variety of government schemes available, small business owners have greater access to funding and support. Whether you are starting a business, looking to upgrade technology, or expanding your workforce, these schemes offer tailored financial solutions to fuel your growth.
By leveraging these schemes, small businesses can overcome challenges, expand their operations, and contribute more significantly to the Indian economy. So, take the first step today, apply for a scheme that fits your business needs, and watch your venture soar to new heights in 2025!