Government-Backed MSME Loan Schemes in Kerala You Should Know

Have you ever thought how small businesses in Kerala can still grow with a tight budget and limited resources? This can be found in the MSME Loan Schemes in Kerala which are able to provide the much needed financial boost to many entrepreneurs.

Such schemes are aimed at simplifying the process of funding, quickening and opening up access to micro, small, and medium businesses. There is probably a scheme that suits your individual requirements whether you are just starting out or are about to grow.

Even more appealing to these schemes is the backing of the government behind them- they provide subsidies, low-interest loans, and even no-collateral ones. That sounds good, doesn’t it?

In this blog, we are going to analyse the best MSME loan schemes in Kerala, their advantages, eligibility and the process of getting them without any headache. Okay, let us begin!

Kerala Financial Corporation (KFC) MSME Term Loan Scheme

KFC offers one of the most reliable and entrepreneur-friendly MSME loan schemes in Kerala. The Kerala Financial Corporation (KFC) offers a term loan scheme to help entrepreneurs with long-term financial needs of industry and industry-related projects. This loan scheme is specifically designed to support micro, small and medium enterprises (MSMEs) in Kerala. The following are its main highlights:

Kerala Financial Corporation (KFC) MSME Working Capital Loan Scheme

This is yet another valuable MSME loan scheme in Kerala designed to support aspiring entrepreneurs. The Kerala Financial Corporation (KFC) also offers a working capital loan scheme that helps in managing MSME’s day-to-day operational expenses. Working capital loans can support businesses to become more focused on their growth and generate capital. The following are its main highlights:

Kerala State Industrial Development Corporation (KSIDC) Seed Funding Loan Scheme

The Kerala State Industrial Development Corporation (KSIDC) provides financial assistance to entrepreneurs and MSMEs. Through this scheme, KSIDC aims to provide seed fund assistance to innovative start-up ventures. The following are its main highlights:

Kerala State Backward Classes Development Corporation (KSBDC) Scheme

The KSBDC provides financial assistance to MSMEs belonging to the backward classes in Kerala in the form Self-Employment Loan Scheme.  The scheme is available to both new and existing MSMEs in Kerala. It is provided by KSBDC in partnership with the National Minorities Development and Finance Corporation (NMDFC). The following are its main highlights:

Credit Linked Capital Subsidy Scheme (CLCSS)

Credit Linked Capital Subsidy Scheme was launched in October 2000 by the Government of India. This scheme provides necessary funds to MSMEs for upgrading their existing technologies. Enterprises can use this scheme to upgrade their existing plant and machinery and increase profit. This scheme has no upper loan limit, but the subsidy is calculated on the loan amount sanctioned for P&M purchase only. The following are its main features:

Pradhan Mantri MUDRA Yojana (PMMY)

The Pradhan Mantri MUDRA Yojana (PMMY) is a flagship central government scheme launched in 2015. It provides micro-loans to non-corporate, non-farm micro and small enterprises in both rural and urban areas.

PMMY offers loans under three categories, depending on the stages of business growth and funding needs:

• Shishu Mudra: Up to Rs. 50,000
• Kishore Mudra: Rs. 50,001 to Rs. 5 lakh
• Tarun Mudra: Rs. 5 lakh to Rs. 10 lakh

MUDRA loans are availed through various financial institutions, including Public sector banks, Private sector banks, Regional Rural Banks, Small Finance Banks, Microfinance Institutions, and Non-Banking Financial Companies (NBFCs).

Unlike other loan schemes, PMMY doesn’t have specific criteria for age, gender, tenure, interest rates, etc. All these factors can vary based on the category of the loan and the policies of the lending institution.

Prime Minister’s Employment Generation Programme (PMEGP)

PMEGP is a credit-linked subsidy scheme administered by the Ministry of Micro, Small and Medium Enterprises (MSME), which aims at creating job opportunities by establishing micro-enterprises. The main target of this scheme is Women, Traditional and prospective artisans and Unemployed youth. The following are some of its main features:

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

CGTMSE is a joint initiative launched in 2000 by the Ministry of Micro, Small and Medium Enterprises (MSME), the Government of India, and the Small Industries Development Bank of India (SIDBI). It encourages financial institutions to provide collateral-free credit schemes to micro and small enterprises. In case of any default, the bank can file a claim with CGTMSE. The following are some of its main features:

Stand-up India

Stand-up India is a central government scheme launched in 2016. It provides bank loans for entrepreneurship among women and members of Scheduled Castes (SCs) and Scheduled Tribes (STs). Existing businesses cannot avail loans through this scheme, as these are provided for starting new businesses. These loans are provided through various banks, including scheduled commercial banks, regional rural banks (RRBs), and small finance banks.

This scheme provides loan amounts ranging from Rs. 10 lakhs to Rs. 1 crore. The interest rates and tenure vary depending on the nature of the business and other factors such as the nature of the business, credit policies of the lender, etc.

SIDBI Make in India Soft Loan Fund for Micro, Small, and Medium Enterprises (SMILE)

SMILE is a scheme launched by the central government to provide financial assistance to 25 Identified sectors under the ‘Make in India’ initiative. This scheme promotes the ‘Make in India’ initiative among entrepreneurs. SMILE provides adequate funding for the setting up of new enterprises and also for the expansion of existing ones. The following are some of its main features:

KB Smart MSME Loan (Kerala Bank)

KB Smart MSME Loan is a loan meant to serve small and micro enterprises in the Kerala program of One Lakh Enterprise. The entrepreneurs can borrow a maximum of 25 lakh rupees in manufacturing and 10 lakh rupees in service and trading sectors. This is a scheme that encourages the accessibility of MSME financing in Kerala with lax repayment of a five-year term. This scheme, which is provided by Kerala Bank, is best suited to people who want to receive localized help. In case you are considering Kerala MSME loans, particularly start-up or expansion units, this scheme is an intelligent entry point. It also goes in line with the increased need of MSME loan schemes in Kerala.

One Family One Enterprise (OFOE) Scheme

One Family One Enterprise (OFOE) is a special project adopted by the Kerala government to promote household level entrepreneurship. Interest subsidies on loans of up to 10 lakh are given to families to initiate at least one micro or small business. There is inclusiveness in the scheme, as there is 50 percent reservation of women. It is significant in the growth of Kerala government MSME loan schemes in Kerala.

Interest Subvention of Nano and Household Units

The plan is aimed at very small businesses which are usually ignored by conventional lenders. It provides 6 percent interest subsidy on term loans during 3 years-8 percent to SC/ST and units owned by women. Businesses have to be able to operate with 5 HP load and meet the pollution standards. It is a good choice for the individuals requiring Kerala MSME loans on the ground level. This scheme will enable the access of MSME funding Kerala to many home-based or low-investment entrepreneurs. As it does not require any large-scale operations, it helps the actual bottom layer of the Kerala business ecosystem and significantly helps in making the MSME loan schemes popular in Kerala.

Mission 1000 (MSME Scale-Up Mission)

Mission 1000, or the MSME Scale-Up Mission is an ambitious initiative of the Kerala government aimed at assisting 1,000 MSMEs to scale operations. The capital subsidy of up to 2 crore and interest subvention of 50 lakh is provided to eligible units. Detailed Project Reports (DPRs) are also supported by the mission. This scheme is a game-changer in case you are thinking of funding MSMEs at large scale in Kerala. It is particularly applicable to those entrepreneurs who are already established and want to grow. As we have seen that some people who are in search of Kerala government MSME loan facilities with great support can count Mission 1000 as one of the contemporary Kerala MSME loan programs.

Stressed MSME Revival & Rehabilitation Scheme

This Kerala government initiative helps the MSMEs that are facing financial setbacks. It provides term loan re-structuring and interest subsidy up to 1 lakh in the first year with a maximum limit of 5 lakh. Its aim is to rejuvenate viable businesses. It is a good alternative to the wider Kerala MSME loans. This Kerala government MSME loan scheme can be of help to the entrepreneurs who are in trouble and require a lifeline. It enhances the reliability of MSME loan schemes to be conducted by the state in Kerala by avoiding closures and facilitating turnarounds.

Kerala Enterprises Loan Scheme (Kerala Gramin Bank)

This scheme provided by Kerala Gramin Bank helps new and emerging business in manufacturing, services and trade. It subsidizes the interest at 5 per cent and hence the effective interest rate will be only 4 per cent on loans up to 10 lakh rupees. The scheme is open to businesses that have been launched since April 2022. It is a perfect opportunity in case you need MSME loan alternatives Kerala, or you need flexible MSME funding Kerala. It is a viable option to business people who require early funding on government-guaranteed conditions. Similar to other schemes of MSME loans in Kerala, it promotes financial autonomy in a comfortable and convenient way.

Wrapping Up

The appropriate MSME loan schemes in Kerala can actually define the future of your business. Whether it is subsidized by the government or a working capital funding that fits in your business cycle, these Kerala MSME loans are meant to get you off on a good start and accelerate your growth. However, here is one thing that many people fail to realize, a good project report is your golden ticket to securing that loan.

And that is where Finline comes in, it is like Canva for financial reports. Be it a Kerala government MSME loan, or a loan with any other bank, Finline will assist you to prepare a bank-ready business plan within 10 minutes. No complex spreadsheets. No jargon in the field of finance. Nothing but clean, easy reports in your own language.

Therefore, you should not waste time in case you are really committed to bringing your business idea into the real world. So, make it now!