Top 7 Government Subsidy Loans for Business in India (Updated 2025)

The Government of India has been highly supportive of small-scale business growth in India and has been creating sufficient schemes for that. The Indian government has provided an 80% subsidy to all the MSMEs (Micro Small and Medium Enterprises) as per the government reports under Make in India, from the Honourable Prime Minister of India. In this article, you will have a quick view of every government subsidy loan for businesses that the government provides.

Government Business Loans for Business/Startups

In 2024, the Indian government extended a total of ₹ 841.8 crores to 217 incubator firms. Talking of the micro-enterprises, the Indian government has aided them too. Over 9.29 lakh micro enterprises were given subsidy loans by the government in 2023. The subsidy amount was ₹ 34,517 crores. This shows that the Indian government has provided subsidy loans to over lakhs of businesses or startups, and yet many businesses may not be aware of these facilities. Indian government currently provides 7 different subsidy based loans, here is a compact list: (image)

• Mudra Loan Scheme
• Coir Udyami Yojana
• Poultry Venture Capital Fund Loan
• Credit Linked Capital Subsidy (CLCS)
• PM Employment Generation Program (PMEGP)
• Credit Guarantee Scheme
• Trade-Related Entrepreneurship Assistance And Development Scheme (TREAD)

Let us get to know each one of them individually and in-depth.

1. Mudra Loan Scheme

MUDRA subsidy loan is a government subsidy loan for businesses, mainly to develop entrepreneurs from underprivileged sections of society.

2. Coir Udyami Yojana

Indian coir entrepreneurs have been lacking proper funding support although India has exported $410.25 million in 2023-24, which has led the Indian government to launch Coir Udgyami Yojana.

Get to know the process for business registration and its various types.

3. Poultry Venture Capital Fund Loan

Small-sized poultry farmers do not have sufficient credit access for strengthening their business, which is made easier by this scheme. Poultry Fund offers a large fund support for raising and maintaining the cattle at a highly subsidized rate.

4. Credit Linked Capital Subsidy (CLCS)

In India, often the MSME businesses find it financially challenging to improve their technology. This escalates further when the startups try to approach commercial institutes for funding of their technology requirements. The Credit Linked Capital Subsidy (CLCS) subsidy is a business loan, which is meant to fund these businesses for improving their state-of-the-art technology. This form of credit assists firms in updating their existing technology, and also onboard new technology at a subsidized rate.

5. PM Employment Generation Program (PMEGP)

The rural and urban population of India has a rising proportion of unemployed youth, such as artisans who do not get sufficient employment facilities. This loan facility with subsidy provides a better opportunity for them to establish their own business or manufacturing unit. Also, the Indian government started this subsidy loan to stop rural migration. As per the government reports, rural-to-urban migration is 18.9%, which is another reason behind launching this scheme.

6. Credit Guarantee Scheme

As per media reports, in 2024 almost 72% of the Indian startups could not get easy funding access. All of these startups have thus sought external funding, which shows the poor funding infrastructure in India. The Indian government has turned this plight into an opportunity by launching the Credit Guarantee Scheme, which provides subsidized credit facilities.

7. Trade-Related Entrepreneurship Assistance And Development Scheme (TREAD)

Most of the women entrepreneurs are devoid of the deserving financial assistance, which makes it difficult for them to start their own venture. Major problems regarding credit assistance have surfaced frequently, especially in the rural Indian regions. TREAD was launched by the Indian government to mainly offer subsidised loans to these non-privileged women.

Read also business loan schemes for women entrepreneurs by the Indian government.

Benefits of Government Subsidy Loans for Business

Here are some major benefits that govt loans for small businesses provide:

• Government loans are aimed at helping small-scale and micro enterprises, and startups in funding, and so the interest rate on these loans is usually very low. Moreover, the government provides 10 - 15% subsidy on average in most of these loans.
• Applying for these loans is relatively easy as compared to loans given by private banks. The documentation process and also loan advancing time taken by banking institutes is much higher.
• Businesses do not have the mandatory requirement for keeping high-value collateral as security against the loan taken. These government business credits often have relaxation on collateral security, making these loans relatively easy to avail of.
• These types of subsidy business loan schemes generate employment. It is through these loan credit systems that the government helps unemployed youth generate a stable income and transform them into an entrepreneur.

Conclusion

To empower MSME businesses as well as startups, the Indian government has initiated multiple credit subsidy schemes. A government subsidy loan for business has multiple benefits, such as low interest rates, and no collaterals, making them a highly sustainable option. Not only do these loans have simple terms, but they also have helped underprivileged individuals to transform into entrepreneurs.