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EDE Assignment No. 8

The document outlines various funding schemes available for Small Scale Enterprises (SSEs) at a bank, including Business Start-up Loans, Working Capital Loans, Growth and Expansion Loans, Government-Backed Loan Schemes, and Microfinance Options. Each scheme has specific purposes, loan amounts, interest rates, repayment periods, and eligibility criteria. Additionally, it highlights MUDRA loans and MSME loans aimed at supporting micro and small enterprises in India.

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Tejas Narwade
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10 views3 pages

EDE Assignment No. 8

The document outlines various funding schemes available for Small Scale Enterprises (SSEs) at a bank, including Business Start-up Loans, Working Capital Loans, Growth and Expansion Loans, Government-Backed Loan Schemes, and Microfinance Options. Each scheme has specific purposes, loan amounts, interest rates, repayment periods, and eligibility criteria. Additionally, it highlights MUDRA loans and MSME loans aimed at supporting micro and small enterprises in India.

Uploaded by

Tejas Narwade
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Assignment No.

Visit a bank/financial institution to enquire about various funding schemes for small scale
enterprise

1. Introduction

Small Scale Enterprises (SSEs) play a critical role in boosting economic growth, employment, and
innovation. However, the lack of adequate financial resources often limits the potential of these
enterprises. In order to help SSEs scale up, various funding schemes are available through banks and
financial institutions. This report summarizes the key funding schemes offered by [Bank Name] after
an inquiry visit.

2. Objective

The main objective of the visit was to gather information on available funding schemes for Small
Scale Enterprises, including their terms and eligibility criteria. The goal is to provide insights into
what options are available to SSEs seeking financial support for growth and development.

3. Types of Funding Schemes Offered

3.1 Business Start-up Loans

 Purpose: To provide capital for entrepreneurs looking to start a new business.


 Loan Amount: Ranges from $5,000 to $100,000 depending on the business plan.
 Interest Rate: Competitive rates starting at 5% p.a.
 Repayment Period: Up to 5 years.
 Eligibility Criteria:
o Business plan submission.
o Proof of business registration.
o A credit check on the business owner.
 Additional Benefits: Access to mentoring and advisory services for new entrepreneurs.

3.2 Working Capital Loan

 Purpose: To help cover the day-to-day operational expenses such as inventory, salaries, and
utilities.
 Loan Amount: Flexible amounts based on monthly cash flow needs, typically up to 80% of
the monthly working capital requirement.
 Interest Rate: Starts at 6% p.a.
 Repayment Period: Typically short-term (6-12 months).
 Eligibility Criteria:
o Business must have been operating for at least 12 months.
o A history of consistent revenue generation.
o A credit check for the business owner.

3.3 Growth and Expansion Loan

 Purpose: Designed for businesses looking to expand operations, introduce new products, or
enter new markets.
 Loan Amount: Ranges from $50,000 to $500,000.
 Interest Rate: Starts at 7% p.a.
 Repayment Period: 3 to 7 years.
 Eligibility Criteria:
o Business must have at least 2-3 years of stable operations.
o Financial statements for the last 2 years must be submitted.
o A solid business expansion plan.

3.4 Government-Backed Loan Schemes

 Purpose: These loans are specifically supported by government initiatives aimed at


promoting entrepreneurship, particularly in underserved sectors.
 Loan Amount: Varies, generally capped at $200,000.
 Interest Rate: Subsidized, as low as 4% p.a.
 Repayment Period: Up to 10 years.
 Eligibility Criteria:
o Must be a registered Small Scale Enterprise.
o The business must operate in a sector identified by the government as a priority
area.
o The business owner must demonstrate a commitment to job creation or innovation.

3.5 Microfinance Options

 Purpose: Aimed at micro-enterprises that require small amounts of capital.


 Loan Amount: Up to $10,000.
 Interest Rate: Starts at 10% p.a.
 Repayment Period: 6 months to 2 years.
 Eligibility Criteria:
o Must be a micro-enterprise with a small-scale turnover.
o Simplified application process, requiring less documentation.

The MUDRA loan (Micro Units Development and Refinance Agency Ltd.) is a government-backed
initiative aimed at providing financial support to micro and small enterprises in India. MUDRA loans
are primarily targeted at non-corporate, non-farm small/micro enterprises to help them grow their
businesses, improve operations, or start new ventures.

Key Features of MUDRA Loan:

1. Loan Categories:
o Shishu: For businesses in their early stages (up to ₹50,000).
o Kishor: For established businesses with moderate growth potential (₹50,001 to ₹5
lakh).
o Tarun: For businesses with a well-established track record and high growth potential
(₹5 lakh to ₹10 lakh).
2. Purpose:
o To fund working capital needs, purchase of machinery/equipment, and other
business requirements of micro and small enterprises.

MSME

An MSME loan refers to a loan specifically designed for businesses that fall under the Micro, Small,
and Medium Enterprises (MSME) sector. These loans are provided by financial institutions, including
banks, to help MSMEs access capital for expansion, working capital needs, purchasing equipment, or
other business requirements. MSMEs are a significant part of the economy, and these loans are
tailored to meet their specific needs, considering that many MSMEs face challenges in accessing
credit.

Key Features of MSME Loans:

1. Eligibility Criteria:
o The business must be registered as a Micro, Small, or Medium Enterprise as per the
MSME Development Act.
o For Micro enterprises: Investment in plant and machinery/equipment should be up
to ₹1 crore (for manufacturing) or ₹50 lakh (for services).
o For Small enterprises: Investment should be between ₹1 crore and ₹10 crore (for
manufacturing) or between ₹50 lakh and ₹2 crore (for services).
o For Medium enterprises: Investment should be between ₹10 crore and ₹50 crore
(for manufacturing) or between ₹2 crore and ₹5 crore (for services).

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