Best Government Business Loans

Micro, Small, and Medium Enterprises (MSMEs) are the pillars of Kerala’s economy and contribute significantly to employment and industrial output. Since they play such a big role, the central government as well as the state government have launched various loan schemes to fund and grow these businesses. If you are on the lookout for business loans in Kerala, you will be able to make the best decisions if you are aware of these schemes.

1. Kerala Financial Corporation (KFC) MSME Term Loan Scheme

The Kerala Financial Corporation (KFC) offers term loans to support entrepreneurs with industry-related projects’ long-term financial needs. This is a special scheme for Kerala’s MSMEs.

• Loan amount: up to ₹50 crore
• Collateral: Compulsory
• Loan tenure: 3 to 10 years
• Minimum credit rating: 40%
• Eligibility: Individuals above 18 years of age

2. KFC MSME Working Capital Loan Scheme

For day-to-day expenses, KFC offers working capital loans to MSMEs.

• Loan Amount: Up to ₹5 crore
• Promoter’s Contribution: 25%
• Loan Tenure: Up to 72 months
• Minimum Credit Rating: 40%
• Eligibility: Age above 18 years

This scheme provides for the easy availability of funds to firms so that they can smooth their operations and focus on growth.

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

Seed funding by KSIDC is provided to innovative start-up business ventures to encourage entrepreneurship in Kerala.

• Loan Amount: 90% of the project cost, up to ₹25 lakh
• Interest Rate: 6.50%
• Loan Tenure: Up to a maximum of 3 years
• Type of Loan: Soft Loan
• Eligibility: Individuals 18 years and above

This scheme is appropriate for start-ups that require start-up capital to start their business.

4. Kerala State Development Corporation (KSBDC) Scheme for Backward Classes

KSBDC offers loans to MSMEs belonging to backward classes under the Self-Employment Loan Scheme.

• Loan Amount: Up to ₹30 lakh
• Interest Rate: 6% to 8%
• Loan Tenure: Up to 60 months
• Annual Income Limit: Less than ₹8,00,000
• Eligibility: Age between 18 and 55 years

5. KB SMART – MSME Loan

Announced by Kerala Bank through the One Lakh Enterprise Scheme of the State Government, KB SMART extends finance to MSMEs in the business and service sectors.

Kerala Bank

Maximum Project Cost:

• Loan Coverage: 90% of the cost of the project
• Service/Business Sector: ₹10 lakh
• Manufacturing Sector: ₹25 lakh
• Repayment Period: 5 years
• Eligibility: Udyam registration is required

It supports small-scale businesses to expand their activities effectively.

6. MSME Scale Up Mission (Mission 1000)

The Government of Kerala’s Scale Up Mission has a vision of transforming 1,000 MSMEs into ₹100 crore turnover companies in four years.

• Eligibility: Registered in Kerala with UDYAM registration
• Operational for at least three years as of March 31, 2023

Appeared MSMEs are given end-to-end assistance to achieve milestone growth.

7. Entrepreneur Support Scheme (ESS)

ESS provides financial assistance to MSMEs to start new ventures or expand existing ones.

• Assistance: Effective fund usage and guidance for entrepreneurs 
• It encourages entrepreneurship by reducing financial limitations.

8. Kerala Stressed MSMEs Revival & Rehabilitation Scheme

Designed to revive financially stressed MSMEs, the scheme offers financial and other aid to convert non-productive assets into productive ones.

• Maximum Assistance: ₹5 lakh per unit

It is designed to prevent MSMEs from turning into non-performing assets with timely support.

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

CGTMSE extends credit without collateral to MSMEs by offering credit guarantees to financial institutions.

Coverage Limits:

• 85%: For women-owned/micro-enterprises (loans up to ₹5 lakh) and MSEs in North-East India
• 75%: For all other MSEs (loans above ₹5 lakh and up to ₹1 crore)
• 50%: For loans ranging from ₹1 crore to ₹5 crore

This scheme enhances the creditworthiness of MSMEs, making it less difficult to obtain business loans in Kerala.

10. Pradhan Mantri MUDRA Yojana (PMMY)

PMMY offers micro-credit for non-corporate, non-farm small/micro businesses.

Loan Categories:

• Shishu: Loans up to ₹50,000
• Kishor: Loans ranging from ₹50,001 to ₹5 lakh
• Tarun: Loans ranging from ₹5,00,001 to ₹10 lakh

These are collateral-free and have a flexible tenure, supporting small businesses during their growth stage.

Conclusion

Kerala offers an abundance of government-backed loan programs tailored to the purpose of financing MSMEs in various industries. As a budding entrepreneur or an experienced business person, these schemes make it possible for you to access funds to establish, sustain, and develop your enterprise. With such options, you stand a better chance of succeeding in the financial system and contributing to growing the state’s economy.

Whether you are a new business looking for seed capital or an established business looking for scale-up, MatchValley can present you to the right resources and, if required, serve as an intermediary directly with scheme administrators to arrange your loan. Let MatchValley assist you in turning your business aspirations into reality.