Starting a new business or expanding an existing one often requires substantial capital. However, getting an unsecured loan from banks or other financial institutions can be challenging, especially when collateral or a guarantor is required.
To make financing more accessible, the Government of India operates several schemes that provide collateral-free loans to eligible individuals and small businesses. These initiatives are aimed at helping people from different sections of society become self-reliant and grow their livelihoods.
Here are three important government schemes through which eligible applicants can get business loans without providing a guarantee.
PM Mudra Yojana: Loans for Starting or Expanding a Business
If you are planning to launch a small business or need additional funds to expand an existing venture, the Pradhan Mantri Mudra Yojana (PMMY) can be an important financing option.
The scheme provides loans to eligible micro and small business owners without requiring traditional collateral or a third-party guarantee. The loan amount depends on the stage and financial requirements of the business.
PM Mudra loans are available under four categories:
- Shishu: Loans of up to ₹50,000.
- Kishor: Loans above ₹50,000 and up to ₹5 lakh.
- Tarun: Loans above ₹5 lakh and up to ₹10 lakh.
- Tarun Plus: Loans of up to ₹20 lakh for eligible borrowers who have successfully repaid previous Tarun-category loans.
Those interested in applying can visit the official Udyamimitra portal: https://udyamimitra.in/.
PM SVANidhi: Financial Support for Street Vendors
The PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi) scheme was introduced in 2020 to provide financial assistance to street vendors and help them strengthen their small businesses.
One of the major benefits of the scheme is that eligible vendors can access loans without collateral. The lending facility is designed to increase gradually as the borrower successfully repays earlier loans.
Under the scheme, vendors can receive:
- First loan: Up to ₹10,000
- Second loan: Up to ₹20,000 after repayment of the first loan
- Third loan: Up to ₹50,000 after successful repayment of the second loan
This step-by-step credit support can help street vendors increase their working capital, purchase stock and gradually expand their businesses.
PM Vishwakarma: Loans for Traditional Artisans
The PM Vishwakarma scheme focuses on people working in traditional crafts and occupations. The initiative is designed to provide financial and other forms of support to eligible artisans and craftspeople so they can improve their livelihoods and grow their businesses.
Under the scheme, eligible beneficiaries can initially receive a loan of ₹1 lakh. After meeting the applicable conditions and successfully repaying the first tranche, they can become eligible for a second loan of up to ₹2 lakh.
The scheme is particularly aimed at helping traditional workers access formal credit and invest in tools, equipment and business activities without the need for conventional collateral.
Government Schemes Can Make Business Finance More Accessible
For aspiring entrepreneurs, street vendors and traditional artisans, arranging funds can be one of the biggest hurdles when starting or growing a business. Government-backed