These five are among the best-known central schemes for small businesses. All of them work through banks or official portals, and none of them needs a paid agent. The limits below come from official sources, but schemes change, so check the linked source before you apply.
1. CGTMSE: credit guarantee for collateral-free loans
What it is: the Ministry of MSME runs the Credit Guarantee Scheme through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). It guarantees loans that lenders give to Micro and Small Enterprises without collateral security or third-party guarantees (PIB).
Key numbers: the guarantee ceiling went up from ₹5 crore to ₹10 crore from 1 April 2025 (PIB). Identified credit-deficient districts get a 10% discount on the annual guarantee fee and 5% more guarantee coverage. MSEs promoted by transgender entrepreneurs get a 10% fee concession and coverage of up to 85% (PIB press note).
Who it is for: micro and small enterprises borrowing from a lender that is a member of CGTMSE. You apply for the loan at the bank, and the bank applies for the guarantee.
2. PMEGP: subsidy to start a new micro enterprise
What it is: the Prime Minister's Employment Generation Programme is a credit-linked subsidy for setting up new micro enterprises. The government pays part of the project cost as "margin money" on top of a bank loan (Ministry of MSME).
Key numbers (Ministry of MSME, KVIC PMEGP FAQ):
| Category | Your contribution | Subsidy (urban / rural) |
|---|---|---|
| General | 10% | 15% / 25% |
| Special (incl. SC, ST, OBC, minorities, women, ex-servicemen, transgender, differently-abled, NER, aspirational districts, hill and border areas) | 5% | 25% / 35% |
The maximum project cost is ₹50 lakh for manufacturing and ₹20 lakh for business or service units. A second loan to upgrade an existing PMEGP or MUDRA unit can cover up to ₹1 crore in manufacturing and ₹25 lakh in services, with a 15% subsidy (20% in NER and hill states) (Ministry of MSME).
How to apply: the whole process runs online on a single government portal run by KVIC, and it is free of cost (PIB).
3. PMFME: for micro food-processing units
What it is: the PM Formalisation of Micro Food Processing Enterprises scheme from the Ministry of Food Processing Industries (pmfme.mofpi.gov.in).
Key numbers: individual and group micro enterprises can get a credit-linked capital subsidy of 35% of the eligible project cost, up to ₹10 lakh per unit (MoFPI, Rajya Sabha reply). The beneficiary contributes at least 10% of the project cost, and the rest comes as a bank loan. SHG members in food processing can get seed capital of ₹40,000 each (PMFME FAQ). Common infrastructure for FPOs, SHGs and cooperatives can get 35% up to ₹3 crore (MoFPI).
Who it is for: micro food processors (pickles, spices, bakery, dairy, millets and so on) who want to start or upgrade a unit.
4. Stand-Up India: for SC, ST and women entrepreneurs
What it is: a scheme to help bank loans of between ₹10 lakh and ₹1 crore reach at least one SC or ST borrower and one woman borrower per bank branch, for a greenfield (first-time) enterprise in manufacturing, services, trading or activities allied to agriculture (PIB).
Who it is for: SC, ST and women entrepreneurs above 18. For non-individual enterprises, at least 51% of the shareholding and controlling stake must be held by SC/ST and/or women entrepreneurs, and the borrower must not be in default to any bank (PIB backgrounder). Margin money of up to 15% may be required (PIB).
Status: the Department of Financial Services says the scheme ran up to 31 March 2025, and that a new scheme announced in Budget 2025-26 for first-time women, SC and ST entrepreneurs (term loans up to ₹2 crore) is still being prepared (DFS). Ask your bank what is open today. More in schemes for women entrepreneurs.
5. MUDRA (PMMY): collateral-free loans up to ₹20 lakh
What it is: Pradhan Mantri MUDRA Yojana loans come through banks, RRBs, small finance banks, NBFCs and MFIs. They are for non-corporate, non-farm income-generating activities, with no collateral (PIB, Apr 2026).
Categories (PIB):
- Shishu: up to ₹50,000
- Kishor: above ₹50,000 up to ₹5 lakh
- Tarun: above ₹5 lakh up to ₹10 lakh
- Tarun Plus: above ₹10 lakh up to ₹20 lakh, for borrowers who have taken and repaid a Tarun loan
Who it is for: micro businesses such as shops, small manufacturers, service providers and traders that need a modest loan.
Before you apply
Most of these schemes go more smoothly if you already have Udyam registration, clean bank statements and a simple project report. Apply through your bank or the official portal yourself. Anyone selling a "guaranteed sanction" is a warning sign (see spotting scams).
Last checked 11 Oct 2026 against the official sources linked in this guide.
Disclaimer: This guide is general information in plain English. It is not legal, tax or financial advice. Scheme rules, limits and portals change, so always check the official source linked above, and talk to your bank or a qualified professional before you apply or bid. OpportunityRaider is independent and is not a government website.
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