Government Loan Schemes Offering Working Capital For Business in India

Over 90% of the over 98,000 businesses that are launched in India every year end up as a failure. That’s quite normal by global standards, but the main reason for a large number of these failures is working capital. To be specific, a major reason for failure is the lack of working capital for business. The good news is that the Government of India knows about this, and is taking active steps to help new small businesses and startups get access to working capital.  

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There are many different government loan schemes that you can apply for as a small business in India. But the two main ones that can be used for working capital are the Stand up India scheme and Mudra Loan Yojana.

Stand up India

Stand up India loan
Stand up India loan

Stand up India, part of the Startup India initiative, aims to provide working capital for business for scheduled caste and backward tribes.

It also aims at promoting employment and entrepreneurship opportunities among women. The Stand Up India Scheme provides collateral free loans to applicants, and is actually known as Credit Guarantee Scheme Stand Up India (CGSSI).

The working capital for business available under Stand up India is between Rs. 10 lakh to Rs. 1 crore, and can cover up to 75% of the project cost. The loan is repayable in up to 7 years, with a moratorium of up to 18 months. The rate of interest would be the lowest applicable rate of the bank for that category. A RuPay debit card will be issued to borrowers for withdrawal of capital for operations. This initiative is supported by Google, LIC and SBI.

Eligibility for Stand Up India Loan

  • Applicant must be SC, ST, OBC, Women
  • Application must be for commercialisation of products
  • Company can an individual entity, partnership or registered LLP
  • Company must be less than 5 years old, and must have a turnover of no more than Rs. 25 crores per year.
  • DIPP certification is required

How to Apply for a Stand Up India Loan

You can apply for a loan under the Stand up India scheme directly at any branch of Scheduled Commercial Banks in India. You can also apply online on the Stand up India portal at

Stand Up India Loan Application Form and Documents

Listed below are downloads for Stand up India loan scheme.

Mudra Loan Yojana

Mudra stands for the Micro Units Development & Refinance Agency Ltd (MUDRA). The Pradhan Mantri Mudra Yojana is for the small and micro scale industries, to help people who do not have financial stability and sizeable assets to start a business. Mudra Bank Loan Yojana will provide loans up to Rs. 10 lakh through Mudra cards so that it can be used in the business.

Slabs of Mudra loan

The initial products and schemes under this umbrella have already been created and the interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur as also provide a reference point for the next phase of graduation / growth for the entrepreneur to aspire for.

  1. SHISHU: Targeted towards start-ups and covering loans up to Rs 50,000. If a loan is applied under this scheme, the interest rate is 10% to 12%.
  2. KISHOR: For existing businesses which lack exposure, covering loans above Rs 50,000 and up to Rs. 5 lakh. For this category, the interest rate is 14% to 17%.
  3. TARUN: For businesses that have grown to a certain stage and have enough exposure, but need to reach  another level. It covers loans above Rs 5 lakh and up to Rs. 10 lakh & has high-interest rates starting from 16% onwards, varying based on the bank to which you apply.

Mudra Loan Application Form

The Mudra Loan application form is available for download from your bank’s website. You can apply for the loan by contacting any branch of the bank you prefer.

Mudra loan application process
Mudra loan application process

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