Government Loan Schemes for Startups in India to Fuel Your Business

Awareness and research can help entrepreneurs immensely today to build and scale their startups. The Indian Government has introduced many schemes to promote the startup culture. As a result, getting collateral-free credit for operations, equipment, and scaling has become possible. In 2025, the following are the government startup business loans in India that entrepreneurs should know.

1. Pradhan Mantri Mudra Yojana (PMMY)

What it offers
The scheme promotes the growth of non-corporate, non-farm micro and small businesses. It allows an entrepreneur to borrow up to ₹10 Lakhs. There are three categories of the scheme:

• Shishu: Up to ₹50,000
• Kishore: ₹50,000 to ₹5 Lakhs
• Tarun: ₹5 Lakhs to ₹10 Lakhs (extended up to ₹20 Lakhs for compliant borrowers)

Eligibility highlights

• The business or startup should be non-farm and non-corporate.
• This startup business loan is processed through banks, NBFCs, and microfinance institutions.

2. Stand-Up India Scheme

What it offers
The scheme offers loans from ₹10 Lakhs to ₹1 Crore to qualifying startups. However, the startup has to be a greenfield project involved in manufacturing, trading, or services. Greenfield projects are new businesses (built from scratch) on undeveloped and unused land. The scheme aims to encourage and empower women and SC/ST entrepreneurs.

Eligibility highlights

• The loan is given to SC/ST and women entrepreneurs only. So either the applicant must fulfil the requirement or an SC/ST/woman should have 51% shareholding in the business.
• The business should be new and not acquired.
• The loan requires a solid business plan, and the applicant must have basic creditworthiness.

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

What it offers
The scheme gives loans up to ₹5 Crores to new and disadvantaged entrepreneurs. Entrepreneurs can borrow from banks without pledging any collateral, as the trust covers up to 85% of the Startup Business Loan amount.

Eligibility highlights

• The startup should provide services or be an MSME.
• Only lending institutions registered as a Member Lending Institution (MLI) with CGTMSE are eligible to lend under the scheme.
• Aditya Birla Finance Limited, Bajaj Finance Limited, L&T Finance Limited, Muthoot Finance Limited, etc., are some examples.[1] 

4. Credit Guarantee Scheme for Startups (CGSS)

What it offers
The scheme ensures guaranteed cover for loans to startups recognised by DPIIT (Department for Promotion of Industry and Internal Trade) under the Startup India Initiative. It covers term loans, working capital, and venture debt instruments. The scheme helps high-growth startups working on innovation with limited or no collateral.

Eligibility highlights

• The startup must be registered with DPIITA.
• Commercial banks, NBFCs, and AIFs registered with SEBI can lend under the scheme.

5. Credit Linked Capital Subsidy Scheme (CLCSS)

What it offers
The scheme gives up to 15% subsidy on eligible investments for technology upgrades. However, the startup needs to be a manufacturing MSME. It aims to help in the growth of manufacturing units.

Eligibility highlights

• The business should be a manufacturing MSME.
• The credit is given only for upgrading tech or machinery.

6. Startup India Seed Fund Scheme (SISFS)

What it offers
The scheme gives financial aid to entrepreneurs in the planning stage of the business. It is ideal for innovative ideas. The grant is given for proof-of-concept, prototype development, and market entry.

Eligibility highlights

• The scheme requires the applicant or at least 51% of the business to be owned by SC/ST or a woman.
• It has to be a greenfield project.

Overview

Key Tips Before Applying

• Register your business under Udyam (MSME) or DPIIT if eligible.
• Maintain clean financial records and GST compliance.
• Prepare a crisp business plan with cash-flow projections.
• Compare loan offers and repayment terms on a financial marketplace like Bajaj Markets before committing.
• Track updates - limits and rules may change with new budgets.

Conclusion

Startups today have increasing opportunities with the Indian Government encouraging entrepreneurship. They have a real chance at growth, crossing the barrier of limited collateral. Government-backed Startup Business Loans are encouraging innovation and entrepreneurship in the country, bringing opportunities to every door.