Kerala is one of the most forward-thinking states in India, and its administration has long been at the forefront of encouraging MSMEs and entrepreneurship. The state government has introduced a number of loan programs that give MSMEs financial support in an effort to assist entrepreneurs in starting and expanding their firms. We’ll look at some of the most well-liked financing programs for MSMEs in Kerala in this blog.

MSME Term Loan Program offered by Kerala Financial Corporation (KFC)

To assist entrepreneurs with the long-term financial needs of the industry and projects related to the industry, the Kerala Financial Corporation (KFC) offers a term loan program. The purpose of this loan program is to assist Kerala’s MSMEs, or micro, small, and medium-sized businesses. These are its principal points of interest:

• Maximum loan amount of 50 crore
• Required Collateral
• The loan term is between three and ten years.
• 40% is the minimum credit rating.
• Age Minimum 18-year-old age

MSME Working Capital Loan Program offered by Kerala Financial Corporation (KFC)

Additionally, the Kerala Financial Corporation (KFC) provides a working capital loan program to assist MSME owners in controlling their daily operating costs. Loans for working capital might help companies focus more on their expansion and raise money. These are its principal points of interest:

• Maximum loan amount of 5 crore
• Contribution of Promoters: 25%
• Loan duration In a span of 72 months
• 40% is the minimum credit rating.
• Minimum 18-year-old age

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

MSMEs and entrepreneurs can receive financial support from the Kerala State Industrial Development Corporation (KSIDC). The goal of this program is for KSIDC to support creative start-ups with seed money. These are its principal points of interest:

• Loan amount: 90% of the project cost up to Rs. 25 lakh, whichever is less.
• Interest rate (bank rate as of the sanction date): 6.50%
• Loan duration: For a maximum of three years
• Type of Loan: Soft Loan
• Minimum age: 18-year-old age

Kerala State Development Corporation (KSBDC) Program for Backward Classes

Through the Self-Employment Loan Scheme, the KSBDC offers financial support to MSMEs in Kerala that are members of the underprivileged classes. MSMEs in Kerala, both new and old, can participate in the program. In collaboration with the National Minorities Development and Finance Corporation (NMDFC), KSBDC offers it. These are its principal points of interest:

• Loan amount: Maximum of Rs. 30 lakh
• Interest rate: 6%-8%
• Loan tenure: Up to 60 months
• Annual Income: Less than Rs. 8,00,000
• Age: Between the age 18 and 55

Credit Linked Capital Subsidy Scheme (CLCSS)

October 2000 saw the introduction of the Credit Linked Capital Subsidy Scheme by the Indian government. This program gives MSMEs the money they need to upgrade their current technology. Businesses can improve their current equipment and plant with this strategy, which will boost revenue. Although there is no maximum loan amount for this plan, the subsidy is only based on the loan amount approved for P&M purchases. Its primary characteristics are as follows:

• Loan amount: No upper limit
• Subsidy: 15% of the loan amount
• Annual guarantee charge: 0.75%-1.0%
• Loan tenure: Flexible tenure depending upon the repayment capacity

Pradhan Mantri MUDRA Yojana (PMMY)

Launched in 2015, the Pradhan Mantri MUDRA Yojana (PMMY) is a prominent central government program. It offers microloans to small, non-farm, non-corporate businesses in both rural and urban locations.

Depending on the phases of a company’s growth and its finance requirements, PMMY offers loans in three categories:

• Shishu Mudra: Up to Rs. 50,000
• Kishore Mudra: Rs. 50,001 to Rs. 5 lakh
• Tarun Mudra: Rs. 5 lakh to Rs. 10 lakh

MUDRA loans are available through a number of financial organizations, such as Non-Banking Financial Companies (NBFCs), Small Finance Banks, Regional Rural Banks, Public and Private Sector Banks, and Microfinance organizations.

PMMY does not have any restrictions on age, gender, tenure, interest rates, or other factors that other loan programs do. Depending on the loan type and the lending institution’s policies, each of these elements may change.

PM’s Employment Generation Programme (PMEGP)

Aiming to create jobs through the establishment of micro-enterprises, the Ministry of Micro, Small, and Medium Enterprises (MSME) oversees the PMEGP, a credit-linked subsidy program. This program’s primary beneficiaries are women, aspiring and established craftspeople, and young people without jobs. Some of its primary characteristics are as follows:

• Age: Minimum age of 18
• Interest rate: Between 11% -12% depending on the bank
• Loan tenure: 3-7 years
• Education qualification: VIII standard pass
• Maximum Loan amount: Rs. 1 Crore
• Subsidy: 15% to 35%

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

The Ministry of Micro, Small, and Medium Enterprises (MSME), the Government of India, and the Small Industries Development Bank of India (SIDBI) jointly established the CGTMSE project in 2000. It pushes financial institutions to grant micro and small businesses credit plans without collateral. The bank has the right to make a claim with CGTMSE in the event of a default. Some of its primary characteristics are as follows:

• Loan amount: Up to 5 crore
• Collateral: Not required
• Loan tenure: 5-10 years
• Annual Guarantee fee: 0.37%-1.35%
• Age: Minimum age of 18