MSME Loan Government Schemes 2026: PMMY, CGTMSE, Stand-Up India & More
India's government and public-sector banks run a dense web of MSME credit schemes. Most borrowers either don't know about them or get the wrong one. This guide cuts through the noise — every active scheme in 2026, its real eligibility criteria, the lenders that actually participate, and how OneLoan can route your application through the right scheme.
Quick comparison of major MSME schemes
| Scheme | Ticket size | Collateral | Best for |
|---|---|---|---|
| PMMY (Mudra) | Up to ₹10 Lakh | Nil | Micro businesses, traders |
| CGTMSE-backed | Up to ₹2 Crore | Nil | Small & medium enterprises |
| Stand-Up India | ₹10L – ₹1 Cr | Nil | Greenfield by SC/ST/Women |
| PMEGP | Up to ₹50L (mfg) / ₹20L (svc) | Margin only | New enterprises with subsidy |
| CLCS-TUS | Subsidy on term loan | — | Tech upgradation in MSMEs |
| Emergency Credit Line (ECLGS legacy) | Top-up on existing | Nil | Pandemic-affected revival |
1. PMMY — Pradhan Mantri Mudra Yojana
Mudra is India's flagship micro-enterprise scheme. Operated through banks, MFIs and NBFCs.
Three tiers
- Shishu: up to ₹50,000 — for very small startups, vendors, tea-stalls
- Kishor: ₹50,001 – ₹5 Lakh — for established micro businesses
- Tarun: ₹5,00,001 – ₹10 Lakh — for growing enterprises
- Tarun Plus (new): ₹10L – ₹20L for successful Tarun graduates
Eligibility
- Any non-corporate, non-farm small business (traders, manufacturers, service providers)
- No upper age limit
- No collateral required
- No fixed minimum CIBIL — but a clean credit history helps
Typical use cases
- Inventory financing for retailers
- Equipment for service businesses
- Working capital for traders
- Vehicle for goods transport
Participating lenders
All public sector banks, most private banks, RRBs, scheduled co-op banks, MFIs and select NBFCs.
2. CGTMSE — the biggest game-changer for ₹10L – ₹2 Cr
CGTMSE is not a "scheme that gives you a loan" — it is a credit guarantee that lenders can attach to your loan, letting them lend collateral-free up to ₹2 Crore.
How it works
- 1You apply for a normal business loan with a participating Bank / NBFC.
- 2The lender approves and tags the loan under CGTMSE.
- 3The government (via CGTMSE Trust) guarantees a portion of the lender's exposure.
- 4You pay an annual guarantee fee of 0.85% – 1.5% on outstanding.
Who's eligible
- Micro & Small Enterprises (Udyam registered)
- New and existing units
- Manufacturing investment up to ₹10 Cr or service turnover up to ₹50 Cr
Why it matters
Without CGTMSE, lenders demand property collateral for ₹50L+ tickets. With it, you keep your assets free and still get funded.
3. Stand-Up India
Designed for women and SC/ST entrepreneurs setting up new (greenfield) enterprises.
Key features
- Loan range: ₹10 Lakh to ₹1 Crore
- Composite loan (term loan + working capital)
- 7-year tenure with 18-month moratorium
- Coverage: every scheduled commercial bank branch must lend to at least one SC/ST and one woman entrepreneur
Eligibility
- SC/ST or Woman entrepreneur
- Age 18+
- First-time entrepreneur in the enterprise (greenfield)
- Holding 51%+ stake in non-individual entities
4. PMEGP — Prime Minister's Employment Generation Programme
PMEGP gives a margin-money subsidy to first-generation entrepreneurs setting up new ventures in manufacturing or services.
Subsidy slabs
- Urban general category: 15%
- Urban special category (SC/ST/Women/PH/Ex-servicemen/Minorities): 25%
- Rural general: 25%
- Rural special: 35%
Project ceilings
- Manufacturing: up to ₹50 Lakh
- Service / Trading: up to ₹20 Lakh
Eligibility
- Age 18+
- 8th pass for projects above the lower threshold
- First-time entrepreneur, no prior PMEGP subsidy availed
- Applies via kviconline.gov.in
5. CLCS-TUS — Credit Linked Capital Subsidy for Tech Upgradation
A 15% capital subsidy on the term-loan portion used to buy approved machinery in any of 51 sub-sectors.
Highlights
- Subsidy up to ₹15 Lakh per unit
- For SSI units adopting newer technology
- Routed through nodal banks: SIDBI, NABARD, etc.
6. SIDBI direct schemes
SIDBI runs several niche schemes for MSMEs:
- SMILE: loan for new MSMEs (₹25L – ₹25 Cr)
- SPEED: equipment loans (up to ₹2 Cr at 9.25%)
- STAR: Special Trade Advance for retailers
How to apply — practical path
- 1Get your Udyam registration first. Free, online, 10 minutes. Every MSME scheme requires it.
- 2Match the scheme to your need:
- Need < ₹10L? → PMMY (Mudra) - Need ₹10L – ₹2 Cr? → CGTMSE-tagged business loan - Greenfield + SC/ST/Woman? → Stand-Up India - New venture + want subsidy? → PMEGP
- 1Apply through OneLoan — we route your file to the right lender under the right scheme.
- 2Be ready with: PAN, Aadhaar, Udyam, GST/ITR if applicable, project report (for greenfield), bank statement.
Common myths
Interest rates under government schemes — realistic ranges
| Scheme | Rate band 2026 |
|---|---|
| PMMY Shishu | 8% – 12% |
| PMMY Kishor / Tarun | 10% – 14% |
| CGTMSE-tagged loans | 10.5% – 16% |
| Stand-Up India | 8.5% – 11% |
| PMEGP-linked term loan | 10% – 14% |
| SIDBI direct (SPEED) | 8.75% – 10.5% |
Bottom line
Government schemes can lower your cost of capital by 200–400 basis points and remove collateral requirements. The right scheme depends entirely on your stage, demographic and use of funds. Run a 5-minute eligibility check on OneLoan Business Loan and we'll show you which schemes apply to your profile.