Government Loans for Business in 2026: Every Central Scheme, Compared and Explained

"Government loan for business" is one of the most searched money phrases in India, and one of the most misunderstood. The government rarely lends you money itself. What it does is make bank loans cheaper or safer through a subsidy, an interest subsidy or a credit guarantee — and each scheme targets a different kind of borrower. This guide lists every central scheme open to businesses in 2026, compares them on loan size, subsidy, eligibility and where to apply, flags the ones that have lapsed or run out of money, and shows how to pick the right one and apply on JanSamarth. All figures were checked against official sources in October 2026.

Quick answer

The main government-backed business loans in 2026 are Mudra (up to ₹20 lakh, no collateral), PMEGP (new units, with a 15%–35% subsidy), CGTMSE-guaranteed bank loans (up to ₹10 crore without property), PM Vishwakarma for artisans (₹3 lakh at 5%) and PM SVANidhi for street vendors. You apply through a bank or on JanSamarth, which covers 16 schemes.

• Banks lend; the government adds a subsidy, interest support or a guarantee

• No collateral on micro and small enterprise loans up to ₹20 lakh (RBI, from 1 April 2026)

• Stand-Up India lapsed on 31 March 2025; its successor isn't notified yet

• Applying is free — never pay an agent to 'sanction' a government loan

How government business loans actually work

Every central scheme uses one or more of three tools. Knowing which one a scheme uses tells you what you will actually save.

1. Capital subsidy. The government pays part of your project cost, usually as "margin money" that is parked with the bank and later adjusted against your loan. PMEGP and PMFME work this way. This is the most valuable form of help, because it permanently reduces what you repay — but it comes with more paperwork, an interview and a lock-in.

2. Interest subsidy or subvention. The government pays part of the interest, so your effective rate falls. PM Vishwakarma, PM SVANidhi and the Agriculture Infrastructure Fund work this way. It suits people who can repay the principal but would struggle with a market rate.

3. Credit guarantee. A government trust promises the bank it will cover most of the loss if you default. That lets the bank lend without collateral or a third-party guarantor. Mudra (through CGFMU), CGTMSE, MCGS-MSME and CGSS for startups work this way. You don't save interest directly, and you may pay a small guarantee fee, but you get a loan you otherwise could not get without pledging property.

In all three, a bank, NBFC, regional rural bank, small finance bank or cooperative bank is the lender. It appraises your project and can say no. A scheme is a reason for the bank to lend, not a right to a loan.

Every central scheme compared (2026)

Two schemes that most bank and blog pages still list are not taking new borrowers as normal: Stand-Up India, whose approved period ended on 31 March 2025, and ECLGS 5.0, which was only for existing borrowers and whose guarantee ceiling was largely used up by August 2026. Both are covered further down.

Mudra: the default collateral-free loan

The Pradhan Mantri Mudra Yojana is the scheme most small businesses should look at first. It funds non-farm income-generating activity through banks, NBFCs and microfinance institutions, in four tiers: Shishu up to ₹50,000, Kishore up to ₹5 lakh, Tarun up to ₹10 lakh, and Tarun Plus up to ₹20 lakh for those who have repaid a Tarun loan. There's no collateral and no guarantor. Proprietorships, partnerships and companies all qualify.

There is no subsidy and no fixed interest rate. Mudra's own FAQ says rates are deregulated and banks should charge reasonable rates within RBI guidelines. A bank loan will be priced over the repo rate, 5.50% as of October 2026, plus a spread; an NBFC or MFI will usually charge more. For a small shop, a tailoring unit, a beauty parlour or a delivery vehicle, Mudra is usually the fastest government-backed loan you can get. See our Mudra loan guide.

PMEGP: the main loan with a subsidy

The Prime Minister's Employment Generation Programme is the scheme people mean when they search for a "govt subsidy loan for business". It funds new micro units — manufacturing up to ₹50 lakh project cost and services up to ₹20 lakh. You put in 10% (5% for special categories such as women, SC/ST, OBC, minorities, ex-servicemen and applicants in the North East or hill areas). The bank lends the rest. The government's margin money is:

• General category: 15% urban, 25% rural
• Special category: 25% urban, 35% rural

The subsidy stays in a term deposit for 3 years and is then adjusted against your loan if the unit is running. Existing PMEGP units with a good record can take a second loan for upgradation up to ₹1 crore (manufacturing) with a 15% (20% in NER and hill states) subsidy.

Mudra vs PMEGP for the same project

Take a ₹15 lakh food-processing unit in a small town (rural area for PMEGP), owned by a general-category man.

• Under Mudra: the bank may lend up to the Tarun limit of ₹10 lakh, typically asking you to bring the rest. You repay the full ₹10 lakh plus interest. Sanction can be quick.
• Under PMEGP: you bring 10%, ₹1.5 lakh. The bank lends ₹13.5 lakh. The 25% rural subsidy, ₹3.75 lakh, is credited to a deposit and later knocks that much off the loan. You effectively repay about ₹9.75 lakh of principal on a ₹15 lakh unit — but sanction takes longer, with a task-force interview and training.

If you are starting a new unit and can wait, PMEGP almost always wins on cost. If you already run a business or need money within weeks, Mudra is the practical choice. The PMEGP cycle approved for 2021-22 to 2025-26 has ended, but the Union Budget 2026-27 still funds the scheme and the portal is processing applications; check it for revised guidelines. Full details: PMEGP loan guide.

Which scheme fits you?

Step 1

Street vendor? → PM SVANidhi

Step 2

Traditional artisan? → PM Vishwakarma

Step 3

New unit, can wait for subsidy? → PMEGP

Step 4

Need under ₹20 lakh fast? → Mudra

Step 5

Bigger loan, no property? → CGTMSE

machinery: MCGS

Collateral-free credit through guarantees: CGTMSE, MCGS and CGSS

Above the Mudra range, the government's main lever is a credit guarantee rather than a subsidy.

CGTMSE. The Credit Guarantee Fund Trust for Micro and Small Enterprises covers term loans and working capital up to ₹10 crore per borrower from member banks and NBFCs, including loans to retail and wholesale traders. Cover ranges from 75% for most borrowers to 90% for women entrepreneurs. The annual fee runs from 0.37% a year to 1.20% a year of the guaranteed amount depending on loan size, with concessions for women, SC/ST and some regions; the lender may pass it on to you. RBI separately bars collateral on micro and small enterprise loans up to ₹20 lakh from 1 April 2026. See our CGTMSE guide.

MCGS-MSME. The Mutual Credit Guarantee Scheme, run by NCGTC, gives lenders a 60% guarantee on loans of up to ₹100 crore for MSMEs buying plant, machinery or equipment. It was widened in March 2026 to include service MSMEs. Ask for it if you are funding a large machinery purchase and the bank wants more security than you have.

CGSS. The Credit Guarantee Scheme for Startups covers loans from banks, NBFCs and alternative investment funds to DPIIT-recognised startups, with a guarantee cap of ₹20 crore per borrower. Lenders still decide on viability, so expect to show revenue or firm contracts. JanSamarth lists "Loan for Startups" as one of its business loan categories.

Schemes that subsidise your interest

PM Vishwakarma. For artisans and craftspeople in 18 traditional trades — carpenters, blacksmiths, potters, tailors, cobblers, barbers, washermen and others — registered through a Common Service Centre. After skill training (with a stipend of ₹500 per day) and a toolkit incentive of up to ₹15,000, artisans can borrow ₹1 lakh and then ₹2 lakh, collateral-free. The borrower pays 5%; the government pays the bank up to 8% on top. The scheme runs from FY 2023-24 to FY 2027-28. See our PM Vishwakarma guide.

PM SVANidhi. For street vendors in urban areas: working-capital loans of ₹15,000, then ₹25,000, then ₹50,000, each unlocked by repaying the last, with a 7% a year interest subsidy and cashback for digital payments. After its 2025 restructuring, lending runs until 31 March 2030. See our PM SVANidhi guide.

Agriculture Infrastructure Fund. For farmers, FPOs, agri-entrepreneurs and startups building post-harvest infrastructure — warehouses, cold storage, sorting and grading units, primary processing. The government pays 3% a year interest subvention and backs a credit guarantee on loans up to ₹2 crore per project per location. If your business is agri-linked, this is often cheaper than any MSME scheme.

Working capital: the credit card for micro enterprises

Announced in the Budget 2025-26, the credit card for micro enterprises gives Udyam-registered micro units a business card with a limit of up to ₹5 lakh for short-term needs such as stock and supplies. It went live in 2026 and is listed on JanSamarth; banks issue it. Uptake has been slow, so ask your bank directly. Our MSME loan guide explains how it compares with a cash credit limit.

Government-backed credit in numbers

16

Central credit schemes on JanSamarth

June 2026

269

Lenders on JanSamarth

₹10 crore

Max CGTMSE guarantee per borrower

₹20 lakh

Collateral-free MSE loan limit (RBI)

Schemes that have lapsed, paused or run dry

Many "top government loan schemes" lists are out of date. Here is the status of the ones you are most likely to read about:

Stand-Up India. Loans of ₹10 lakh–₹1 crore for women and SC/ST founders of a first enterprise. The Department of Financial Services says the scheme ran up to 31 March 2025. The Budget 2025-26 announced a new scheme with term loans up to ₹2 crore for 5 lakh first-time women, SC and ST entrepreneurs, but as of October 2026 it had not been notified. Some banks still show Stand-Up India products — ask in writing whether they are sanctioning new loans. See Stand-Up India.

ECLGS 5.0. Approved in May 2026 to give existing borrowers an emergency top-up with a full guarantee for MSMEs, applied for only through JanSamarth. It was not for new borrowers, and most of its guarantee ceiling had been used by late August 2026. Our ECLGS guide has the details.

PMFME. The food-processing subsidy scheme was on a temporary extension to 30 September 2026, and the ministry has proposed continuing it for 2026-31. As of October 2026 we found no Cabinet decision, so check the PMFME portal before planning around it.

Mahila Udyam Nidhi and other legacy names. These appear in many listicles but are not on SIDBI's or the major banks' current product menus. See our business loan for women guide.

JanSamarth: one portal for government loans

JanSamarth, launched on 6 June 2022, is the government's single digital window for credit-linked schemes. According to PIB's June 2026 update, it covers 16 central schemes in eight loan categories, with 269 lenders — public and private banks, NBFCs, regional rural banks, small finance banks and cooperative banks. Under "Business Activity Loan" it lists PMEGP, Weaver Mudra, PMMY, PM SVANidhi, NAMASTE, Loan for Startups and the credit card for micro enterprises.

What makes it useful is that it pulls your data from government databases — Udyam, Aadhaar, the income-tax department, GST and the DPIIT startup portal — checks your eligibility for each scheme, and gives an in-principle approval before routing the application to the branch you choose. You can track the status online instead of visiting the branch repeatedly. By 1 June 2026, about 54 lakh applications had been processed through it.

In-principle approval is not a sanction. The branch still appraises your project, may ask for more documents and decides the final amount and rate.

How to apply on JanSamarth

1. 1

   Register with your mobile number

   Open jansamarth.in, choose Business Activity Loan, and sign up with OTP.

   Open JanSamarth
2. 2

   Answer the eligibility questions

   Enter your activity, loan amount and location. The portal shows which schemes you qualify for.

3. 3

   Share your data with consent

   Allow it to fetch Aadhaar, PAN, Udyam, GST and ITR data. Upload anything it can't fetch, such as a project report.

4. 4

   Pick a lender and branch

   Choose from the banks offered for your area. You get an in-principle approval on screen.

5. 5

   Complete the branch formalities

   The branch contacts you, verifies documents and the site, and issues the sanction letter and Key Facts Statement.

How to choose the right scheme

Start with who you are and what you need, not with a scheme name.

• Street vendor in a town or city: PM SVANidhi, then Mudra once you outgrow it.
• Traditional artisan (tailor, carpenter, potter, cobbler and similar): PM Vishwakarma for the 5% loan and toolkit.
• First business, under ₹20 lakh, need it soon: Mudra.
• New manufacturing or service unit, can wait a couple of months: PMEGP for the subsidy.
• Existing business, larger loan, no property: a CGTMSE-covered term loan or working capital; for heavy machinery, ask about MCGS-MSME.
• Agri-processing, warehouse or cold store: Agriculture Infrastructure Fund.
• DPIIT-recognised startup: a CGSS-backed loan, alongside equity.
• State top-ups: ask your District Industries Centre about state schemes that add to these, such as Maharashtra's CMEGP or Karnataka's Udyogini for women.

Whatever you pick, compare offers from at least two lenders. Ask each for a written Key Facts Statement with the annual percentage rate, benchmark, spread, processing fee, guarantee fee and repayment schedule.

Eligibility basics and documents

Almost every scheme expects the same groundwork:

Get these ready before you apply

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• Udyam registration (free) — needed for MSME benefits and pulled by JanSamarth
• Aadhaar and PAN of owners; business PAN for firms and companies
• Bank statements for 6–12 months
• Project report with costs, sales estimate and repayment plan (PMEGP, larger Mudra, CGTMSE)
• Quotations for machinery and equipment
• GST registration and returns, if registered
• ITRs for 2–3 years for loans above the smallest tiers
• Category certificate (SC/ST/OBC, ex-servicemen, PwD) if claiming special-category benefits
• Proof of address of the business premises

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Banks also look at your credit report. A default or a loan written off in the last few years is the most common reason for rejection, so pull your CIBIL report first and clear or explain any problems. Our CIBIL score guide covers how.

Common mistakes and why applications get rejected

Choosing the scheme with the biggest headline number. A "₹2 crore loan" that hasn't been notified, or a "₹10 crore CGTMSE loan" for a business doing ₹40 lakh in sales, won't be sanctioned. Apply for what your cash flow can repay.

Thin or copied project reports. PMEGP task forces and bank officers see the same downloaded template every week. Use your own numbers: rent, wages, raw material cost per unit, selling price, and how many units you'll sell a month. A break-even calculation makes the case far stronger — our break-even point guide shows how.

Applying for PMEGP for an existing business. PMEGP's first loan is only for new units. If you already run the business, use Mudra, a CGTMSE-covered loan or, if you were funded under PMEGP before, its upgradation loan.

Paying middlemen. Every scheme here is free to apply for. Agents who promise a "guaranteed sanction" for a fee, or WhatsApp messages offering "government loans" against a processing charge, are frauds. Use the bank branch, JanSamarth or the scheme's own portal.

Ignoring the full cost. Add the processing fee, CGTMSE or CGFMU guarantee fee and insurance to the interest when comparing offers. The annual percentage rate on the Key Facts Statement captures most of these.

Not following up. RBI expects banks to decide on micro and small enterprise loans up to ₹25 lakh within 14 working days of a complete application. If a file stalls, ask for the reason in writing and use the bank's MSME grievance channel.

Official links

• JanSamarthSingle portal for 16 credit-linked schemes
• MUDRAMudra tiers and FAQs
• KVIC PMEGP e-portalPMEGP applications and status
• CGTMSEScheme document, fees, member lenders
• NCGTCMCGS-MSME, CGSS and other guarantee funds
• PM VishwakarmaArtisan registration and loan
• PM SVANidhiStreet vendor loans
• Agriculture Infrastructure FundAgri-infrastructure loans with subvention
• Udyam registrationFree MSME registration

What to do next

Get Udyam registration done, check your credit report, and write down what you need the money for and how you'll repay it. Then run the numbers through our EMI calculator and apply on JanSamarth or at your bank. If you want a quick in-principle offer from public sector banks for a GST-registered business, read our guide to PSB Loans in 59 Minutes.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Which government loan is best for starting a new business?

If you need up to ₹20 lakh and don't want a subsidy, a Mudra loan is quickest and needs no collateral. If you are setting up a new manufacturing or service unit, PMEGP is usually better value because the government pays 15%–35% of project cost as a subsidy. Traditional artisans in the 18 listed trades should look at PM Vishwakarma's 5% loans.

Does the government give business loans directly?

Almost never. Under every major central scheme, a bank, NBFC or cooperative bank lends the money and carries the risk. The government's role is to add a subsidy (PMEGP), an interest subsidy (PM Vishwakarma, PM SVANidhi, AIF) or a credit guarantee (Mudra, CGTMSE, MCGS). Anyone who says they are lending 'government money' directly and asks for a fee is likely a fraud.

What is the interest rate on a government business loan?

Most schemes do not fix a rate. Banks price MSE loans over an external benchmark — usually the RBI repo rate, 5.50% as of October 2026 — plus a spread based on your risk. A few schemes do fix the borrower's cost: PM Vishwakarma loans cost the borrower 5%, PM SVANidhi gives a 7% a year interest subsidy, and AIF gives 3% a year subvention.

Can I get a government business loan without collateral?

Yes. RBI bars collateral on micro and small enterprise loans up to ₹20 lakh sanctioned or renewed from 1 April 2026, and Mudra loans up to ₹20 lakh need none. For larger loans, a CGTMSE guarantee lets the bank lend up to ₹10 crore without property.

What is JanSamarth and which loans can I apply for on it?

JanSamarth is the government's single portal for credit-linked schemes. As of June 2026 it covers 16 central schemes and 269 lenders. Business loans on it include Mudra, PMEGP, PM SVANidhi, Weaver Mudra, NAMASTE, loans for startups and the credit card for micro enterprises, along with AIF and Kisan Credit Card loans.

Is there a government loan with a subsidy for business?

PMEGP is the main one: the margin-money subsidy is 15% to 35% of project cost depending on location and category. PMFME gives food-processing units 35% of eligible project cost, up to ₹10 lakh, though its current extension ran to 30 September 2026. Many states add their own subsidy schemes, such as Maharashtra's CMEGP.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 8 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.4 years of Jan Samarth Portal (5 June 2026) — PIB — Ministry of Finance · accessed 8 October 2026
2. 2.MUDRA — Frequently Asked Questions — MUDRA · accessed 8 October 2026
3. 3.Pradhan Mantri Mudra Yojana loan limit raised to ₹20 lakh — PIB — Ministry of Finance · accessed 8 October 2026
4. 4.CGTMSE — Scheme Document CGS-I (updated as on 1 April 2026) — CGTMSE · accessed 8 October 2026
5. 5.RBI Master Direction — Lending to MSME Sector — Reserve Bank of India · accessed 8 October 2026
6. 6.Stand Up India Scheme (SUPI) — Department of Financial Services · accessed 8 October 2026
7. 7.Agriculture Infrastructure Fund — Ministry of Agriculture & Farmers Welfare · accessed 8 October 2026
8. 8.Government modifies Mutual Credit Guarantee Scheme (MCGS-MSME) — 21 March 2026 — PIB — Ministry of Finance · accessed 8 October 2026
9. 9.Media interaction on PMFME scheme (22 May 2026) — PIB — Ministry of Food Processing Industries · accessed 8 October 2026
10. 10.Rs 13,000 crore provided for PM Vishwakarma from FY 2023-24 to FY 2027-28 — PIB — Ministry of MSME · accessed 8 October 2026
11. 11.PMFME scheme set for extension after hitting 2-lakh unit target (secondary) — Outlook Business, 24 Aug 2026 · accessed 8 October 2026