Friends, if you’re thinking of starting a small business or startup, government subsidy loans are an absolute game-changer! In 2025, the Union Budget brought new updates, such as the Tarun Plus category in the Mudra Yojana, which provides loans of up to ₹20 lakh to previously successful entrepreneurs.
These schemes offer low-interest, subsidy, and collateral-free options to MSMEs, so you can grow your business without the stress of a large financial burden.
I’ve checked the latest information from government sites and reliable sources, and am explaining which Government Subsidy Loans for Small Business are available, how to apply, and what benefits you’ll receive. Let’s explain it simply!
Government Subsidy Loans for Small Business:
PM Mudra Yojana: Easy Loans for Small Businesses
This is the most popular scheme, providing loans up to ₹10 lakh to non-corporate small businesses. In 2025, a new Tarun Plus category was added, providing expansion loans of up to ₹20 lakh to entrepreneurs who have repaid previous Mudra loans.
The categories are: Shishu (up to ₹50,000), Kishore (up to ₹5 lakh), and Tarun (up to ₹10 lakh). Interest rates are 8-12%, and no collateral is required. Women, SC/ST, and rural businesses receive extra priority.
Stand-Up India: Special for Women and SC/ST
This scheme is for women entrepreneurs and SC/ST communities, providing loans ranging from ₹10 lakh to ₹1 crore for greenfield projects. In the 2025 Budget, capital assistance for first-time entrepreneurs was increased to ₹2 crore. Repayment is up to 7 years, and 85% guarantee cover is provided. Perfect for manufacturing, services, or trading!
CGTMSE: Collateral-Free Guarantee Scheme
This scheme for micro and small businesses provides a loan guarantee of up to ₹2 crore without any security. In the 2025 Budget, credit guarantee cover for startups was increased from ₹10 crore to ₹20 crore. The annual guarantee fee is only 0.37% to 1.35%, which is reduced through subsidies. This helps MSMEs obtain loans from banks.
Credit Linked Capital Subsidy Scheme (CLCSS): For Tech Upgrades
This scheme provides small industries with a 15% upfront capital subsidy for technology upgrades, up to ₹15 crore for projects. In 2025, there is an additional focus on MSME modernization, such as subsidies for machinery purchases. Loans can be obtained from banks, and subsidies are available through SIDBI.
PMEGP: Employment Guarantee Scheme
The Prime Minister’s Employment Generation Programme provides loans up to ₹25 lakh for setting up new units in rural and urban areas, with a 15-35% subsidy. Rural projects will receive a higher subsidy (up to 35%) in 2025. Khadi, village industries, and manufacturing also offer free training.
SIDBI Schemes: Flexible Options for MSMEs
The Small Industries Development Bank of India (SIDBI) offers collateral-free loans up to ₹1 crore through the SMILE scheme, with repayment periods of up to 10 years. In 2025, the focus is on working capital and term loans, with interest rates around 9-12%.
Conclusion
Government subsidy loans have become stronger in 2025 to boost small businesses – from Mudra’s new Tarun Plus to CGTMSE’s enhanced guarantee. These schemes provide low-cost funding so you can focus on growth. Register on the Udyam portal, go to a bank, or contact SIDBI.
If you have a business idea, apply now! Let us know in the comments: Which scheme would you try? I have taken this information from reliable sources like Indifi, Bajaj Finserv, and FinanceKD – check Indifi Blog for full details.
