How the Indian Government Helps Entrepreneurs Get Funded: 4 Schemes Explained
- Amal K B
- 15 hours ago
- 9 min read
Starting or growing a business in India often comes down to one big question: where does the money come from? Banks want collateral, private investors want proof of scale, and personal savings only stretch so far. This is exactly the gap the government has tried to fill through a range of funding and support schemes for entrepreneurs.
In this article, we break down four such schemes Pradhan Mantri Mudra Yojana (PMMY), Stand-Up India, PMEGP, and SAMRIDH. Each one is designed for a different kind of business owner, from a small shop owner needing a modest loan to a tech startup founder looking for growth capital. We'll cover who each scheme is for, how much funding is available, why people use it, and the conditions you need to know before applying.
Quick Comparison
Scheme | Who It's For | Funding Available | Apply Directly? |
PMMY (Mudra Yojana) | Small business owners, freelancers, shop owners, service providers | Up to ₹20 lakh (₹50,000 to ₹20 lakh across categories) | Yes, through banks/NBFCs |
Stand-Up India | Women entrepreneurs and SC/ST entrepreneurs starting a new business | ₹10 lakh to ₹1 crore | Yes, through banks |
PMEGP | First-time entrepreneurs setting up a new manufacturing or service unit | Up to ₹50 lakh (manufacturing) / ₹20 lakh (services) | Yes, via KVIC portal |
SAMRIDH | Technology startups with a working product | Up to ₹40 lakh (matched funding) | No, only via approved accelerators |
1. Pradhan Mantri Mudra Yojana (PMMY)
PMMY is one of the most widely used government-backed loan schemes in India, aimed at people running or starting small, non-farm businesses. This includes shop owners, manufacturing units, freelancers, repair centers, beauty salons, coaching centers, food businesses, and similar ventures.
In simple words
Think of PMMY as a government push to make sure small business owners aren't turned away by banks just because they don't own property or gold to pledge. "Mudra" simply refers to the loan itself, and the scheme works by having your bank or NBFC lend you the money, with the government backing and guiding the process not the government handing you cash directly.
Who is it for?
Anyone starting or running a small business such as a shop, manufacturing unit, freelance practice, repair center, beauty salon, coaching center, or food business.
Funding available
The loan amount is split into four simple stages, based on how established your business already is:
• Shishu: Up to ₹50,000 best suited for someone just starting out, like a small home-based food stall or a first-time tailor setting up shop.
• Kishore: ₹50,000 to ₹5 lakh for a business that has been running for a while and needs money to expand, such as buying a second sewing machine or adding stock.
• Tarun: ₹5 lakh to ₹10 lakh for a more established business looking at a bigger expansion, like renovating a shop or buying new equipment.
• Tarun Plus: Up to ₹20 lakh, for borrowers who have successfully repaid an earlier Mudra loan under the Tarun category essentially a reward for good repayment history.
Why people use it
PMMY is considered one of the easiest government-backed business loans to access. In most cases, no collateral is required meaning you don't need to pledge property, gold, or other assets as security and the loan can be used for working capital, buying machinery, purchasing inventory, or setting up a new business from scratch.
Important conditions
• The business must be non-farm in nature (activities directly tied to farming are generally covered under separate agricultural schemes).
• A good repayment history improves your chances of approval, especially if you're applying for a repeat or larger loan.
• The loan is disbursed by banks and NBFCs, not directly by the government the government's role is to guarantee and promote the scheme.
• Having a simple, clear business plan even a one-page note on what you'll do with the money and how you'll repay it significantly increases approval chances.
How to apply
• Visit any nearby bank branch, NBFC, or Micro Finance Institution, or apply online via the Mudra portal or Udyamimitra portal.
• Fill out the Mudra loan application form and submit basic KYC documents (ID proof, address proof, business proof).
• Attach a brief business plan or project cost estimate for the activity you want funded.
• The lender reviews your application and, if approved, disburses the loan directly to your bank account.
Apply here: https://www.mudra.org.in
2. Stand-Up India
Stand-Up India is one of the largest government-backed loan schemes created specifically for first-generation entrepreneurs, with a focus on women and SC/ST communities starting a new business.
In simple words
The scheme exists because first-time entrepreneurs from these groups often find it harder to get a bank loan, simply because they don't have an existing business track record or assets to show. Stand-Up India asks every bank branch across the country to support at least one such entrepreneur, making it easier to get a meaningful amount of funding even without prior business history.
Who is it for?
Women entrepreneurs and SC/ST entrepreneurs who are starting a new business venture for example, a woman opening a garment manufacturing unit, or an SC/ST entrepreneur setting up a small trading business.
Funding available
Loans ranging from ₹10 lakh to ₹1 crore. This is usually given as a composite loan, which simply means it covers both the upfront cost of setting up the business (like machinery or renovation) and the day-to-day working capital needed to run it.
Why people use it
It is one of the largest structured loan programs aimed at helping first-time business owners who may otherwise struggle to access formal credit, covering manufacturing, services, and trading businesses. Because the loan amounts are considerably higher than PMMY, it suits people looking to start a proper standalone unit rather than a very small home-based venture.
Important conditions
• The business must be a new venture, not an existing or ongoing one this scheme is meant to help people take the first step, not expand something already running.
• The applicant must hold at least 51% ownership and controlling stake in the business, in case it is a company or partnership.
• The scheme covers manufacturing, services, and trading businesses.
• Applicants generally need to be above 18 years of age.
How to apply
• Visit the Stand-Up India portal (standupmitra.in) and fill in your details to check eligibility and generate a handholding support request.
• Alternatively, approach the nearest branch of a scheduled commercial bank directly, since every branch is expected to support this scheme.
• Submit your business idea, identity and address proof, and category certificate (for SC/ST applicants) along with the application.
• The bank evaluates the proposal and, if approved, disburses the composite loan covering both setup cost and working capital.
Apply here: https://www.standupmitra.in
3.Prime Minister's Employment Generation Programme (PMEGP)
PMEGP is designed for individuals who want to set up a brand-new manufacturing or service business. What makes it distinct from many other schemes is that it combines a subsidy with loan support, rather than offering a loan alone.
In simple words
Here, the "subsidy" (also called margin money) is essentially a portion of the project cost that you don't have to repay at all the government contributes it upfront, and you only repay the remaining loan amount to the bank. This makes the effective cost of borrowing noticeably lower than a regular business loan.
Who is it for?
People planning to start a new manufacturing or service business for example, a small food-processing unit, a printing press, a tailoring unit, or a repair and service center.
Funding available
• Manufacturing projects: Up to ₹50 lakh
• Service projects: Up to ₹20 lakh
Subsidy available
Generally between 15% and 35% of the project cost, depending on the applicant's category and location. As a simple rule of thumb, women, SC/ST, and other special-category applicants, as well as those setting up in rural areas, typically receive a higher subsidy percentage than general-category applicants in urban areas.
Why people use it
Unlike many other schemes that only offer a loan, PMEGP provides a subsidy on top of loan support, which lowers the effective cost of setting up the business. This combination of subsidy plus loan is what makes it particularly attractive for someone setting up a manufacturing unit, where machinery and setup costs can be high.
Important conditions
• Existing businesses are generally not eligible; the project must be a new enterprise that hasn't started operating yet.
• A detailed project report is required as part of the application, covering project cost, machinery needed, and expected income this can usually be prepared with help from the district industries office.
• Certain educational qualifications may apply for larger project sizes (for instance, projects above a certain cost may require the applicant to have passed a minimum school grade).
• Applicants generally need to be 18 years or older.
How to apply
•Register and apply online through the PMEGP e-Portal (kviconline.gov.in/pmegpeportal).
•Fill in personal details, project details, and upload the required documents, including ID proof, address proof, and the project report.
•Applications are then screened by the District Industries Centre or the relevant implementing agency (KVIC, KVIB, or Coir Board depending on the activity).
•Once approved, the loan (along with the subsidy component) is sanctioned through a bank, and you may be required to attend a short entrepreneurship development training program before final disbursement.
Apply here: https://www.kviconline.gov.in/pmegpeportal
4. SAMRIDH
SAMRIDH stands for Startup Accelerators of MeitY for Product Innovation, Development and Growth. Unlike the other three schemes, this one is focused specifically on technology startups that already have a working product and are looking to scale.
In simple words
An "accelerator" here is an organization that mentors and invests in early-stage startups, helping them grow faster. Under SAMRIDH, when an approved accelerator invests its own money into a startup, the government matches a part of that investment with additional funding. In effect, this means a startup that convinces an accelerator to invest can end up with more total capital than the accelerator alone would have provided.
Who is it for?
Technology startups building innovative products typically ones that have already built a working product (not just an idea or prototype) and are looking to grow their user base or revenue.
Funding available
Up to ₹40 lakh, provided through matched funding support, on top of whatever the accelerator itself invests.
Why people use it
The government matches the investment support that a startup receives through an approved accelerator, effectively increasing the capital available for product development and growth. For a startup, this can mean access to more runway for scaling operations, hiring, or improving the product, without giving up as much equity as they might for the same amount raised purely from private investors.
Important conditions
• Startups cannot apply directly as individuals or companies to the government for this funding.
• Selection must happen through a participating accelerator that is already empanelled under the SAMRIDH scheme.
• The startup should generally already have a working product and demonstrated growth potential early ideas without a product are usually not eligible.
• The startup typically needs to be recognised as an eligible entity (for instance, DPIIT-recognised) to qualify.
Note: You cannot apply directly to SAMRIDH. You must first be selected by a participating accelerator.
How to apply
• Identify and apply to an accelerator, incubator, or seed fund that is empanelled under the SAMRIDH scheme (the list is available on the MeitY Startup Hub portal).
• Go through that accelerator's own selection process, which usually includes pitching your product, traction, and growth plan.
• If the accelerator decides to invest in your startup, it applies to MeitY on your behalf for matching government funding.
• Once approved, the matched funding is released alongside the accelerator's investment, based on the agreed terms.
Apply here: https://msh.meity.gov.in
Which Scheme Is Right For You?
If you are running or starting a small shop, service business, or freelance practice and need a modest loan without collateral, PMMY is usually the simplest starting point. If you are a woman or belong to an SC/ST community and are setting up a new, larger venture, Stand-Up India offers significantly higher loan amounts. If you want both a loan and a subsidy for a brand-new manufacturing or service unit, PMEGP is worth exploring. And if you are building a technology product and already have some traction, SAMRIDH's matched funding accessed through an accelerator can help you scale faster.
In all cases, having a clear, simple business plan or project report ready before you apply will make the process considerably smoother, regardless of which scheme you choose.
Disclaimer
This article is for general informational purposes only and does not constitute financial, legal, or investment advice. Scheme names, funding limits, eligibility conditions, and application processes are subject to change by the respective government departments and implementing agencies. Readers should verify the latest details on the official portals linked below, or consult a qualified financial advisor or the relevant implementing bank/agency, before making any application or business decision.
Sources
1. Pradhan Mantri Mudra Yojana official portal: https://www.mudra.org.in
2. Mudra Yojana success stories/proof: https://www.mudra.org.in/mudra-kahaniyaan-v2/index.html
3. Stand-Up India official portal: https://www.standupmitra.in
4. Stand-Up India PIB document: https://static.pib.gov.in/WriteReadData/specificdocs/documents/2025/apr/doc202545534701.pdf
5. PMEGP official e-portal (KVIC): https://www.kviconline.gov.in/pmegpeportal
6. PMEGP Lok Sabha reply document: https://sansad.in/getFile/loksabhaquestions/annex/185/AU3019_d3QPwx.pdf?source=pqals
7. SAMRIDH Startup Hub, MeitY portal: https://msh.meity.gov.in
8. SAMRIDH success stories document: https://msh.meity.gov.in/assets/successStorieslist/SAMRIDH_Startup_Success_Stories.pdf
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