In a major initiative to boost small-scale entrepreneurship, the Government of India has launched a dedicated Credit Guarantee Scheme specifically aimed at supporting sole proprietors and individual-run enterprises. The scheme, introduced under the Ministry of Micro, Small and Medium Enterprises (MSME), provides collateral-free credit guarantees to sole traders who often face difficulties accessing institutional finance. The move is expected to empower millions of micro-business owners across the country, especially in rural and semi-urban areas where financial inclusion remains a challenge.

Under the new scheme, eligible sole proprietors can avail of loans up to ₹25 lakh without the requirement of providing collateral, with the government acting as the guarantor. This is designed to address one of the most significant barriers faced by small entrepreneurs—the lack of security or formal credit history. The credit guarantee will cover up to 85% of the loan amount for micro-enterprises and up to 75% for other eligible sole proprietors, thereby reducing the risk for lending institutions. The scheme will be available through both public and private sector banks, as well as registered non-banking financial companies (NBFCs).

Officials have highlighted that the scheme also includes provisions for flexible repayment terms and lower interest rates, particularly for businesses in priority sectors like manufacturing, retail, food processing, and services. In addition to the financial benefits, the program will be integrated with digital platforms to ensure faster loan approvals and easier monitoring. The government believes that by removing barriers to credit, the scheme will not only enable existing sole traders to expand their operations but also encourage more informal businesses to formalize and scale. Industry experts have welcomed the initiative, stating it marks a significant step toward inclusive economic development and grassroots enterprise growth.