In a noble effort to not only acknowledge but also address challenges faced by entrepreneurs who are women or are members of the SC/ST community who are looking to obtain a loan to launch their own business venture, Prime Minister Narendra Modi launched the Stand-Up India Scheme in April of 2016.
The main objective of this scheme provide bank loans within the range of Rs. 10 lakh up to Rs. 1 crore to at least one SC / ST and one woman borrower from every bank branch to set up a greenfield enterprise which may involve services, manufacturing or trade.
What is the Eligibility Points for Stand Up India Loan Scheme?
In order to be eligible for obtaining a loan under the Stand Up India Loan scheme, an individual must comply with the following eligibility criteria:
- The individual must be above 18 years of age.
- The entrepreneur must either be a woman or belong to the SC or ST community.
- Loans will be provided under this scheme only for funding greenfield projects, which implies that the venture is the very first one ever being undertaken by the applicant under the trade, services or manufacturing sector.
- If the loan is being taken for a non-individual enterprise, then it is compulsory that a minimum of 51% of the shareholding / controlling stake be held by a woman, SC or ST entrepreneur.
- The loan applicant must not be an existing defaulter to any bank or financial organization.
What are the criteria to avail Stand up India loan Scheme?
There are certain factors which will directly influence the availability/approval of loans under Stand Up India Scheme which are mentioned below-
- The borrower’s location of the place of residence.
- Which category they belong to -SC, SC or woman.
- Nature of business for which loan is required.
- Whether the planned business premises are available or not.
- Whether the borrower required any assistance to prepare their project plan.
- The amount that the borrower is investing from their own pocket towards the set-up of the business venture.
- Does the borrower require financial aid to raise the amount of margin money.
- Whether the borrower has any prior experience in handling a business.
What are the features of the Stand up India Loan?
- Nature of Loan – Composite loan (inclusive of the term loan and working capital) between 10 lakh and up to 100 lakh.
- Purpose of Loan – For setting up a new enterprise in manufacturing, trading or services sector by SC/ST/Women entrepreneur.
- Size of Loan – Composite loan of 75% of the project cost inclusive of the term loan and working capital. The stipulation of the loan being expected to cover 75% of the project cost would not apply if the borrower’s contribution along with convergence support from any other schemes exceeds 25% of the project cost.
- Interest Rate – The rate of interest would be the lowest applicable rate of the bank for that category (rating category) not to exceed (base rate (MCLR) + 3%+ tenor premium).
- Security – Besides primary security, the loan may be secured by collateral security or guarantee of Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL) as decided by the banks.
- Repayment – The loan is repayable in 7 years with a maximum moratorium period of 18 months.
- Working Capital – For withdrawal of Working capital up to 10 lakh, the same may be sanctioned by way of overdraft. Rupay debit card to be issued for the convenience of the borrower. Working capital limit above 10 lakh to be sanctioned by way of Cash Credit limit.
- Margin Money – The Scheme envisages 25% margin money which can be provided in convergence with eligible Central / State schemes. While such schemes can be drawn upon for availing admissible subsidies or for meeting margin money requirements, in all cases, the borrower shall be required to bring in a minimum of 10% of the project cost as own contribution.