Stand Up India Loan Scheme
In India, it is quite common to face challenges when you are a plagued entrepreneur, either women or members of the SC & ST community, who are looking for financial assistance to launch their business venture. So, making it easier for such entrepreneurs, Prime Minister Narendra Modi launched the Stand-up India Scheme in April 2016.
The objective of the Stand-up India Loan Scheme
The main objective of this scheme is to provide financial assistance starting from 10 Lakhs to 1 Crore to SC& ST and women entrepreneurs. The Government has asked each of the scheduled commercial banks to set up a provision of greenfield enterprises that may involve services, manufacturing, or trade. In case being a group enterprise, a minimum of 51% stake is required. The Stand Up India Loan Scheme will be available at all branches of Scheduled Commercial banks.
Features of Stand-up India Loan scheme
Nature of loan: The loan offered under this scheme is a composite loan that includes both working capital and term loan.
Scheme availability: The scheme is available with all the scheduled commercial bank branches of India. One can access it either directly by visiting the bank branch or logging into the SIDBI’s Stand Up India Portal or vis Lead district Manager.
Quantum of loan:
The loan granted under this scheme ranges between 10 Lakh to 1 Crore. The composite loan amount will cover 75% of the costly project. It includes the amount of working capital and term loan. However, the condition that the loan given on 75% of the cost of the project will not be applicable in case the contribution of the borrower, along with financial support being provided from any other scheme amounts to more than 25% of the overall cost of the project.
Loan Purpose
The loan will be given to SC and ST or any women who are undertaking a venture for the first time under the services, manufacturing, or trading sector.
Rate of Interest
The Stand-up India scheme interest is the lowest interest rate as compared to other form credits offered by the bank or financial institutions. The interest rate however must not exceed the Tenor premium + 3% + MCLR.
Collateral security
Along with the giving of primary security, the bank asks the borrower to provide either collateral security or a guarantee of CGHFSIL (Credit Guarantee Fund Scheme for Stand-up India Loans), on the requirement of the bank.
Repayment Tenure
The maximum tenure given on repayment of loans under this scheme is 7 years.
Working Capital
The funds sanctioned by the bank to the borrower up to 10 Lakh in the form of overdrafts. A RuPay debit card can also be issued to the borrower for added convenience of withdrawing funds easily. If the working capital requirement is above Rs. 10 lakhs, the same will be provided by the cash credit limit.
Margin Money
This scheme is operating on 25% margin money kept for the project which is either provided by another state/central government schemes which provide subsidies, the loan applicant is expected to contribute a minimum of 10% of the cost of the project from their own funds.
Eligibility for Stand Up India Loan Scheme
To become eligible for obtaining a loan under the Stand Up India Loan scheme, an individual must comply with the following criteria:
- Must be above the age of 18 years
- 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 of the 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 a minimum of 51% of the shareholding / controlling stake must be held by a woman, SC, or ST entrepreneur.
- The loan applicant must not be an existing defaulter to any bank or financial organization.
Factors required to avail Stand up India Loan Scheme
Certain factors will directly influence the availability/approval of loans under the Stand Up India Scheme. These are:
- Residence location of the borrower
- Which category do they belong to, SC, ST, or a women entrepreneur.
- Understand the business nature and loan required
- Whether the planned business premises are available or not.
- Whether the borrower is required any assistance to prepare their project plan.
- Estimation of an amount that borrowed self-invested in setting up the business venture
- Is the borrower in need of the margin money?
- Whether the borrower has any prior experience in handling a business.
