The Stand Up India scheme is aimed at promoting entrepreneurship at the grassroots sections of the society. The scheme was launched in 2015 to promote funding for green-field projects promoted by SC/ST/Women entrepreneurs. The scheme facilitates bank loans between Rs 10 lakhs and Rs 1 crore. Let’s find out more about the loan scheme.
Stand up India Loan Scheme: Eligibility
- The loan is available to only women borrowers or to Scheduled Caste (SC) or Scheduled Tribe (ST) Borrowers.
- You must be above 18 years of age.
- The loan must be used to set up a greenfield enterprise. i.e., this must be the first venture of the borrower.
- The enterprise should be in manufacturing, services or trading sector.
- In the applicant is a non-individual (say a company), at least 51% of the shareholding or the controlling stake must be owned by the SC/ST or woman entrepreneur.
- The Borrower shouldn’t be in default with any bank or financial institution.
For instance, if a lady has done beautician course and wants to open a beauty parlour. She can apply for loan under the scheme provided she meets the other conditions.
How Much Loan Can I Get under Stand up India Loan Scheme? The loan amount under the scheme ranges from Rs 10 lacs to Rs 1 crore. If the borrower has taken both term loan and working capital loan, the cap of Rs 1 crore is on the cumulative loan amount. The loan scheme would fund only 75% of the project cost. This means, 25% of the project cost still needs to be managed. As per the scheme, the borrower must bring 10% of the project cost from own funds. To bridge the deficit, he/she can seek assistance under eligible state/central schemes. Here are a few subsidy schemes that can be taken advantage of.
Working capital loans up to Rs 10 lacs can be sanctioned as overdraft. Rupay debit card shall also be issued. For working capital loans in excess of Rs 10 lacs, the facility must be sanctioned as cash credit limit.
What if my loan requirement is less than Rs 10 lacs? In such cases, you must apply for loan under the Mudra loan scheme.
What Is the rate of interest for such Loans? The Government has not specified any rate of interest. The rate must be the lowest that is offered for the borrower category (where the applicant falls). The Government has specified a cap though. The rate of interest for such loans must not exceed Base/MCLR + 3% +Tenure premium. I believe this is likely to be very good rate for any first-time entrepreneur.
What is the repayment tenure for Stand Up India Loans? The maximum loan tenure is 7 years. The bank may provide you moratorium on principal repayment for up to 18 months.
What is the security for such loans? Banks or financial institutions will have charge on the assets created from such loans. In case of term loans, the concerned bank will have first charge on the fixed asset (say, machinery) created through the loan. In case of a working capital loan, the bank will create charge on the current assets (raw material, finished goods, receivables etc) created through such facility. Though not relevant for the borrowers, the bank may seek guarantee from Credit Guarantee Fund Scheme too.
How to Apply for Stand up India Loans?
You can apply for Stand Up India Loans in many ways. Do ensure that you meet the eligibility criteria.
- At the branches of Scheduled and Commercial Banks
- Through Stand Up India Portal (https://www.standupmitra.in/)
- Through the lead district manager (LDM)
Online process is quite similar to that in case of Mudra Loans. The application process is succinctly explained in this video on StandUpMitra website. Based on your initial application inputs, the system will decide if you are a trainee borrower or a ready borrower. If you are a ready borrower, you can go ahead and complete the application form. If you are a trainee borrower, then you will be provided hand-holding support during the application process.
If you are wondering what is the difference between Stand Up India and Mudra loans, the difference is in eligibility and the maximum loan amount. Under Mudra Loan scheme, the maximum loan amount is capped at Rs 10 lacs. With Stand Up India loan, the minimum loan amount is Rs 10 lacs. I expect the loan sanction process under Mudra loans to be relatively lenient.
How long does it take to get such loans approved? As per the scheme guidelines, the loan shall be approved by concerned branch within 3-6 weeks of completed application. Actual timelines may vary. Please understand there is no guarantee that your loan application under this scheme will be approved. Banks will do necessary diligence before sanctioning the loan.
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