deAsra Guide For Stand-Up India Loan Scheme
The aim of the Stand-Up India scheme is to ensure that every bank branch provides business loans to at least one woman entrepreneur and at least one Schedulaed Caste/Scheduled Tribe entrepreneur. The loan amount can vary from INR 10 lakhs to INR 1 crore and it is provided for new businesses.
Traditionally, banks are wary of providing business loans to women and SC/ST communities. This is mainly due to the inherently wrong notion that they are not good at business. This notion has been proven wrong time and again. The Stand-Up India loan scheme is a platform to encourage people from these sections of the society to come out and set up a successful business, proving their critics wrong.
The scheme also addresses another issue. The country has a high rate of unemployment because there aren’t enough jobs. By helping set up new businesses, the scheme also creates more jobs.
Everything You Need to Know About the Stand-Up India Loan Scheme
So, what are the features of the loan? What is the interest rate? Are you eligible?
This section will try to answer all these questions.
Stand-Up India loan can be availed by SC/ST or women entrepreneurs who want to start a new business in the trading, manufacturing, and service sectors. The loan is provided for greenfield projects, i.e., those projects which are the first ones being undertaken by the applicant in that sector.
- If the loan is being applied for a company that is owned by multiple individuals, then at least 51% of the shares or controlling stakes should belong to a member of the eligible community, i.e., SC/ST or women.
- You also need to be above 18 years of age.
- You should also never have defaulted on a loan previously.
2. Nature of the Loan:
The Stand-Up India loan is a composite loan made of two types of loans – a term loan and a working capital.
A term loan is a loan that can be paid back over a period of time and has a variable interest rate. This is usually used to buy fixed equipment, office space, etc.
A working capital loan can be used for the day to day expenses of running a business. You will be given a RuPay debit card to make it easier to withdraw money.
A working capital loan of up to an amount of INR 10 lakhs is given in the form of an overdraft cash credit and any amount above that is issued as a cash credit limit. Cash credit is a short-term loan given to the company.
3. Loan Amount:
The scheme issues loans between the amount INR 10 lakhs and INR 1 crore. However, the loan will only cover a maximum of 75% of the cost of the project. You should be able to cover the rest of the 25% of the cost.
4. Margin Money:
The cost of the project that you have to cover is called the margin money. It is mandatory that at least 10% of the cost of the project should come from you. The rest of the margin money can come from other schemes or loans.
Consider the following 2 examples.
- You come up with 10% of the cost and you get 15% via some other scheme, thus achieving the 25% margin money condition. The rest of the 75% will be covered by the Stand-Up India scheme.
- You can come up with 10% and another scheme covers 20% of the cost. In this case, Stand-Up India scheme will only cover the rest of the 70% of the cost.
5. Repayment Options:
The tenure of the loan can be a maximum of 7 years and it will be fixed by the bank based on factors such as the bank’s policy, the term you requested, loan amount etc.
You also get a moratorium period of a maximum of 18 months. The repayments will start after the moratorium period. However, the interest will still be calculated over the moratorium period.
6. Interest Rate:
The interest rate on your Stand-Up India loan will depend on the bank that issues the loan. However, there is a maximum limit to prevent misuse.
The assets that were purchased from the funds from the scheme will also act as the primary security. Additionally, you may be required to put up some collateral. If you don’t have any collateral, the loan can be secured under the Credit Guarantee Fund Scheme for Stand-Up India (CGFSSI) scheme.
Types of Borrower
Borrowers are classified into two groups based on their experience.
How do you know which group you fall into?
A trainee borrower is anyone who requires help from the Stand-Up India loan scheme for any or all of the following –
- Filling the application for the loan
- Preparing the project report
- Training in how to handle the financial aspects of the business
- Skill development
- Credit counselling to help with repayment of the loan
- Finding the margin money
- Digital literacy
- Joining an Entrepreneurship Development Program (EDP)
- Help with energy efficiency for solar projects and energy audits
How to Apply?
While filling the application, indicate the areas you would like to have handholding support. You can select as many aspects as you like.
- On logging in, you will be shown the details of the Lead District Manager (LDM) and the Stand-Up India and the Small Industries Development Bank of India (SIDBI) or National bank for Agriculture and Rural Development (NABARD) offices that function as Stand-Up India Connect Centers (SUCCs) that you can approach for help.
- You can contact the Help Centers and hand-holding agencies through the portal. Any payments towards these agencies should be made directly. It cannot be done via the portal.
- You can also change the handholding agency if you are not happy with it.
- Upload all the relevant documents through the portal and specify your bank preferences. Your details will be forwarded to the banks.
- You can track your loan application through the portal using your application number.
- The LDM will work with the SUCCs and banks to ensure that your loan application is handled smoothly.
- You will be intimated once the loan gets sanctioned or if they require any additional information.
If you do not need any help on any of the points mentioned above, then you are a ready borrower.
How to Apply?
- Log in to the Stand-Up India portal, fill in the application, and give your bank preferences (maximum three).
- Your details will be shared with the bank, the LDM for SIDBI/NABARD office.
- You can track the status of your application through the portal.
How Can deAsra Help?
If you feel the process of getting help from the Stand-Up India help centers is too complicated and time-consuming or even if you just want to get some additional help, visit deAsra.in.
deAsra can help you with the form filling for the loan application, creating the project report, and also with various checklists. They can also help you connect with a mentor in your business domain who can guide you set up and run the business and give you advice based on their experience. Get more details on how to fill the Stand-Up India Loan Application.