Equity Grant Fund Scheme

The Small Farmers Agribusiness Consortium (SFAC) was set up by the Ministry of Agriculture, Government of India. Its primary purpose is to increase the income of small and marginal farmers through the development of agribusiness. Through SFAC, numerous schemes like the Equity Grant Scheme and Credit Guarantee Fund Scheme were launched to enhance working capital and business development activities. This article provides an in-depth look at the Equity Grant Fund Scheme.

Equity Grant Fund Scheme

The Equity Grant Fund (EGF) Scheme is designed to support Farmer Producer Companies (FPC) by matching the equity contributions made by members of the FPCs. Managed by the SFAC, the scheme provides up to Rs. 10 lakhs per FPC in two installments. At the time of application, the FPC's emerging capital must not exceed Rs. 30 lakhs.

Objectives of the Scheme

The aims of the Equity Grant Fund are:

Improving the viability and sustainability of Farmer Producer Companies (FPC).
Enhancing the creditworthiness of FPCs.
Increasing member shareholding to boost ownership and participation in FPCs.

Eligibility Criteria

FPCs must meet the following criteria for the Equity Grant Fund:

Duly registered under the Indian Companies Act, 1956.
Raised equity from members in accordance with association/bye-laws.
At least 50 individual shareholders.
Paid-up equity does not exceed Rs. 30 lakh.
A minimum of 33% of shareholders should be small, marginal, or landless tenant farmers according to the Agriculture Census by the Ministry of Agriculture, GOI.
Maximum institutional member shareholding should not exceed 10% of total FPC equity.
Board of Directors must include five members, with farmer representation and at least one female member.
A Management Committee should oversee FPC business.
Have a business plan and budget for the next 18 months based on a revenue model as determined by the Implementing Agency.
Maintain an account with a Scheduled "Bank" and audited financial statements by a Chartered Accountant for at least one full financial year.

Documents Required

Applicants need to submit the following documents:

Duly signed application form by two Board Members/Authorized Representatives of the FPC.
Category-wise allotment of shares and proposed computation of allotment from the Equity Grant.
FPC Board resolution for obtaining Equity Grant and issuing shares against it.
Resolutions on appointment of the Chief Executive Officer and other relevant proceedings.
Audited Financial Statements for the previous fiscal year.
Bank statement for the last six months, authenticated by the Branch Manager.
KYC documents for Representatives/Directors authorized by the FPC Board.
Certificate of incorporation/business commencement, Memorandum of Association/Articles of Association.
18-month business plan.

Application Procedure for the Scheme

Step 1: Visit the official SFAC Government of India portal.
Step 2: Click on the “Equity Grant and Credit Guarantee Fund Scheme (EGCGF)” tab on the homepage.
Step 3: Choose “Online Application Form for Equity Grant Scheme” to apply online.
Step 4: The application form for the scheme will open.
Step 5: Fill in the required details in the application form.
Step 6: Upload the necessary documents with the form.
Step 7: Click “Submit” to complete the process. A reference number will be provided as an acknowledgement of submission.

Sanctioning Authority

An Equity Grant Sanction Committee (EGSC) with the Managing Director SFAC, selected officers, and an external sector expert, evaluates or sanctions the applications under this Scheme. Their decision is final. The grant amount, which matches the shareholder equity in the FPC, will be transferred directly to the FPC's bank account. Within 45 days of receiving the Equity Grant, the FPC must distribute additional shares to its shareholders, equivalent to the grant amount received.

To explore more funding options beyond the Equity Grant Fund, you can also consider learning about the National Equity Fund Scheme and the NEDFi Equity Fund Scheme. For startups seeking funding, options like Innovation Grant Scheme and Elevate Unnati Seed Funding Scheme might also be relevant. Additionally, the Seed Stage Funding Scheme and Micro and Small Enterprises Funding Scheme offer various benefits to emerging businesses.

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Frequently Asked Questions

Common questions about Equity Grant Fund Scheme for Farmer Producer Companies.

The Equity Grant Fund Scheme is an initiative by the Small Farmers Agribusiness Consortium (SFAC) under the Ministry of Agriculture, Government of India. It aims to provide financial support to Farmer Producer Companies (FPCs) by granting an amount equivalent to the equity contribution made by the members in the FPCs. This scheme can provide a maximum of Rs. 10 lakhs per FPC in two installments.

The main objectives of the Equity Grant Fund Scheme are to improve the viability and sustainability of Farmer Producer Companies (FPCs), increase their creditworthiness, and enhance the shareholding of members to increase their ownership and participation in their respective FPCs.

Some of the key eligibility criteria are: the FPC should be registered under the Indian Companies Act, 1956; it should have raised equity from its members; it should have at least 50 individual shareholders; the paid-up equity should not exceed Rs. 30 lakhs; at least 33% of its shareholders should be small, marginal, or landless tenant farmers; and it should have an elected Board of Directors and a Management Committee.

The required documents include an application form signed by authorized representatives, details of share allotment, resolutions by the FPC Board/Governing Council, audited financial statements, bank statements, KYC documents of authorized representatives, incorporation/registration documents, and a business plan for 18 months.

An FPC can apply for the Equity Grant Fund Scheme through the online application form available on the SFAC website. The process involves filling out the application form, uploading the required documents, and submitting the application.

The applications received under the Equity Grant Fund Scheme are evaluated and sanctioned by an Equity Grant Sanction Committee (EGSC) comprising members from SFAC and an external sector expert. The decision of this committee is final.

The sanctioned Equity Grant is directly transferred to the bank account of the eligible FPC. The FPC is then required to distribute additional shares to its shareholders, equivalent in value to the amount of the Grant received, within 45 days of receiving the Grant.

The maximum amount that an FPC can receive under the Equity Grant Fund Scheme is Rs. 10 lakhs, which is disbursed in two installments.

No, one of the eligibility criteria for the Equity Grant Fund Scheme is that the paid-up equity of the FPC should not exceed Rs. 30 lakhs on the date of application.

The Equity Grant Fund Scheme aims to provide financial support to Farmer Producer Companies (FPCs) by contributing an amount equivalent to the equity raised by the members. This is intended to improve the viability, creditworthiness, and ownership participation of members in their respective FPCs, ultimately enhancing the income of small and marginal farmers through agribusiness development.