Kerala Margin Money Loan

Entrepreneurs play a vital role in the economy. Successful entrepreneurs who are taking risks to set up a

startup are rewarded with profits, fame and continued growth opportunities. The Government assists these entrepreneurs by launching schemes and other programmes. One such initiative is the Margin Money Loan scheme, introduced by the Kerala Government. In this article, let us see in detail about the scheme.

Objective

The objective of the scheme is to assist potential entrepreneurs in establishing small-scale industrial units by offering soft loan to raise the required equity that is insisted on by the financing institutions.

Eligibility

The initiative is applicable only for newly registered

SSI units. Preference is given to tiny sectors and units that are run by technocrats, women, differently challenged individuals, ex-servicemen and individuals belonging to scheduled castes/tribes.

Funding Limit

Margin Money Loan is offered for both term loan and working capital loan. It is limited to 20% of the cost of the project of the total working capital requirement, or 50% of the margin stipulates by the financing institution for a term loan or working capital loan. The maximum limit that would be offered is Rs. 2.5 crores. The interest rate is 9% per annum.

Repayment

The loan must be repaid in 16 equal quarterly instalments. For term loans, the first instalment of repayment is due on three months from the date when the last instalment of the term loan falls due/51st months of the disbursement of the margin money loan whichever is earlier. On the other hand, for a working capital loan, the first instalment of repayment would be due on completion of the 51st month from the date of disbursement.

State Investment Subsidy

An investment subsidy of 10% limited to Rs. 5 lakhs would be payable on the fixed capital investment of every industrial unit that is set up in the State. Tiny, small, medium, large or new units that are included under thrust sector are eligible for investment subsidy at a rate of 15% of the fixed capital investment subject to a ceiling of Rs. 15. The Investment subsidy for various industries is listed below.

Thrust Industries

The following are the Thrust Industries that are eligible for a State Investment of 15%. Rubber based industries, information technology, agro-based business such as food processing, readymade garments, Ayurvedic medicines, mining, marine products, light engineering, biotechnology and 100% Export Oriented Units.

IT Industries

The investment subsidy for Information Technology industries would be 20% of the fixed capital investment subject to a maximum of Rs. 25 lakhs.

Industrial Units

For Industrial Units that are established in Idukki, Wayanad and notified industrial areas such as Industrial parks and industrial growth centres, the eligible subsidy would be 10% of fixed capital investment subject to a ceiling of Rs. 10 lakhs. The thrust sector units that are located in Idukki and Wayanad districts would be paid an investment subsidy of 25% of fixed capital investment up to a maximum of Rs. 25 lakhs.

Additional Investment

Industrial Units that are new and existing in the tiny and SSI sectors that install equipment for the renewable source of energy is eligible for an additional investment subsidy at 15% for investments that are made up to Rs. 5 lakhs per unit over the normal subsidies.
An additional investment subsidy of 5% of the value of fixed capital investment subject to a ceiling of Rs. 1 lakh would be payable for tiny and SSI units that are established by entrepreneurs belonging to any of the following categories.
- Scheduled Castes
- Scheduled Tribes
- Women
- Physically disabled individuals
- Ex-serviceman
Units undertaking expansion, diversification and modernisation would also be eligible for investment subsidy at the revised rates that apply to each sector. The expansion, diversification and modernisation have to be carried out according to a definite project report.
The principal elements of Fixed Capital investment like building, land, plant and machinery, testing equipment, electrification costs, generator and pollution control equipment would be admitted to investment subsidy.

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Frequently Asked Questions

Common questions about Kerala Margin Money Loan Scheme for Entrepreneurs.

The Margin Money Loan scheme is an initiative introduced by the Kerala Government to assist potential entrepreneurs in establishing small-scale industrial units by offering soft loans to raise the required equity insisted upon by financing institutions.

The scheme is applicable only for newly registered small-scale industrial (SSI) units. Preference is given to tiny sectors and units run by technocrats, women, differently-abled individuals, ex-servicemen, and individuals belonging to scheduled castes/tribes.

The Margin Money Loan is offered for both term loan and working capital loan. It is limited to 20% of the cost of the project or the total working capital requirement, or 50% of the margin stipulated by the financing institution for a term loan or working capital loan, whichever is lower. The maximum limit that would be offered is Rs. 2.5 crores, and the interest rate is 9% per annum.

The loan must be repaid in 16 equal quarterly installments. For term loans, the first installment is due three months from the date when the last installment of the term loan falls due or the 51st month of the disbursement of the margin money loan, whichever is earlier. For working capital loans, the first installment is due on completion of the 51st month from the date of disbursement.

The State Investment Subsidy is an additional benefit offered by the Kerala Government. It is a 10% subsidy, limited to Rs. 5 lakhs, payable on the fixed capital investment of every industrial unit set up in the state. Thrust sector units are eligible for a higher subsidy of 15% of the fixed capital investment, subject to a ceiling of Rs. 15 lakhs.

The Thrust Industries eligible for a 15% State Investment Subsidy include rubber-based industries, information technology, agro-based businesses like food processing, readymade garments, Ayurvedic medicines, mining, marine products, light engineering, biotechnology, and 100% Export Oriented Units.

IT Industries are eligible for an investment subsidy of 20% of the fixed capital investment, subject to a maximum of Rs. 25 lakhs.

Yes, industrial units established in Idukki, Wayanad, and notified industrial areas such as industrial parks and industrial growth centers are eligible for additional benefits. Non-thrust sector units in these areas can receive a 10% subsidy on fixed capital investment, subject to a ceiling of Rs. 10 lakhs, while thrust sector units can receive a 25% subsidy, up to a maximum of Rs. 25 lakhs.

Industrial units in the tiny and SSI sectors that install equipment for renewable energy sources are eligible for an additional 15% investment subsidy on investments up to Rs. 5 lakhs per unit, over the normal subsidies. Additionally, tiny and SSI units established by entrepreneurs belonging to Scheduled Castes, Scheduled Tribes, women, physically disabled individuals, or ex-servicemen are eligible for an additional 5% subsidy on the value of fixed capital investment, subject to a ceiling of Rs. 1 lakh.

Yes, units undertaking expansion, diversification, and modernization are eligible for investment subsidies at the revised rates applicable to their respective sectors, provided these activities are carried out according to a definite project report.