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Kerala Margin Money Loan

Kerala Margin Money Loan Scheme

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.


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.


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.


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.