Self-Employment Scheme for Persons with Disabilities

The Department of National Handicapped Finance and Development (NHFD), established by the Indian Government, aims to promote economic activities for persons with disabilities. Under this initiative, the Self Employment Scheme has been developed to support disabled individuals financially by providing them with loan facilities for trading activities. This article provides a detailed guide on the application process for the Self Employment Scheme.

Purpose of the Loan

The Self Employment Scheme provides financial assistance to economically disadvantaged disabled individuals to establish businesses in their local areas.

Eligibility Criteria

Eligibility criteria for the Self Employment Scheme include:

The beneficiary must be a disabled person or part of a cooperative society of disabled individuals.
The beneficiary must have a minimum disability of at least 40%.

Income Criteria

The income requirements for the scheme are outlined below:

Rural Areas: Unemployed disabled persons with a family income below Rs.22,000/- per annum can avail of the loan facility.
Urban Areas: Unemployed disabled persons with a family income below Rs.24,000/- per annum are eligible.
For self-dependent disabled individuals, personal income is considered.
The age requirement for the loan is between 18 to 55 years.
Eligibility extends to members of cooperative societies and other associations of disabled persons seeking financial assistance from NHFDC.
Applicants must be Indian citizens and permanent residents of the state where the project is located.
Educational qualifications or relevant experience for the project are mandatory.
Applicants should not have outstanding debts from other financial institutions.
Those from agricultural backgrounds must have projects located in agricultural areas for loans under the “Assistance for agricultural activities” scheme.

Type of Fund

NHFDC provides various types of loans under this scheme:

Term Loan

NHFDC grants Term Loans to disabled entrepreneurs or groups. Under this scheme:

Loans cover up to 100% of the project cost for high-working-capital projects.
For projects costing up to Rs.50,000, loans are issued up to 100% of the total value as composite loans.
Projects between Rs.50,000 and Rs.1,00,000 must maintain a 1:3 fixed assets to working capital ratio.
Projects over Rs.1,00,000 include 50% of the working capital requirement, with banks financing the remaining as cash credit.

Project Details

Project cost details are as follows:

Project Cost	NHFDC Share	Channelising Agent Share	Promoter's Share
Below Rs.50,000	100%	Nil	Nil
Above Rs.50,000 up to Rs.1 lakh	95%	5%	Nil
Above Rs.1 lakh up to Rs.5 lakhs	90%	5%	5%
Above Rs. 5 lakhs	85%	5%	10%

Margin Loan (Seed Capital)

Seed Capital assistance complements term loans from State Financial Corporations or other financial institutions.
It fills the equity gap specified by term lending institutions.
Entrepreneurs need to arrange a minimum of 20% equity.
NHFDC provides up to 80% of the equity required for projects costing up to Rs.50 lakhs.
Seed Capital is interest-free, with a 1% service charge per annum by channelising agencies.
Repayment is within 7 years, with conversion to term loan if unpaid.
Projects with Seed Capital are ineligible for other NHFDC financial aid.

Rate of Interest

The interest rates for loans are detailed below:

Loan Amount	Interest Rate	Interest (Channelising Agent)	Total
Loan less than Rs.50,000	3%	2%	5%
Loan above Rs.50,000 up to Rs.1 lakh	4%	2%	6%
Above Rs.1 lakh up to Rs.5 lakhs	7%	2%	9%
Above Rs.5 lakhs	8%	2%	10%

Note: Women with disabilities receive a 2% interest rebate. A 0.5% rebate applies for timely loan repayments.

Sanction of Loan

Loans are sanctioned by the channelising agencies with NHFDC's prior approval. Applications are forwarded to NHFDC for approval.
In some cases, NHFDC directly receives, appraises, and disburses applications for skill and entrepreneurial development assistance.
NHFDC's Board of Directors approves projects with a loan component exceeding Rs.10 lakhs.

Recovery of Loan

Loans must be repaid within seven years, including the moratorium period. Repayments can be on half-yearly, quarterly, or monthly schedules.
Moratorium periods are determined based on project merit and requirements.
A 0.5% interest rebate is given for on-time installment payments.
A 3% penal interest is charged for defaults, applicable both to the channelising agency and beneficiaries.

Security

State Government guarantees are required for loan sanctions and disbursements by NHFDC to state channelising agencies. In case of defaults, NHFDC can recover from future projects.
NHFDC accepts bank guarantees or other forms of acceptable security for loan grants.

For more resources on self-employment schemes, explore our comprehensive guide on Self-Employment Schemes. Additionally, you can learn about region-specific initiatives like the Jammu and Kashmir Self Employment Scheme and the KESRU Kerala Self Employment Scheme. Discover other support programs like the Assistance Scheme to Women for Self-Employment in Himachal Pradesh and the Chief Minister's Self-Employment Scheme (CMEGP). For those in urban areas, our guide on the Delhi Self Employment Loan Scheme might be beneficial. Stay informed about entrepreneurship trends and resources by exploring our Startup India initiative.

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Frequently Asked Questions

Common questions about Self Employment Scheme for Disabled Entrepreneurs in India.

The Self Employment Scheme aims to provide financial assistance to economically weaker sections of disabled individuals for establishing businesses in their respective areas. It offers loan facilities to support entrepreneurial ventures among persons with disabilities.

Disabled individuals with a minimum degree of disability of 40% or cooperative societies/associations of disabled persons are eligible to apply for the Self Employment Scheme. The applicant must be an Indian citizen and a permanent resident of the state where the project is to be set up.

For rural areas, unemployed disabled persons with a family income below Rs. 22,000 per annum are eligible. For urban areas, the family income should be below Rs. 24,000 per annum. In case of self-dependent disabled individuals, their individual income will be considered.

The National Handicapped Finance and Development Corporation (NHFDC) offers Term Loans and Seed Capital assistance under the Self Employment Scheme. Term Loans cover up to 100% of the project cost, while Seed Capital assists in meeting the equity requirement for availing term loans from other financial institutions.

The interest rate varies based on the loan amount. For loans below Rs. 50,000, the interest rate is 5% (3% for NHFDC and 2% for the channelizing agency). For loans above Rs. 5 lakhs, the interest rate is 10% (8% for NHFDC and 2% for the channelizing agency). A rebate of 2% on interest is provided for women with disabilities and 0.5% for timely repayment.

The entire loan should be repaid within a reasonable period, not exceeding seven years, including the moratorium period. The repayment can be on a half-yearly, quarterly, or monthly basis, depending on the project's income potential and requirement.

The concerned State Government's guarantee is required for the sanction and disbursement of the loan by NHFDC to State Channelizing Agencies. NHFDC also accepts Bank Guarantees or other forms of acceptable security for granting loans.

No, disabled individuals cannot apply for the Self Employment Scheme loan directly. The loan applications must be forwarded by the channelizing agency to NHFDC for approval, except for loans under "Assistance for Skill and Entrepreneurial Development," which are received and appraised directly by NHFDC.

Yes, there is an age limit for availing the Self Employment Scheme loan. The minimum age is 18 years, and the maximum age is 55 years.

Yes, the applicant should possess an educational qualification or relevant experience for the proposed project under the Self Employment Scheme.