Small Loan Scheme

Small Loan Scheme

Small Loan Scheme

The Small Loan Scheme was introduced by the National Backward Classes Finance and Development Corporation (NBCFDC) to promote an individual in establishing a small business. Under the small loan scheme, term loan will be provided to any entrepreneur belonging to the target group (backward classes). The implementation of the scheme is performed by the State Channelising Agency (SCA) which act as the nodal agency. In this article, we look at the Small Loan Scheme in detail.

NBCFDC

The National Backward Classes Finance and Development Corporation (NBCFDC) which is formulated under the Ministry of Social Justice and Empowerment serves for promoting economic and developmental activities for the welfare of Backward Classes and aiding the weaker section of these classes in self-employment and skill development.

NBCFDC renders financial assistance through State Channelising Agencies (SCAs) and Self Help Groups (SHGs). Also, NBCFDC supports the economically weaker section in developing self-employment ventures under the following sectors:

  • Agriculture and Allied Activities.
  • Small Business.
  • Artisan and Traditional Occupation.
  • Technical and Professional Trades/Courses.
  • Transport and Service Sector.

Objective of the Scheme

The main objective of the small loan scheme is to support entrepreneurs and Self-Employment by providing an enabling environment for job creation and entrepreneurship.

Eligibility Criteria

The eligibility criteria to obtain benefits of Small Loan Scheme are given in detail here:

  • The entrepreneur belonging to backward classes is only eligible to apply for this scheme.
  • The applicant family yearly income should be less than Rs.3 Lakhs per annum.

Note:  The SCAs or Banks will release up to 50% of total funding to the entrepreneur with a yearly income of Rs.1.50 Lakh.

Quantum of Assistance

Under the Small Loan Scheme, all the eligible entrepreneurs will get a subsidy amount of Rs. 60,000 for self-employment and the remaining amount has to be self-owned by the beneficiary.

Pattern of Financing

The loan will be provided up to 85%, and 10% will be provided by the State Channelizing Agencies (SCAs)/ banks and the remaining 5% has to be contributed by the beneficiary. The utilization period is 4 months from the date of disbursement of the loan.

Rate of Interest

The rate of interest under the Small Loan Scheme for entrepreneurs are tabulated below:

Interest Chargeable from

 NBCFDC to SCA2% per annum
SCA to Beneficiary5% per annum

Repayment of Loan

The amount of loan has to be repaid in quarterly instalments within 10 years, including the moratorium period.

Documents Required

The below following documents are to be submitted along with the application form:

  • Proof of identity (Aadhaar card)
  • Ration Card
  • Domicile Certificate
  • Caste Certificate for reserved category
  • Passport size Photograph of the applicant

Small Loan Scheme Registration Procedure

 The procedure to apply for Small Loan Scheme for the entrepreneur is explained below:

Visit Channelising Agencies (SCAs) Office

Step 1: The eligible entrepreneur needs to visit the nearest SCA office, apply on prescribed form for Small Loan Scheme for entrepreneurs.

Application Form for Small Loan Scheme

Step 2: Enter the necessary details in the application form and mention the needs and choice of vocation and training requirements, if any.

Upload the Documents

Step 3: Submit your application form along with the required documents to the same SCA office.

Sanction of Loan

Step 4: After reviewing the application, the loan will be sanctioned by SCA.

Note: For more details about the Small Loan Scheme for entrepreneurs, contact concern District collector or District Manager.

Post by Karthiga

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.