Stand Up India Scheme
Stand Up India Scheme
Stand Up India Scheme aims to facilitate bank loans between Rs.10 lakh and Rs.1 Crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise. SC, ST and Women Entrepreneurs face challenges in accessing bank financing for setting up of new businesses and the Start-Up India scheme endeavours to remove this roadblock. Stand Up India scheme is applicable for all scheduled commercial bank branches in India, thereby setting the stage for creating thousands of SC, ST and Women Entrepreneurs.
Overview
Stand Up India scheme was launched on April 5th, 2016 by Hon’ble Prime Minister of India to help SC, ST and women entrepreneurs in setting up of new businesses and obtaining a loan from banks for the same. Stand Up India scheme is a part of the Startup India Action Plan 2016 for promoting startups and new businesses in India. Through the Stand Up India scheme, the Government envisions the creation of opportunities to make job seekers become job creators. The scheme is applicable for all scheduled commercial bank branches in India.
Amount of Loan
A bank loan of Rs.10 lakhs to Rs.100 lakhs is provided can be provided as a composite loan (working capital or term loan) to eligible borrowers. Composite loan of upto 75% of the project cost inclusive of term loan and working capital can be provided under the Stand Up India scheme. Further, the stipulation of the loan being expected to cover 75% of the project cost would not apply if the borrower’s contribution along with convergence support from any other schemes exceeds 25% of the project cost.
Margin money under this scheme can be provided in convergence with eligible Central / state schemes with providing margin money support. However, the borrower would still require to bring in minimum of 10% of the project cost as own contribution.
Loan Eligibility
Loan under the Stand-Up India scheme can be used for setting up of new businesses by SC, ST or women entrepreneurs in the manufacturing, trading or services sector. The following eligibility criteria must also be satisfied by the Entrepreneur to avail loan under the scheme.
- Applicant must be an SC/ST and/or woman entrepreneurs, above 18 years of age.
- Loans can be provided only for startups or new businesses in the manufacturing or services or trading sector.
- In the case of a private limited company, 51% of the shareholding and controlling stake should be held by either SC/ST and/or Women Entrepreneur.
- Applicant should not be in default to any bank/financial institution.
Repayment & Interest Rate
The loan provided under the Stand Up India scheme is sanctioned with a repayment period of upto 7 years and a moratorium of 18 months. In case of working capital limit, the limit is sanctioned as an overdraft facility and Rupay debit card can be issued for the convenience of the borrower for operating the overdraft facility. Working capital limit above 10 lakh is typically sanctioned by way of the cash credit limit.
The rate of interest must be the lowest applicable rate of the bank for that category (rating category) not exceeding the base rate of the bank + 3% + tenor premium. Loan under this scheme is provided at a very competitive rate of interest.
Collateral Security
Banks can request for collateral security or provide the loan under the CGTMSE scheme without any collateral security. The bank makes the decision on collateral security as that depends on the borrower profile.
How to Apply
A person can apply the application for a loan under the Stand Up India scheme under three ways:
- Directly at the Banks Branch
- Stand Up India portal
- Lead District Manager (LDM) – List of LDM available on Stand Up India portal
Documents Required
- Proof of Identity: Voter’s ID Card / Passport / Driving License / PAN Card / Signature identification from present bankers of the proprietor, partner of the director ( if a company)
- Proof of residence: Recent telephone bills, electricity bill, property tax receipt /Passport/voter’s ID Card of Proprietor, partner of Director (if a company)
- Proof of Business Address
- Applicant should not be a defaulter in any Bank/F.I.
- Memorandum and articles of association of the Company / Partnership Deed of partners etc.
- Assets and liabilities statement of promoters and guarantors along with latest income tax returns.
- Rent Agreement (if business premises on rent) and clearance from pollution control board if applicable.
- SSI / MSME registration if applicable.
- Projected balance sheets for the next two years in case of working capital limits and for the period of the loan in case of term loan
- It offers photocopies of lease deeds/ title deeds of all the properties as primary and collateral securities.
- Documents to establish whether the applicant belongs to SC/ST Category, wherever applicable.
- Certificate of incorporation from ROC to establish whether the majority stakeholding in the company is in the hands of a person who belongs to SC/ST/Woman category.
- Profile of the unit (includes names of promoters, other directors in the company, the activity undertaken addresses of all offices and plants, shareholding pattern etc.
- Last three years balance sheets of the Associate / Group Companies (if any).
- Project report (for the proposed project if it requires term funding is required) containing details of the machinery to be acquired, from whom to be acquired, price, names of suppliers, financial details like capacity of machines, capacity of utilization assumed, production, sales, projected profit and loss and balance sheets for the tenor of the loan, the details of labour, staff to be hired, basis of assumption of such financial details etc.
- Manufacturing process if applicable, a major profile of executives in the company, any tie-ups, details about raw material used and their suppliers, details about the buyers, details about major-competitors and the company’s strength and weaknesses as compared to their competitors etc.
Download Stand Up India Scheme Loan Application Form. For assistance in applying for Stand Up India scheme, talk to an IndiaFilings Business Advisor.
