What Is the Stand-Up India Loan Scheme? Features, Eligibility & Benefits

Since its launch in 2016, the Stand-Up India scheme has aimed to empower marginalised entrepreneurs across the country by providing them with access to funding and growth opportunities. The initiative specifically supports SC/ST and women, enabling them to pursue their business aspirations.

In this article, we’ll explore the Stand-Up India Yojana – including its purpose, eligibility criteria, features, and benefits.

What Is the Stand-Up India Scheme?

The Stand-Up India scheme is a government initiative that helps SC/ST and women entrepreneurs avail loans of INR 10 lakhs to INR 1 crore for greenfield projects. Borrowers under this scheme can access loans secured either by collateral or by the Credit Guarantee Fund Scheme (CGFS) for manufacturing, services, trading, and agri-allied enterprises.

What Is the Impact of the Stand-Up India Scheme?

The Government of India recognises the challenges that SC/ST and women entrepreneurs face in accessing credit and starting new ventures. Hence, the Stand-Up India loan scheme is an endeavour to create a system that provides financial support to the marginalised entrepreneurs of the country.

Purpose of the Stand-Up India Scheme Loan

The Stand-Up India loans are intended to fund greenfield projects – businesses that are being set up for the first time. This includes ventures in manufacturing, services, trading, and agri-allied sectors. It’s also meant to promote financial inclusivity and equal growth opportunities across the nation.

Stand-Up India Scheme: Nature of the

Under the Stand-Up India scheme, applicants (SC/ST/ and Women) can secure composite loans, which include term loans and working capital, to cover a maximum of 85% of the total project cost. However, this cap would cease to apply if the contribution from the borrower, coupled with any contribution from other schemes, exceeds 15% of the project cost.

Features and Benefits of the Stand-Up India Scheme

Here’s a quick overview of the salient features and benefits of the scheme:

• Loans under the Stand-Up India scheme range from INR 10 lakhs to INR 1 crore at competitive interest rates.
• The CGFSIL(Credit Guarantee Fund Scheme for Stand-Up India Loans) secures loans granted under this scheme.
• Loans under the Stand-Up India scheme are repayable within 7 years with a maximum moratorium period of 18 months.
• Working capital of up to INR 10 lakhs can be withdrawn through the overdraft facility or RuPay debit cards. Working capital above INR 10 lakhs can be sanctioned through a cash credit limit.
• All eligible applicants can get hand-holding support, training, mentorship, and guidance through the Stand-Up India portal.

Stand-Up India Scheme

• Scheduled Caste (SC), Scheduled Tribe (ST), or women entrepreneurs who are 18 years or above are eligible.
• The applicant should not have defaulted on any bank or financial institution.
• The Stand-Up loan scheme is only applicable to greenfield enterprises in the manufacturing, services, trading, and agri-allied sectors.
• For non-individual enterprises like LLCs, corporations, or partnerships, at least 51% (i.e. the controlling stake) should be held by SC/ST and/or a woman entrepreneur.

Stand-Up India Scheme Interest

The Stand-Up India scheme rate of interest varies from one lender to another. It depends on factors like the applicant's creditworthiness, collateral pledged, loan tenure, and more.

However, in the interest of supporting startups, the government has capped the interest rate, ensuring it does not exceed the financial institution’s lowest applicable rate for that loan category (i.e., not exceeding the base rate/MCLR + 3% + tenor premium).

Steps to Register for the Stand-Up India Scheme

To register yourself for the Stand-Up India Scheme, you may follow these steps:

1. Visit the Stand-Up India online portal and fill in your business details.
2. Select your category (SC, ST, or Women).
3. Provide business details like address, industry, and a description of services.
4. Enter the required loan amount.
5. Select if you need hand-holding or additional support.
6. Fill in the personal information requested.
7. When done, click on Register.

*Please refer to the official Stand-Up India portal for the most up-to-date information on the application process.

Documents Required for the Stand-Up India Scheme

Here’s a list of documents you may need to proceed with your application:

• Identification Proof (PAN card, Aadhar Card, Driving Licence, Passport, Voter ID)
• Proof of Residence (Utility Bills, Voter ID)
• Proof of Business Address
• Financial Proof (Non-default confirmation, assets and liabilities, income tax returns, bank statements)
• Business Documents (Certificate of Incorporation, Memorandum of Association, Articles of Association, Shareholder agreements, and Registrations)
• SC/ST category proof
• Documents for Pledged Collateral (title or lease deeds)
• Projected Financials

*Document requirements may vary across lending institutions or based on the nature of the project.

Challenges for the Stand-Up India Scheme

Despite its progressive intent, the Stand-Up loan scheme faces several implementation challenges:

• Low awareness among eligible applicants, particularly in rural and semi-urban areas.
• Complex documentation and lengthy approval processes.
• Applicants may face challenges meeting collateral requirements.
• There could be delays in fund disbursement due to bureaucratic hurdles or a lack of coordination between stakeholders.

Conclusion

The Stand-Up India Yojana has opened up crucial credit access for SC/ST and women entrepreneurs, enabling them to grow their ventures with government-backed support.

However, limited awareness, strict eligibility norms, and collateral requirements may still prevent many deserving businesses from fully benefiting from the scheme.

If you're seeking flexible, collateral-free financing to scale your enterprise, SMFG India Credit offers unsecured business loans of up to INR 75 lakhs*. Please note that to qualify, your business should have been operating for at least 3 years with consistent income and profitability for the past 2 years. Apply online today to avail of competitive interest rates and flexible tenures of up to 60 months*! If you’re seeking a higher loan amount, explore our Loan Against Property solutions.