Tuesday, August 6, 2019

Salient Features and Eligibility for Stand Up India Loan Scheme


Stand Up India is a scheme launched by the Government of India back in 5th April 2016. Its objective is to provide loans to at least one woman and at least one Scheduled Tribe (ST) or Scheduled Caste (SC) beneficiary per branch of a financial institution.

Under the project Stand Up India, loan will be available to those setting up a Greenfield business either in the trading, manufacturing, or services sector.

Beneficiaries can avail loans up to 75% of their project cost under this scheme. They can bring in the rest 25% from any other Central or State Government sponsored schemes. However, borrowers have to contribute at least 10% of the project cost on their own.

Features of these loans

Loan amount

Beneficiaries can avail loans of up to Rs. 1 Crore. The loans are composite in nature and are useful to finance a growing business.

Repayment tenor

The maximum repayment tenure of Stand Up India loans is 7 years. Borrowers also get a moratorium period of up to 18 months after the tenor ends.


The loan may or may not be secured against collateral. Lenders may ask borrowers to pledge security as per their needs.
Loans under this scheme are usually secured under the Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL).

Interest rate

Beneficiaries will receive the lowest possible interest rates. The rates will never be more than MCLR + 3% + tenor premium to help businesses avoid a financial crisis.

Eligibility criteria of these loans

         I.    Age

Woman and SC/ST entrepreneurs need to be at least 18 years of age to become eligible for these loans.

      II.     Company share

Beneficiaries have to hold at least 51% of controlling stake in case of a partnership business to avail loans under the Stand Up India scheme.

   III.   Documents

Borrowers have to provide the following documents to apply for a loan –

       Identity proof – PAN, Voter ID, Driving License, Passport, etc.
       Residential address proof – Any KYC document with address proof, property tax, latest electricity bill, latest telephone bill, etc.
       Business address proof.
       Proof of business documents - Partnership Deed, Memorandum and Articles of Association, SSI/MSME registration, Registrar of Companies certificate, etc.
       Rent agreement if the business is on leased property.
       Certificate from pollution control board (if applicable).
       SC/ST certificate (if applicable).
       Latest income tax returns.
       Assets and liabilities of the concerned individuals.
       Estimated balance sheet of the forthcoming 2 years.
Lenders may also ask for additional documents if needed.

   IV.     Loans more than Rs. 25 Lakh

Borrowers availing loans more than Rs. 25 Lakh have to provide information on the following:

       Details of raw materials and their suppliers.
       Details of staff, labours, etc.
       List of machinery to be purchased, their details, suppliers, etc.
       Profile of company authorities.
       Details of competitors.

Financial institutions may also need other information in case the loan amount exceeds this threshold.
Application process      

Beneficiaries can apply for a Stand Up India loan through the official website of this scheme, any empanelled financial institution, or through the Lead District Manager (LDM).
The scheme classifies borrowers under the following two types:

  1. Trainee borrower – Who needs assistance to avail financing, training, etc.
  2. Ready borrower – Who does not need any assistance.   
Entrepreneurs can opt for start-up business loans from NBFCs if they are not eligible for this scheme.

Make sure to check the rate of interest and charges when opting for a business loan. Also, calculate your EMIs to evaluate your repayment plan. Grow your business without undermining your finances.

Author: verified_user