The primary objective of the Stand-up India scheme is to provide funding to women entrepreneurs and people belonging to the Scheduled Castes/Scheduled Tribes(SC/ST) section of the society and to promote their entrepreneurial abilities. This flagship initiative of the government launched on 5th April 2016 is administered by DFS (Department of Financial Services) under the overall supervision of the Ministry of Finance.
# What is Stand-Up India Scheme
The Stand-up India scheme was one such initiative of the Government of India which was introduced primarily to provide credit services to the SC/ST. Under this scheme, the bank provides loan facilities between Rs 10 lakh to Rs 1 crore to at least one SC/ST borrower and at least one woman borrower to set up a greenfield enterprise. So that they can easily establish their business. This enterprise may be in the manufacturing, services, or trading sector. In the case of non-individual enterprises, at least 51% shareholding and controlling stake should be held by any SC/ST or women entrepreneur. In the current situation, you can get the benefits of this scheme to start your own business and stand up for yourself.
# Current Updates:
- Recently Finance Minister Nirmala Sitharaman announced through Twitter on 5th April that the Stand Up India scheme has been extended till 2025.
- Through a tweet on April 5, the ministry said over ‘Rs 25,586 crore has been sanctioned to more than 114,322 accounts or women entrepreneurs understand up India scheme.
- 83% of loans sanctioned under the stand-up India scheme have been given to women entrepreneurs.
- Margin money requirement reduced from 25% to 15% under standup India, making more women entrepreneurs eligible to borrow
# Loan Details
Stand-up India Scheme – Loan Details – 2021
|Interest Rate||Bank’s MCLR + 3% + tenor premium|
|Minimum Age Criteria||18 years for SC/ST and women entrepreneur|
|Loan Amount||Between Rs. 10 lakh and Rs. 1 crore|
|Loan offered for||Greenfield projects only (first-time venture)|
|Repayment Period||7 years with a maximum moratorium period of 18 months.|
|Shareholding Stake||51% for non-individual enterprises|
|Borrower’s financial repayment status||Never defaulted to any Bank or NBFC|
|Margin Money||Maximum 25%|
|Working Capital Limit||Up to Rs. 10 lakh in form of Cash Credit limit|
# Features of Stand-up India Scheme
- RuPay Debit Card will be issued for the convenience of the borrower. Also, a working capital limit of more than 10 lakhs will be sanctioned as a cash credit limit.
- Apart from the primary security, the loan can be secured by collateral security or guarantee of Credit Guarantee Fund Scheme for Stand-up India Loan (CGFSIL) decided by banks.
- Loans under this scheme can be used only for SC/ST and women entrepreneurs for setting up new enterprises in the business, services, and manufacturing sectors.
- No subsidy is given under the Stand-up India scheme
- The scheme envisages 25% margin money which can be provided in convergence with eligible Central/State schemes. While such schemes may be designed to obtain an acceptable subsidy or meet margin money requirements, in all cases, the borrower will have to bring in a minimum of 10% of the project cost as his contribution.
- Overall loan of 75% of the project cost including term loan and working capital under Stand-up India scheme. The condition of the loan to cover 75% of the project cost will not be applicable if the borrower’s contribution with convergence support from any other scheme exceeds 25% of the project cost.
The main objective of every scheme brought by the government is to benefit the citizens. Similarly, the same is the case with the Stand Up India scheme. Below are some of the benefits you will get when you go for the Stand-up India scheme:
- The first and basic benefit of this scheme is that it “encourages and motivates new entrepreneurs” and reduces unemployment in India.
- If you are an investor then Stand Up India provides you the right platform where you get complete professional advice, timing, and information about the laws. Plus another advantage of this, they will assist you in the start-up for the first two years of your work.
- In this scheme, they also provide post-set-up support to the consultants.
- Apart from this, there is also an advantage of this scheme for the entrepreneurs that they do not have to worry much about how they will repay the amount taken for the loan as they need to pay the loan back over a period of seven years. which reduces the stress of repayment.
- The scheme will also help in removing legal, operational, and other institutional hurdles for the entrepreneurs.
- This can be a very positive boost in terms of employment generation, leading to socio-economic empowerment of Dalits, Adivasis, and women.
- It can also act as a driving force for other government schemes like ‘Skill India’ and ‘Made in India’.
- This will help protect the demographic dividend in India
- Access to bank accounts and technical education will promote the financial and social inclusion of these sections of society.
# Tax Benefits/Incentives
Here are some of the tax benefits available in this scheme:
- Applicants will get 80% relaxation after filing the patent application form. This can be filled only by startups and the benefits are also high for them as compared to other companies.
- It also includes Credit Guarantee Fund and entrepreneurs enjoy income tax exemption at least for the first three years.
- Entrepreneurs will get full exemption from capital gains tax.
- In addition, benefits such as redemption of tax on profits earned will be availed for entities that qualify in the program.
- This is to ease the entities during the initial startup phase and there is no burden of paying a huge cost for taxes.
# Eligibility Criteria
- Minimum age of 18 years for SC/ST or women entrepreneurs.
- A loan under the scheme is available for greenfield projects only. Greenfield, in this context, refers to the beneficiary’s first venture in the manufacturing or services or trade sector.
- In the case of non-individual enterprises, 51% shareholding and controlling stake should be with SC/ST and/or women entrepreneurs.
- The borrower should not default on any bank or financial institution.
# How to apply for the scheme and get benefits?
The scheme covering all branches of scheduled commercial banks will be accessed in three possible ways:
Through the Offline Method(Directly at a Bank Branch):- By visiting any branch of any commercial bank and applying for a loan at the branch by attaching the application form along with the required documents.
- Through the Online Method:-
Step 1: Visit the Stand-Up India portal at www.standupmitra.in to understand the scheme details better.
Step 2: Click on the ‘Register’ button and answer a set of questions asked.
Step 3: Based on your response, you will be categorized either as Trainee Borrower or Ready Borrower.
Step 4: Feedback will be given regarding the eligibility of the applicant for the loan.
Step 5: The applicant can then register and log in to the portal.
Step 6: Upon logging in successfully, a dashboard will be displayed to the applicant to proceed with further actions.
- Through the Lead District Manager:- A list of state-wise LDMs are available and submitted.
# What questions can you expect to register?
The applicant has to answer the following questions at the time of registration on the portal:
- Location of the borrower.
- Category, as in SC, ST, or woman.
- Type of business planned.
- Location of business set up.
- Assistance needed to prepare a project plan.
- Requires technical and financial skills/training.
- Current bank account details.
- Own investment amount for the project.
- Whether help is needed to raise the margin amount.
- Experience in business management.
# What is meant by ‘Trainee Borrower’ and ‘Ready Borrower’?
Based on the response and description provided by you for the set of questions described above, an applicant will be classified as a trainee borrower or a Ready Borrower.
Trainee Borrower: If you specify that you require support to increase the margin amount, you will be classified as a Trainee Borrower on the Portal. This will connect the applicant with the Principal District Manager (LDM) of the applicant’s respective district and the concerned office of NABARD/SIDBI. The concerned authorities will then arrange the assistance as given below:
- Financial training through Financial Literacy Centers (FLCs).
- Skill development through Vocational Training Centers and others.
- Electronic data processing in MSME DIs, District Industries Centers, and Rural Self-Employment Training Institutes.
- Workshed through District Industries Centres.
- Margin money through State Khadi and Village Industries Board, Women Development Corporation, State Scheduled Caste Finance Corporation, and others.
- To get support from renowned entrepreneurs through Women Entrepreneurs Associations, trade bodies, and other NGOs.
- Utility connection through utility provider offices.
Ready Borrower: If you specify that you do not require any assistance for availing marginal funds, you will be classified as a ready borrower on the Portal. Also, the portal will start processing your application for a loan at the bank you have chosen. After that, an application number will be generated, and your details will be shared with the bank, LDM, and the concerned office of NABARD/SIDBI. Also, you can track the progress of your application on the portal with your application number.
# Documents Required
The documentation process for availing loan under the Stand-up India scheme is a bit detailed, and the requirements are as follows:
- Duly filled application form with Passport-sized photographs
- Identity Proof: Passport, driving license, voter’s ID card, PAN card, etc.
- Residence Proof: Voter’s ID card, passport, latest electricity and telephone bills, property tax receipt, etc.
- Business address proof
- Partnership deed of the partners
- Copies of lease deeds or Rent agreement
- Last 3 years’ balance sheets of association
- Assets and liabilities statement of the promoters and guarantors
- Any other document required by the bank
Frequently Asked Questions(FAQs)
# Is there any subsidy in Stand-up India?
No, no subsidy is given under this scheme. However, loans up to 75% of the project cost from scheduled commercial banks as well as private and public sector banks are given at attractive interest rates.
# What are the key factors to avail Stand-up India Loan Scheme?
Here are some key factors to take advantage of the Stand-up India scheme:
- The Borrower’s place of residence.
- The category to which they belonging i.e. SC/ST or woman.
- The nature of the business for which the loan is required.
- Whether the planned business premises are available or not.
- Whether the borrower needs any assistance for preparing his business/project plan.
- The amount of money the borrower is investing from his end for setting up the business.
- Whether the borrower has any prior experience of handling any business.
# What is the difference between Startup India and Stand-up India?
Startup India is an online entrepreneurship platform for startups that allows them to access various tools and resources for their business and allows them to build a network to promote and grow their business. Whereas in Stand-up India it provides loans to SC/ST and/or women entrepreneurs on a project cost basis.
# What is a Greenfield Project?
A greenfield venture is one where new infrastructure will be built on unused land, i.e. no demolition or remodeling of the existing structure will be involved.
# Can I get help from available sources after taking a loan?
Yes, you can get help at any time even after the loan is approved. Contact Stand-up Connect Centers to access services.
# What is the purpose of the loan under the “Stand-up India” scheme?
This scheme is for setting up a new enterprise in the manufacturing, trading, or service sector by SC/ST/Women entrepreneurs.
# Who are the eligible lending institutions for giving loans under the scheme?
All branches of scheduled commercial banks are located across the country.
# Do I have to mandatorily opt for credit guarantee cover for loans under Stand-up India if I have collateral?
No, In this scheme there is no obligation to take a loan only through credit guarantee cover. You can also choose to get a loan as collateral security. Please discuss this aspect with your banker.
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