Stand Up India Scheme for Business Growth: A Complete Guide
Leveraging Stand Up India Scheme for Business Growth
Till March 2023, the Government of India has successfully offered financial assistance under their Stand Up India scheme to over 0.18 million women and SC/ST entrepreneurs. While ₹40,710 Crore worth of loans were sanctioned, 80% of them were given to women entrepreneurs.
Hence, this Government-backed scheme is designed to facilitate the spirit of entrepreneurship in underrepresented communities. Kickstart your entrepreneurial journey today by seeking substantial loan amounts of ₹10 Lakh to ₹1 Crore. Read this blog further to get an in-depth understanding of this scheme.
What is the Stand Up India Scheme?
The Stand Up India Scheme is an initiative launched by Prime Minister of India, Narendra Modi, with the motive to support entrepreneurship among women and marginalised communities (SC and ST).
Launched on 5th April 2016, this scheme facilitates accessibility of bank loans between ₹10 Lakh and ₹1 Crore for setting up a greenfield enterprise. This enterprise may be involved in trading, agriculture, manufacturing, or services sectors.
How Does it Benefit Business Growth?
The primary aim of this government scheme is to empower underrepresented sections of society through job creation and reduction in social disparities. Check the following points to learn how it can promote the growth of your business:
1. Access to Financial Support
Studies show that about 35% of businesses become bankrupt because they fail to raise new capital or due to insufficient cash flow. The Stand Up India Scheme addresses this significant barrier by providing substantial loans.
This empowers entrepreneurs from the marginalised community to start their businesses without worrying about initial capital.
2. Reduction of Socio-Economic Inequalities
Financial inclusion is crucial for economic growth and sustainable development. According to recent data, the Indian economy has grown 8.2% in real terms in FY24.
Women and SC/ST entrepreneurs’ inclusivity in the extremely competitive financial realm marks the success of this scheme launch. Hence, the scheme helps bridge the gap between socio-economic groups, promoting inclusive growth.
3. Encouragement of New Enterprises
With substantial funding through this scheme, you can establish new ventures in manufacturing, trading, agricultural or services sectors.
This contributes to the overall development of the economy. Hence, by focusing on greenfield enterprises, entrepreneurs foster innovation and the creation of new products and services, addressing the ever-evolving needs of consumers.
4. Employment Creation
New businesses create jobs and contribute to the reduction of unemployment in the country, particularly in marginalized communities.
5. Guiding Ecosystem
The scheme facilitates and continues to provide financial assistance and a supportive ecosystem for doing business. It aims to offer mentorship and guidance for entrepreneurs, ensuring their businesses grow sustainably.
What are the Features of the Stand Up India Scheme?
The government scheme offers a range of features, providing a comprehensive support system for entrepreneurs. Check out the Stand Up India scheme features by going through the following points:
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Loan Amount: Substantial loan limit of ₹10 Lakh to ₹1 Crore.
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Nature of the Loan: A composite loan covering both term loans and working capital needs. This ensures that the entrepreneurs have enough funds to cover all aspects of their business operations.
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Loan Purpose: Aiming to foster entrepreneurship between women and individuals belonging to scheduled caste, and scheduled tribe communities.
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Security Requirements: You may need to provide collateral or it may be secured by the guarantee of the Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL).
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Repayment Tenure: Maximum repayment tenure allowed is 7 years with a 18 months moratorium period.
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Margin Money: Maximum 15% with Central/State schemes.
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Working Capital Limit: Up to ₹10 Lakh in the form of Cash Credit limit.
Stand Up India Scheme Interest Rate
The bank’s discretion governs the interest rate applicable under the scheme, which is linked to the Marginal Cost of Funds-based Lending rate (MCLR). The rate also includes a small additional premium, making it affordable for the borrowers.
Hence, the Stand Up India Scheme Rate is – bank’s base rate (MCLR) + 3% + tenor premium
Eligibility Criteria for the Stand Up India Scheme
The eligibility criteria for the loans under the Stand Up India scheme is simple, enabling you to access funds confidently. Check out the following qualification requirements:
- SC/ST and women entrepreneurs above the age of 18
- The beneficiary must seek the loan for only establish a Green Field enterprise in the agri-allied activities, services, manufacturing or trading sector
- The borrower must not owe any amount of money to any financial institution
- SC/ST and women entrepreneurs hold 51% of the controlling stake and shareholding of non-individual enterprises
Documents Required for Stand Up India Scheme
Submit the following documents for accessing a loan under the Government scheme for MSMEs:
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Identity Proof: PAN card, Voter ID card, passport, driving licence, Aadhaar card
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Residence Verification: Voter ID card, passport, property tax receipt, or utility bills
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Category Proof: Aadhaar card, PAN card, caste certificate, affidavit or self-declaration documents
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Business ID Proof: For Msme udyam registration required
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Other Docuement Proofs:- Any certificate issued for registration/operations/Trade License/business by Local/State/ Central Government/Government Agency/SEBI/IRDA/ICAI/ICSI/ICWAI/Office of Registrar of Newspapers for India in the name of entity/firm. E.g.: Sales Tax, TIN/VAT/TAN etc. APMC/Mandi License/Certificate. Labour License/Certificate.
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Income Details: Income Tax Returns (ITR), bank statements, or audited financial statements
Read More: How to apply for udyam registration
Stand Up India Scheme Application Procedure
You can apply for a loan under the scheme by visiting your nearest branch or following the online application procedure. Check out these 3 simple steps for application:
Step 1: Visit the official website of Stand Up India.
Step 2: Enter relevant details including caste category, business location, stake holdings, desired loan amount, address, past business experience, etc.
Step 3: Click on the ‘Register’ button to complete the application process.
Final Word About Stand Up India Scheme
The Stand Up India Scheme is a transformative government-backed initiative, aimed at fostering entrepreneurship among women and SC/ST communities. Besides providing financial assistance, this scheme also offers mentorship and guidance, making it easier for first-time entrepreneurs to navigate the challenges of setting up a business.
Make your entrepreneurial journey smoother by seeking assistance from Kogta Financial. Gain a deep understanding of our financial services, and take the first step towards realising your business dreams!
