For individuals from traditionally underserved backgrounds, starting a business can be challenging. In India, initiatives like the Stand Up India Scheme provide a valuable stepping stone for SC/ST and women entrepreneurs by offering both financial support and entrepreneurial guidance. But who exactly qualifies for this scheme, and what benefits does it offer? Let’s read about everything you need to know about the Stand Up India Scheme, from eligibility criteria to the potential advantages it provides for aspiring business owners.
What is the Stand Up India Scheme?
The Stand Up India Scheme, launched on April 5, 2016, supports SC, ST, and women entrepreneurs by providing loans for establishing greenfield businesses in sectors like manufacturing, services, trading, and agriculture-allied activities. Administered by the Ministry of Finance, it promotes job creation and economic inclusion.
The scheme helps overcome barriers to credit access, fostering entrepreneurship and self-employment. Additionally, it aligns with broader MSME government schemes aimed at boosting growth in the micro, small, and medium enterprise sectors.
Key Features of the Stand Up India Scheme
The Stand Up India Scheme has a variety of features that make it easier for eligible entrepreneurs to get started. Here are some of the scheme’s most significant features:
1. Composite Loan Facility: Loans under the scheme can combine both working capital and term loans, allowing entrepreneurs to cover a wide array of startup costs.
2. Loan Range: Eligible applicants can receive loans between ₹10 lakh and ₹1 crore, providing substantial financial support.
3. Loan Coverage: The composite loan can cover up to 85% of the total project cost unless the borrower’s contribution exceeds 15%.
4. Interest Rates: Interest rates for Stand Up India loans are highly competitive and must be the lowest in the bank’s category, capped at the base rate/MCLR + 3% + tenor premium.
5. Loan Guarantee: Depending on the lender, loans may be covered under the Credit Guarantee Fund Scheme for Stand Up India loans, which offers additional security for lenders and borrowers alike.
6. Repayment Term: Stand Up India loans offer a repayment period of up to seven years, with an optional moratorium period of 18 months, giving businesses time to establish themselves before starting repayment.
7. Working Capital Support: For working capital needs up to ₹10 lakh, an overdraft facility is available. For amounts above ₹10 lakh, cash credit options are provided.
8. Branch Commitment: All branches of scheduled commercial banks in India are required to lend to at least an SC/ST borrower and a woman borrower.
Why is the Stand Up India Scheme Important?
In its seven years of operation, the Stand Up India Scheme has disbursed over ₹40,700 crore to more than 1.8 lakh beneficiaries. By providing access to credit for SC/ST and women entrepreneurs, the scheme has significantly contributed to job creation, economic empowerment, and social upliftment.
The Stand Up India Scheme isn’t just about financial assistance—it’s about supporting an ecosystem of entrepreneurial growth. By reaching out to sections of society that often face challenges in obtaining loans, the scheme is instrumental in fostering diversity and inclusivity in India’s business landscape.
Moreover, it complements the broader goals of MSME government schemes, which aim to boost entrepreneurship, job creation, and economic growth across India.
Benefits of the Stand Up India Scheme
For eligible entrepreneurs, the Stand Up India Scheme offers a variety of advantages designed to support sustainable business growth:
1. Inclusivity and Empowerment: The scheme is designed to empower SC/ST and women entrepreneurs who may have limited access to conventional financing options. It encourages diversity in the entrepreneurial ecosystem, especially at the grassroots level.
2. Substantial Financial Support: With loans covering up to 85% of the project cost, entrepreneurs can focus on building their business without facing overwhelming financial pressures. This feature greatly reduces the initial financial burden and allows businesses to channel resources effectively.
3. Digital Access to Resources: Entrepreneurs can apply for loans online through the scheme’s official portal. The platform also offers guidance on essential steps, such as setting up a business, training, and the loan application process, helping streamline the journey for new business owners.
4. Hassle-Free Loan Application Process: Unlike many other loan schemes, Stand Up India simplifies the application process, making it more accessible to first-time entrepreneurs. This not only saves time but also allows entrepreneurs to focus more on business planning.
5. Long Repayment Period: With a maximum repayment term of seven years and an optional moratorium period, the scheme offers flexibility that’s especially beneficial for greenfield businesses. Entrepreneurs have the time needed to grow their ventures before repayment starts, supporting long-term business sustainability.
6. Complementing MSME Government Schemes: The Stand Up India Scheme provides additional opportunities for entrepreneurs looking to tap into government schemes aimed at supporting small businesses. It works in tandem with other MSME government schemes designed to promote business growth and support entrepreneurs at the grassroots level.
Eligibility Criteria for the Stand Up India Scheme
So, who qualifies for the Stand Up India Scheme? Here’s a breakdown of the eligibility requirements:
1. Targeted Beneficiaries: The scheme is available to SC/ST individuals and women entrepreneurs. It specifically supports individuals from these groups to address the social and economic challenges they may face.
2. Age Requirement: Applicants must be over 18 years old, ensuring that only adults participate in this government scheme.
3. Greenfield Projects Only: The scheme exclusively applies to greenfield projects, which are ventures that are entirely new to the entrepreneur. This means that the Stand Up India Scheme is not intended for existing businesses but rather aims to support first-time entrepreneurs in launching their initial venture.
4. Business Sectors Covered: Eligible businesses under the scheme can belong to the manufacturing, services, trading, or agriculture-related sectors, allowing for diverse business opportunities.
5. Ownership Requirement for Non-Proprietary Businesses: For non-proprietary businesses (e.g., partnership firms or companies), at least 51% of the shares and control must be held by an SC/ST or woman entrepreneur. This ensures that the primary beneficiaries of the scheme retain control and ownership of the funded business.
6. No Prior Loan Defaults: Applicants must not have a history of defaulting with other financial institutions, maintaining a positive credit history as part of the eligibility.
Building an Inclusive Business Landscape
The Stand Up India Scheme is a transformative initiative that empowers SC/ST and women entrepreneurs by providing the financial support and guidance needed to start greenfield businesses. This scheme promotes a more inclusive and diverse entrepreneurial landscape in India.
By making it easier for aspiring business owners to access loans and resources, it helps turn dreams into reality. Additionally, the synergy between the Stand Up India Scheme and MSME government schemes offers enhanced growth opportunities. Institutions like HDFC also play an important role in assisting entrepreneurs by offering the necessary resources and credit support to help businesses thrive.