Detailed Guide on Stand-Up India, Startup India

The unemployment rate in India has been rising for the last two years and is at 7.6 % from 4% during the year 2017-2019. As a countermeasure, the Government of India has introduced several schemes such as Stand Up India, Start-up India as initiatives to provide subsidised business funding to aspiring entrepreneurs. 

The programme came into effect on 16^th January 2016 and aimed to provide advances ranging between Rs. 10 Lakh and Rs. 1 Crore to the SC or ST and women entrepreneurs. To avail start-up business loans at a subsidised interest rate under this scheme, you will have to meet its eligibility criteria mandatorily.

Eligibility criteria

●      Business vintage- Your Company should not be older than five years.

●      Age- You can avail a loan under this scheme only if you’re over the age of 18.

●      Type- The firm should be a partnership or private limited firm.

●      Turnover- Your firm should not have a total turnover of more than Rs. 25 Crore.

●      Approvals and registration- To be eligible for start up business loans under this scheme, you will require approvals and certifications from the following departments:

-          Department of Industrial Policy and Promotion, also known as DIPP.

-          Trademark Registry or Indian Patent Office; you would also require a patron guarantee from their side.

-          If your firm provides funding and equity services, it should be registered under the Securities and Exchange Board of India, also known as SEBI.

Also, if your firm is a partnership company, 51% of its shares should be owned by women or SCs or STs, and you should not have defaulted payments of any financial institutions or NBFCs.

Along with meeting the eligibility criteria, you will have to furnish some documents required for business loan while you avail loans under Stand-up India scheme.

Documents required

●      KYC documents- these include your Aadhaar card, Voter ID, passport, PAN card, driving license, etc.

●      Address proof- utility bills such as electricity bills, telephone bills, gas bills, etc.

●      Income proof- such as profit and loss statements, balance sheets having details of what is the working capital of your business, its limits and future projections.

●      Business address proof- such as rental agreement.

●      Business existence proof- such as GST registration certificate, SEBI registration certificate, etc.

Your lender might ask you to furnish other documents apart from the above, as per their policy.

Application process

You can apply for a loan under the Stand-up India scheme in two ways:

-          Visit the official portal of Stand-up India, Start-up India and fill the application form with the required details.   

-          Apply to financial institutions and NBFCs offering credits under this scheme.

Interest rate

These loans are provided at the lowest interest rate (depending on the existing MCLR) of the financial institution you are availing it from. This low rate of interest is one reason why you should avail such loans to start investing for your start-up today.

You can apply for such advances online by visiting the lender’s official website. Fill the application form with some relevant details. A representative of your lender will collect the documents from you, and your loan amount will be disbursed accordingly.

Besides the above, you also get to enjoy tax benefits under section 80 IAC and section 56 of the Income Tax Act. The tenor allowed for repayment is extended up to 7 years with 18 months moratorium period.