Loans up to 25 lakhs at three percent interest rate to startups, project itself as collateral

The Ministry of Industry, Commerce and Supply has approved the Startup Enterprise Loan Operation Procedure, 2080.

The Ministry has approved Startup Enterprise Loan Operation Procedures, 2080 to make the work related to subsidized loans simple, clear, orderly and transparent, encouraging entrepreneurs with the latest knowledge, thinking, skills and abilities to get involved in startup enterprises.

With the formation of the procedure, now the startups will get a loan of up to 25 lakhs at a three per cent interest rate. For this, in the current financial year, 25 crores have been allocated for start-up enterprises and loan programs. The procedure has opened the way for the disbursement of loans as provided in the budget.

1. How to get a loan?

The Industrial Business Development Foundation, the implementing body of the Startup Enterprise Loan Program, will issue a public notice and request proposals for providing loans. An entrepreneur cannot submit more than one proposal.

Startups that can work in the fields related to agriculture and livestock, forestry, tourism promotion and entertainment and hospitality, science, technology, information and communication, human health services, education and teaching-learning, easy and safe transportation and transportation services can take loans.

Apart from this, startups related to automobiles, traditional technology, production and service flow process improvement, mining and mineral research and development, household or daily living, food production and processing, waste management and environmental protection, disaster management, alternative and renewable energy and climate change mitigation are eligible for loans. can apply for

The proposal received will be evaluated based on meeting the criteria set for the startup enterprise, the market potential of selling the product or service produced by the project, the source of raw materials used in the project, the availability of the necessary infrastructure for the project, the measures adopted for risk management, the presentation of the business proposal and credit appraisal.

But for evaluation, the foundation will have to form a committee under its leadership with experts who have worked in the field of startups and entrepreneurship, and the banks providing loans.

The foundation will provide the amount allocated for the start-up enterprise loan to the government bank that will provide the loan. The bank will have to open a separate account and keep that amount as a start-up enterprise loan disbursement fund. To get a loan, the startup will put the project as a mortgage.

2. Loan eligibility criteria

To lend to startup enterprises, startups that have not exceeded seven years by the last date of registration and application in accordance with prevailing laws will receive loans.

Similarly, new technology and creative thinking have been used in the production or operation or distribution process of any goods or services, the total paid-up capital is from two lakh rupees to ten lakh rupees, the total annual turnover of the enterprise does not exceed two million rupees, fixed capital (excluding the value of real estate) Startups not exceeding two crore rupees will be eligible for the loan.

3. Loans up to 25 lakhs, project itself as collateral

The startups selected from the applications received will get a loan of up to 25 lakhs at 3 per cent interest rate by keeping the project as a mortgage.

The maximum loan period will be five years. When giving a loan, the bank will have to agree with the proposer on the method of disbursing the loan, the loan limit, the period to pay instalments, and the period and process of repayment of principal and interest.

It is also necessary to mention how the principal and interest must be returned from the second year of taking the loan. The bank can also agree with its branch office.
The bank has to give the information about the agreement with the entrepreneur to the establishment within seven days. After the agreement, the concerned bank must provide the first instalment of the loan to the entrepreneur within seven working days.

While disbursing the loan, the bank will provide the loan amount in one instalment for loans up to five lakhs, two instalments for loans up to fifteen lakhs and three instalments for loans up to twenty-five lakhs. The amount of the first instalment provided, if the concerned entrepreneur requests an additional instalment along with the confirmation that he has used the loan in the startup enterprise, the bank will have to inspect and provide an additional loan amount based on the progress.

If someone wants to repay the loan before the instalment period, no additional fee will be charged. Banks and financial institutions have to insure the business or project while disbursing loans according to this procedure.
According to this procedure, the bank will keep the approved business or project as collateral while disbursing the loan, and the entrepreneur will have to insure such business or project himself.

While disbursing the loan, the bank has to secure the loan in the deposit and loan protection fund according to the prevailing law. The bank will be allowed to charge a maximum of 0.1 per cent service fee while disbursing the loan.

4. Punishment for non-payment of loan

If the entrepreneur who receives the loan does not repay the loan, the bank may consider the loan as a bad loan according to the prevailing law, withhold the entrepreneur’s passport, send a written notice to the relevant agency to prohibit the sale of any movable and immovable property in the name of the entrepreneur, freeze the entrepreneur’s account in banks and financial institutions and It can recommend the deprivation of other civil benefits including social security allowance provided by the government.

If the lending bank requests to withhold such facilities, the relevant agency shall withhold the facilities of such entrepreneurs.