Startup Loan from Canara Bank !
Startup India campaign is based on an action plan aimed at promoting bank financing for start-up ventures to boost entrepreneurship and encourage start ups with jobs creation. The campaign was first announced by Prime Minister Narendra Modi in his 15 August, 2015. As part of Start Up India action plan Canara Bank has introduced a specialised scheme for financing of startups and early stage units promoted by graduates of reputed educational institutions like IIT and IIM. Canara Bank is among the largest banks in India with 5841 branches spread across all geographical segments. In addition to over 5841 branches, the bank also has other channels that include 9251 ATMs, covering 4081 centres.
Canara Bank is one of the first bank to launch a specialised scheme for financing of start ups and early stage units promoted or proposed to be promoted by Graduates of reputed Educational Institutions. To be eligible for loan under this scheme, the promoter must be aged between 20 – 50 years and operate a startup or early stage unit that is less than 3 years from date of commercial operation or first balance sheet, whichever is earlier. In addition to the above, the promoter must be a Graduate of one of the Educational Institution listed below:
- IIMs (Indian Institute of Management)
- IITs (Indian Institute of Technology)
- IIITs (Indian Institute of Information Technology)
- IISc (Indian Institute of Science)
- ISBs (Indian School of Business)
- IISERs(Indian Institute Of Science Education And Research)
- XLRI ( Xavier School of Management)
- Symbiosis Institute of Management Pune/Bangalore
- Management Development Institute, Gurgaon
- NITs (National Institute of Technology)
Amount of Loan
Under the scheme for financing startups, loan can be provided for manufacturing or services activity. The loan can be working capital, term loan and non-fund based limits. The minimum loan that can be availed under this scheme is Rs.10 lakhs, while a maximum loan of upto Rs.2 crores can be provided for startup and Rs.5 crores for early stage units.
Promoters would have to maintain a margin of 25% in case of working capital limit and 20% in case of term loan.
Minimal collateral security is required for loan sanctioned under this scheme. In case of loan under Rs.100 lakhs, loan can be provided without collateral under CGTMSE coverage. In case of loan over Rs.100 lakhs, loan can be provided against pledge of collateral property worth 50% of the loan amount in the form of land or building or approved securities or bank deposits.
Interest and Repayment
Loan sanctioned for startups and early stage units under this scheme are sanctioned at attractive rate of interest. A 0.25% reduction from card rate is provided for applicable MSME businesses. In addition to the interest, an upfront fee of 0.25% of the sanctioned amount (Minimum of Rs.5000) must be paid to be bank on sanction of the loan.
Repayment tenure of upto 7 years excluding moratorium is provided for projects involving project cost of less than Rs.1 crore. Projects with a cost of over 1 crore can enjoy 7 to 10 years repayment tenure, excluding moratorium period. Repayments can be structured as EMI payments or ballooning repayment, based on the projected cash flows.