Business loans in Karnataka: Government loan schemes, subsidy, interest rates

If you are an entrepreneur in a big city like Bangalore, your average overheads will be larger than other companies in rural areas. You might be searching for business loans in Karnataka to cover your working capital expenses and other expenditure.

To get a business loan in Karnataka you can try several options. There are government loan schemes for small businesses in Karnataka, business loans from local Karnataka banks and loans from private banks offered specifically for MSMEs.

Business loans by Government of Karnataka

Karnataka government offers multiple MSME loan schemes for boosting businesses within the state. Here are a few popular government loan schemes you can apply for:

Direct loans for business enterprise

This is a government scheme launched by the Government of Karnataka to provide financial assistance to entrepreneurs belonging to Karnataka’s religious minority communities. Under this scheme loans are provided to entrepreneurs who wish to start or expand their businesses by mortgaging property (building or land).

Direct loans for business enterprise provides a business loan of up to ₹20 Lakh at a 4% interest rate will be provided if the applicant’s family income is below ₹8 Lakh. A loan of up to ₹20 Lakhs at a 6% interest rate will be provided if the applicant’s family income is ₹8 Lakh to ₹15 Lakh.

Eligibility

These are the eligibility conditions set for applicants of the scheme:

• Applicant should be a resident of Karnataka state
• Applicant should belong to a minority community (Muslim, Christian, Sikh, Buddhist, or Jain)
• Age of the applicant should be between 18 to 55 years
• Business/enterprise loan will be given to only one member of a family
• Applicant should not be defaulter of loans provided by KMDC (Karnataka Minorities Development Corporation)
• Loans will be provided only on mortgage of property and the value of the property should not be less than the loan amount.

Also read: Jan Samarth portal: Loan details, registration, login, how to apply

Shramashakthi scheme

Shramshakti scheme is a government subsidy loan for businesses in Karnataka belonging to religious minority community entrepreneurs. The minority business loan in Karnataka is provided to start a new business or to fund the activities of an existing business. The business loan provides loan of ₹50000 with 4% rate of interest, to be paid in 36 instalments.

If the borrower repays 50% of the loan within 36 months, the remaining 50% of the loan would be considered a backend subsidy.  If the beneficiary fails to repay the loan within 36 months, 50% of the backend subsidy will be considered as a loan.

Eligibility

• Applicants must belong to the State Religious Minority Community.
• The applicant must be a permanent resident of the State.
• The age limit of the applicant is between 18 to 55 years.
• The annual income of the family from all sources shall not exceed ₹3.5 Lakh per annum
• No member of the applicant’s family shall be an employee of the State/Central/ Government PSU
• The applicant should not have availed any loan from KMDC.

Udyogini scheme

Launched by the Karnataka State Women Development Corporation (KSWDC) to encourage women to take loans from banks and other financial institutions for starting businesses by KSWDC or other profitable activities for which KSWDC assists in the form of subsidy.

This business loan for women in Karnataka gives women belonging to the Scheduled Caste and Scheduled Tribe a 50% subsidy on the loan amount when the unit cost is between ₹ 1 Lakh to ₹ 3Lakh.  For women belonging to the special category and general category a subsidy of 30% (a maximum of ₹ 90,000) is given when the maximum unit cost is ₹ 3 Lakh.

Eligibility

• The applicant must be a woman
• The applicant should be a permanent resident of Karnataka
• The age of the applicant should be between 18 to 55 years
• For women belonging to general and special categories, the family income of the applicant should be less than ₹150000. There is no limit imposed on family income for widowed or disabled women.
• The applicant should not have defaulted on any past loan with any financial institution

Also read: Company registration in Karnataka: Online process, eligibility, documents

Business loans by local banks of Karnataka

There are several corporate trust societies and various other local banks established under the government of Karnataka. Have a look at a few business loan schemes from these entities:

Vyapar loan – Karnataka Grameen Bank

This is a working capital loan for traders and businesses which is facilitated by providing an overdraft of up to ₹5 Lakh or an Open Cash Credit loan of ₹10 Lakhs. The loan has a two-year repayment period and any trader or a business enterprise is eligible for this loan.

A collateral must be provided to apply for the loan and a few options are mortgage of immovable property (NA property), LIC Policies, KVP and NSC.

XPRESS MSME Scheme – Karnataka Bank Ltd

This loan offered by the Karnataka Bank Ltd provides funding for establishment and/or improvement of the unit, repairs and renovations, acquiring machinery and vehicles and any fixed assets for the business. This small-scale business loan in Karnataka offers a maximum of ₹1500 Lakh as loans to MSMEs at 13% to 14% interest rate.

To be eligible for this business loan you need to be officially classified as an MSME under Udyam registration.

Business loans offered by private banks

All private banks in India have business loan products that feature multiple benefits including collateral free loans and loans at discounted rates. Here are few of the popular business loans in Karnataka offered by private banks:

IndusInd Bank business loan

IndusInd Bank is a private sector bank that offers business loans for companies established in India. IndusInd Bank’s business loans are called Business Installment Loans. These are unsecured loans given based on 3 years audited financials and business vintage.  You can apply for Loan amounts up to ₹50 Lakh. The loan tenure is up to 48 months.

Eligibility

Given below are the eligibility criteria for IndusInd bank business loan:

• Age of the applicant must be 25 to 70 years
• Business should have been in operation for a minimum of three years
• The property of the business establishment must be under the name of the entrepreneur who owns the business
• The paid-up capital must be greater than or equal to ₹10 Lakh
• Minimum turnover must be ₹1 Crore in latest financial year with audited financials for 3 years
• Profit before depreciation and tax must be positive for the last three years

Canara Bank business loan

Canara Bank offers different types of business loans. One of the most popular business loan products from this bank is Canara MSME Smart Professional. This is a loan scheme for the purchase and construction of office premises and acquisition of machinery/equipment/furniture/fixtures, including the expansion and modernisation of the existing office premises.

You should be a professional with a minimum experience of 2 years in the business and must have a valid license/certificate to carry out your current profession to be eligible for the loan.

Tata nexarc Business Loans

Tata nexarc’ Business Loans platform is designed to help small business with easy access to business loans. Business can sign up on the portal to get access to unsecured business loans from numerous lenders across India with reasonable interest rates.

The special feature of the platform is that you would only need to submit a single application for multiple lenders. Tata nexarc compares the rates of various lenders and finds you the most suitable options for your business.  Here are a few features of business loans offered by the platform:

• Unsecured business loans up to ₹30 Lakh
• Interest rates starting at 13% per annum
• Repayment period up to 5 years
• Business loan EMI calculator
• No audited financials required

To explore business loans on Tata nexarc click here.