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‘Direct loans for business enterprise’ is a government scheme launched by the Government of Karnataka to provide financial assistance to entrepreneurs belonging to Karnataka’s religious minority communities.

About ‘Direct loans for business enterprise’ scheme

Entrepreneurs who wish to start a new business or expand their existing small business can apply for financial assistance under this scheme. Entrepreneurs belonging to the “state religious minority communities” are covered under this scheme. State religious minority communities of Karnataka consist of people belonging to Muslim, Christian, Sikh, Buddhist, and Jain communities.

Financial assistance will be provided in the form of a loan provided that the applicant satisfies all the eligibility criteria set by the government. Loans will be provided only on a mortgage of property (building/land) to the applicant.

Therefore, the applicant must be in possession of a building or land property, and the relevant documents to prove his/her ownership of the property. In case the property belongs to your family and is under another family member’s name, he/she shouldn’t have any objections to mortgage the property.

Also read: MSME schemes in India for new entrepreneurs and start-ups

Benefits of the scheme

Given below are the benefits of the scheme:

  • Loans provided to entrepreneurs who wish to start or expand their businesses by mortgaging property (building or land).
  • Loan of up to ₹20 Lakh at a 4% interest rate will be provided if the applicant’s family income is below ₹8 Lakh.
  • Loan of up to ₹20 Lakh at a 6% interest rate will be provided if the applicant’s family income is ₹8 Lakh to ₹15 Lakh.

Eligibility criteria for the scheme

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 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.

* KMDC or the Karnataka Minorities Development Corporation extends loan facilities to minorities of Karnataka to help them become self-reliant. If you wish to apply to the ‘Direct loans for business enterprise’ scheme, then you shouldn’t have defaulted on any loans sanctioned by the KMDC under your name.

Also read: MSME subsidy schemes of 2022-2023

Documents required for applying to the scheme

Here are the documents you will need to apply for the scheme:

  • Copy of Aadhaar as residential proof
  • Caste certificate issued by the competent authority
  • Income certificate issued by the competent authority
  • Lease deed/partition deed/release deed/gift deed/rental agreement/sale deed of the property
  • Project report/profile of activities from a Chartered Accountant
  • Quotations related to the project
  • License from respective authorities with respect to property proposed to be mortgaged
  • Building’s Khata extract and Khata certificate or land’s mutation copy
  • Phodi/partition deed with respect to revenue lands and phani-rtc
  • Encumbrance certificate-(ec)/Form no.15
  • Tax receipts from the local bodies until the last assessment year from the date of application
  • Guidance value of the land from the competent authority
  • In the case of a building, a valuation report by a registered valuer – valuation certificate
  • Self-declaration form

If your application is approved KMDC will ask you for these documents:

Business Loan
  • Committee approval order
  • Affidavit from applicant
  • Joint affidavit from the beneficiary and the guarantor
  • Demand Promissory Note (DPN)
  • Hypothecation and mortgage deed
  • Letter of repayment
  • Letter of guarantee
  • Loan agreement
  • Consideration of receipt
  • Acknowledgment of debt from the borrower
  • Acknowledgment of debt from the guarantor
  • Memorandum of deposit of title deeds/equitable mortgage deed
  • Blood relations power of attorney (if the property is not in the applicant’s name)

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

How to apply to the scheme?

Follow these steps to apply for the scheme:

Step 1: Visit the KMDC website

Step 2: Click on e-Services on the banner of the website

Step 3: Tap on ‘Online application’ from the drop-down menu

Step 4: Scroll down the page that appears until you find the name of the scheme from the list of the schemes that appear

Step 5: Click on the ‘Apply’ button shown against it

Step 6: Fill the application form

Step 7: Print a hard copy of the filled-out application form

Step 8: Submit this application form along with other relevant documents to the selection panel of your concerned district*.

Step 9: After the approval of the selection panel, the loan amount will be transferred to your bank account.

*To find out the address of the selection panel in your district go to the KMDC website and click on ‘Contact us’. From the drop-down menu select ‘District office contact details’. This will take you to a page with a list of KMDC offices along with contact numbers, email addresses and office addresses.

KMDC also provides multiple other loans schemes for entrepreneurs belonging to minority communities including Subsidy scheme for purchase of taxi/goods vehicle/passenger autorickshaw, Shramashakthi scheme, etc. Visit the KMDC website for more information of various loan schemes.

Also read: A Guide to the Top 5 Government Loan Schemes in India

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Priyanka Babu

Priyanka is a seasoned content marketing professional with more than 6 years of experience crafting various forms of business and technology sector content. Her insightful writing tackles critical issues faced by small-scale manufacturing businesses. Priyanka’s clear and concise communication empowers businesses to make informed decisions and thrive in today’s dynamic business environment.