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When it comes to loan facility for physically handicapped/challenged and disabled people or differently-abled people, there are special business loan options. The Government of India has introduced several initiatives to enable people with disabilities (PwD) to have access to funding for business growth. In this article we discuss business loan for disabled person and the NHFDC or The National Handicapped Finance and Development Corporation to provide financial assistance to disabled individuals to start their own business or expand existing ones.
Business loan for disabled person
Business loan for disabled person is a loan that aims to empower differently abled individuals to start their entrepreneurial ventures and get financial support from the government required for the same. The government already has several MSME loan schemes such as the PMEGP scheme, PMRY scheme, and CGTMSE scheme. With the National Handicapped Finance initiative, the idea is to provide subsidy loan for physically handicapped and challenged individuals for their business ventures.
These loan schemes are designed to provide PwDs and differently-abled people the financial assistance required for business expansion, education and skill development, purchase of equipment for social rehabilitation or any other, without much hassle. Though, in most cases these loans are collateral-free loans, in certain cases, the agencies might request for modest collateral as security for loan or have family member as co-borrowers/guarantors.
Let’s take a closer look at them.
NHFDC loan scheme for differently abled people
The National Handicapped Finance and Development Corporation offers business loan for disabled person. Wholly owned by the Government of India it provides financial aid for activities that drive income generation and empower PwDs. There are several public sector banks and regional rural banks identified through which the aid is made available.
For more information, check the NHFDC website: disabilityaffairs.gov.in/content/page/national-handicapped-finance-and-development-corporation.php
The purpose of National Handicapped Finance is to understand the diverse needs of people with disability and facilitate borrowings that meet their requirements. The scheme as such offers a wide range of financial aid to:
- Women with disability at a reduced interest rate of interest
- Loans for higher education and skill development/vocational training with no limit on age
- Funding to provide training for skill development for self-employment, start their own ventures and be empowered
There are 3 prominent types of business loan schemes for disabled people under NHFDC. Let’s look at them.
Divyangjan Swavalamban Yojana
This small business loan for disabled person is a loan type that is provided to People with Disabilities (PwD) for overall and economic empowerment. Borrowers can use these concessional loans to start business activities to generate income or drive overall empowerment.
Details of the loan scheme are:
- Loan amount – ₹50 lakh (maximum) to PwDs for self-employment activity (the actual loan can be decided by the implementing agency based on requirements and the loan repayment capacity)
- Type of loan – Term loan or working capital loan
- Interest rate – 5%-9% p.a. (1% rebate to women with disabilities for self-employment loans up to ₹50,000/)
- Loan tenure – 10 years (maximum tenure) from the date of disbursement (Note – Prepayment is allowed after prepayment period commences without any business loan foreclosure charges)
- Eligibility – Indian citizen of 18+ years and with 40% or more disability (for those with mental retardation challenges, age is relaxed to 14+ years)
- Purpose – Can be used as a startup business loan for disabled person or for education after Class 12 (Bachelors, Masters, Professional programmes, vocational courses, etc.)
|Loan amount||<₹50,000||₹50k-₹5 lakhs||₹5-15 lakhs||₹15-₹30 lakhs||₹30-₹50 lakhs|
|Rate of interest to PwD*||5% p.a.||6% p.a.||7% p.a.||8% p.a.||9% p.a.|
*This includes Rate of Interest(%) and Implementing Agency Margin(%)
Vishesh Microfinance Yojana (VMY)
Under this scheme, quick, need based finance is provided through NBFCs, MFIs, SHG Federations, state Government Missions and others. The funds provided are usually for the unbanked population of the target audience group to enable them pursue small and micro businesses and development activities.
Some of the highlights of this business loan for disabled person in India are:
- Unit cost of project – Not exceeding ₹60,000/
- Repayment period – Up to 3 years from the date the loan is disbursed
- Rate of interest –5% p.a.
- Eligibility – Similar to loans offered by SIDBI and NABARD
NHFDC Swavalamban Kendra (NSK)
This scheme started as a pilot project with the goal to emerge as a larger, grandiose scheme. The scheme aims to bring together the various credit, skill and assured business linkage needs. It will initially extend to every district in the country and will offer one NSK loan to each district.
Some of the key highlights of the offered business loan to PwD are:
- Capital cost – ₹12 lakh by PwD entrepreneurs for each NSK
- Financing – 100% from NHFDC
Also, these kendras will act as small incubation centres to train the local PwDs on becoming self-sufficient and having self-employment opportunities in the locality.
How to apply for loans for disabled people from NHFDC
Here’s how you can apply for a loan for handicapped person:
- Apply through State Channelised Agencies (SCAs) appointed by State Governments or Union Territories
- Apply through appointed public sector banks – Punjab National Bank, Andhra Bank, IDBI Bank and also the Regional Rural Banks (state-specific)
- Apply through an approved and recognised NGO who can help to take the application to the SCAs
Other banks/NBFCs with business loans for differently abled persons
Apart from government initiatives there are other disability business loans from banks and NBFCs that can be considered. It’s recommended to check the official bank/NBFC website for more details and the latest information.
Star Mitra Personal Loan – Bank of India
While this is not a business loan for handicapped individuals, it’s designed to help specially abled individuals to buy sophisticated and/or necessary equipment to promote their social and physical rehabilitation. Some of the key highlights of the loan scheme are:
- Loan amount – Maximum up to 15 times the net monthly salary or 100% of net annual income for self-employed individuals
- Loan tenure – Up to 60 months
- Interest rate –70 p.a. onwards
- Collateral free loans, minimum documentation, no processing fees, quick disbursal
- Funds can be used to purchase relevant aids/appliances for their disability
- Proof of identity and proof of address
- Proof of income – 6 months payslip, ITR/Form 16, PL statement, balance sheet, etc.
- Doctor’s certificate on the extent of handicap and the need of equipment
For more information visit – bankofindia.co.in/personal-loan/star-mitra
Loans to Physically Challenged Persons – TNSC Bank
This loan scheme has been designed to empower people with disabilities and specially abled persons to start self-employment initiatives and economic development.
- Up to ₹3 lakhs – As a startup business loan for disabled person for building a business in service or trading
- Up to ₹3 lakhs – Self-employment for people with mental retardation/ autism/ celebral palsy
- Up to ₹5 lakhs – For purchasing a vehicle for commercial hiring purpose (also read about equipment financing and machinery loans)
- Up to ₹5 lakhs – For setting a small industrial unit
- Up to ₹7.5 – For education in India
- Up to ₹15 lakhs – For education abroad
Rate of interest:
- 5% p.a. – For loans up to ₹50,000
- 6% p.a. – For loans from ₹50,000 to ₹5 lakhs
- 8% p.a. – For loans more than ₹5 lakhs
- 1% p.a. – Rebate to women with disabilities
Loan tenure / repayment:
- Up to 10 years (maximum)
- Moratorium – 3 years
Eligibility and Documents required for subsidy loan for physically handicapped:
- Documents – Application form, disability certificate, income certificate, age certificate, affidavit confirming that no other aid has been availed from another government agency
- Eligibility – Any Indian citizen with 40% or more disability, age between 18 and 55 years, annual income below ₹1 lakh, relevant education
For more information check the bank’s website on: tnscbank.com/individual/loans/loans-to-physically-challenged-persons/
In general, the government has taken significant initiatives to provide financial aid to enable people with disabilities self-empower themselves. While the private sector banks have not opened up many schemes and loan opportunities for PwD, there are always easy to avail business loans that can be considered by those wanting to start or grow their business. There are also start-up business loans by government for those wanting to apply for them.