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Government of India and Government of Karnataka have prioritised small businesses started by minority groups of India. This is to ensure fair chances and competition for minority businesses of the country. There are minority business loans in Karnataka offered by the Karnataka government to help minority entrepreneurs set up businesses in the state.

There are also many minority business loans in India offered by the central government for the minority businesses of the country. India as a country with numerous linguistic and religious minorities has been giving importance to such minority groups through various reservation loan schemes and subsidies.

If you are an entrepreneur in Karnataka belonging to a minority category and looking for a business loan, there are many loan schemes introduced by both central and state government that you can explore. These are syndicated loans at subsidised interest rates that can be easily paid off by entrepreneurs.

National minority business loans

National minority business loans are offered by National Minorities Development Financial Corporation (NMDFC). NMDFC is a government company Ministry of Minority Affairs, Government of India. They have many schemes introduced for minority communities including Muslims, Christians, Sikhs, Buddhists, Parsis and Jains, preference being given to the occupational group and women.

The loan schemes under NMDFC are usually divided into credit line 1 and credit line 2 where credit line 1 is schemes for people hailing from rural areas. Have a look at minority business loans in India offered by NMDFC that minority entrepreneurs in Karnataka can apply for:

Micro financing scheme

This government subsidy loan for business was introduced for members of the Self-Help Groups (SHGs). Under the scheme, credit line-1 extends loans of up to ₹1 Lakh at 7% per annum and credit line- 2 extends up to ₹150000 at an interest rate of 10% per annum.  Concession of 2% is extended to women beneficiaries under Credit Line-2.


  • Members of SHGs
  • Priority is given to minority women scattered in remote villages and urban slums.

Virasat scheme

Virasat scheme was started to meet working capital and fixed capital needs of entrepreneurs for the purchase of equipment, tools, machinery and raw materials. Under this scheme, a loan of up to ₹10 Lakh can be availed under Credit Line-1 and 2.

An interest of 5% per annum is charged for male entrepreneurs and 4% is charged for female entrepreneurs under credit line 1. Male artisans are charged 6% interest rate and female entrepreneurs are charged 5% under Credit line- 2.


  • Under Credit Line-1 entrepreneurs having annual family income of up to ₹98000 in rural areas and up to ₹120000 in urban areas can apply
  • Under Credit Line-2 entrepreneurs with annual family income of up to ₹8 Lakh can apply.

NMDFC term loan

The NMDFC term loan for minorities is divided into two types; Credit Line 1 and Credit Line 2. Under Credit Line 1 loans of up to ₹20 Lakh is sanctioned for minorities at an interest rate of 6% per annum. A loan of up to ₹30 Lakh is given under Credit line 2 with an interest rate of 8% per annum.

Business Loan


  • Under Credit Line-1 entrepreneurs having annual family income of up to ₹98000 in rural areas and up to ₹120000 in urban areas can apply
  • Under Credit Line-2 entrepreneurs with annual family income of up to ₹8 Lakh can apply.

How to apply to NMDFC loan schemes?

Follow these steps to apply to the scheme:

Step 1: Visit the NMDFC website

Step 2: Navigate to homepage

Step 3: Scroll down and click on ‘Find Schemes for you’ button

Step 4: Scroll down to find options for selecting the loan type and state

Step 5: Click on ‘Select loan type’ and choose the preferred loan type

Step 5: Click on ‘Select state/UT’ and choose Karnataka from the drop-down menu

Step 6: Click on ‘Download loan application form’

Fill in the loan application form and contact the NMDFC using their contact information. You can try sending mail or calling them using their helpline number. You can also choose to fill in the enquiry form given online on the NMDFC website. You can find all contact details by clicking on the ‘contact us’ option displayed on the homepage.

Stand up India

Stand-Up India is a startup business loan for women by Government of India. The scheme provides financial assistance to SC/ST and women entrepreneurs for setting up greenfield businesses involved in manufacturing, services, trading or agri-allied activities.

The startup business loan by Indian government offers term loans and working capital loans between ₹10 lakh to ₹1 crore. This is an unsecured business loan for startups that can finance up to 75% of the project cost and is one of the most common minority business loans in Karnataka.


  • The borrower must be an SC/ST or a woman entrepreneur.
  • The minimum age of the borrower should be 18 years.
  • The enterprise has to be a greenfield project engaged in manufacturing, service, trading or agri-allied activities.
  • If the business is a non-individual enterprise, 51% of the shareholding and controlling stake should be owned by an SC/ST or woman entrepreneur.

How to apply?

  • Visit the Stand-Up India portal
  • Register on the portal
  • Log in with your credentials
  • Click on the apply button
  • Fill in the form and submit the application

Direct loans for business enterprise

This is one of the popular minority business loans in Karnataka launched by the Government of Karnataka under Karnataka Minorities Development Corporation (KMDC) 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.


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.

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.

Shramashakthi scheme

Shramshakti scheme is a government subsidy loan for businesses in Karnataka belonging to religious minority community entrepreneurs. The loan is provided to start a new business or to fund the activities of an existing business. The business loan for minorities in Karnataka 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.


  • 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.

How to apply?

Follow the same steps as the Direct loans for business enterprise scheme to apply.

Minority business loans can help you to get subsidised loans at low interest rates. This will help you find money for setting up your business and managing working capital needs. These loans are more advantageous than formal lines of credit like business loans from banks and NBFCs as they have relaxed eligibility criteria, low interest rates and are tailored specifically for minority entrepreneurs.

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

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.