Government Loans for Startups and businesses in Delhi NCR – Meaning, Schemes, Eligibility, Factors, Documents Required,

The Nasscom report for the year 2018 titled “Indian Start-up Ecosystem 2018- Approaching Escape Velocity,” stated that India has the third-largest number of start-ups in the world. Undoubtedly, the start-up ecosystem is growing and thriving in the country with more than 65000 start-ups registered under the Start-up India Scheme with already 100 start-ups reaching unicorn valuations and many more coming. It is important to understand that without the appropriate funding and resources required to start a business and run it in the early stages, it is just a mere idea. They need funds to maintain a strong fiscal stimulus with concessional working capital loans to ensure there is adequate liquidity available to run day-to-day business operations and fund business expansion requirements.

However, Small scale businesses and entrepreneurs in Delhi NCR find it hard to obtain funds from banks/financial institutions, which makes them turn to angel investors and venture capitalists, which is even harder, and even if it does, it costs them equity and ownership at the beginning itself. Realizing the importance of the start-ups and small-scale units in the economic development and employment generation in the country, the Government of India has rolled –out various policies and programs to facilitate credit facilities to start-ups and existing businesses in a rather simpler and more efficient manner.

These loan schemes in Delhi NCR have been introduced with the primary objective to offer financing through business loans with flexibility in collateral and lesser documentation requirements. Any start-up or entrepreneur can borrow funds in the form of a business loan through any of these schemes offered by the government which suits their business needs. Further, the Small Industries Development Bank of India (SIDBI) has started to offer funds directly to start-ups and MSME businesses rather than channelizing funds through banks or financial institutions at concessional interest rates which are way lower than those offered by banks by almost 300 basis points.

In case you are going to start your business in Delhi NCR anytime soon or already looking for options to fund your business, you need to take note of these business loans for your start-up as provided below.

Meaning & Definition of Start-ups in Delhi NCR

Under the Start-up India Scheme launched in the year 2016, a start-up in Delhi NCR means an entity that is-

1. An entity incorporated either as a Private Limited Company /a Partnership Firm/Limited Liability Partnership under their respective Acts under the Indian Law up to ten years from the date of incorporation/ registration.
2. The annual turnover of such an entity has not exceeded one hundred crore rupees in any of the financial years since incorporation/ registration.
3. The entity should be working towards innovation, development, or improvement of products or processes or services, or in case of a scalable business model with a higher potential to generate employment or creation of wealth or both.
4. However, such entity shall not be formed or constituted either through splitting up or reconstruction, of a business already in existence.

An entity shall cease to be a Start-up post the completion of a period of ten years from the date of its incorporation/ registration or the turnover of the entity exceeds one hundred crore rupees.

Delhi, officially known as the National Capital Territory (NCT) of Delhi, is India’s union territory and capital. Delhi shares boundaries with Uttar Pradesh and Haryana. The city was the capital of two major empires, the Delhi sultanate and the Mughal Empire, from the 13th to the mid-19th century. New Delhi, the southern region within Delhi, was declared the capital of the British Indian Empire. In the index of human development, Delhi ranks 5th. Besides this, Delhi has the second-highest GDP after Goa.
As per the 2011 census of India, the total population of NCT of Delhi is 16,753,235, with a population density of 11297 persons per square kilometer. The sex ratio of Delhi is 866 women per thousand men, and the literacy rate of Delhi is 86.34%.
The major service industries in Delhi are information technology, hotels, telecommunications, media, banking, and tourism. Besides these services, health, power, construction, real estate, and community services have also helped boost Delhi’s economy. The city currently has India’s most prominent and fastest-growing retail industry and is also the largest commercial center in Northern India. Some good companies have established manufacturing units in this city’s headquarters, which helped grow the manufacturing sector.
Hinduism is the predominant religion in Delhi, followed by Islam, Sikhism, Jainism, and Buddhism. Hindi is the most spoken language in Delhi, and other languages spoken in Delhi are Punjabi, Urdu, and Bengali. The city’s official language is Hindi, and Urdu and Punjabi are declared additional official languages.

The startup ecosystem in Delhi
As per the economic survey 2021-22, Delhi, the national capital of India, has replaced Bangalore as the startup capital of India. The Government of Delhi has the vision to transform the national capital into a global innovation hub. The government aspires to make Delhi the most preferred destination for startups by 2030.
With the help of the startup policy, the government will try to build a strong enabling ecosystem for an innovation-based economy. Through the policy, the government wants to foster entrepreneurs’ spirit with the help of a strong support mechanism. The government aims to encourage, facilitate and support 15,000 startups by 2030 with the help of the Delhi startup policy. The vision of the Delhi startup policy is to create entrepreneurs and business leaders out of Delhi youth. So, the startup policy of Delhi aims to attract the young population to become entrepreneurs and business owners. This will be done by teaching entrepreneurship to students from 9th to 12 standards. To aid them, the government will provide seed capital under the ‘Business Blaster Program.’ The Business Blaster Program is an initiative the Delhi government took to encourage the spirit of entrepreneurship in the school-going students of Delhi.
The Delhi government is trying to build a strong and supportive startup ecosystem in Delhi. Delhi already has a very strong startup ecosystem, but there is always room for improvement. The Delhi government’s vision is to attract young people to entrepreneurship and build a world-class startup ecosystem.

Effective startup ideas in Delhi
Delhi has replaced Bengaluru as the startup capital of India, which means that it is undoubtedly the best place to start a business. The city has several business opportunities, and wholesale products are readily available. With the help of readily available resources, it becomes easy to set up business in Delhi. So, if you are wondering about startup ideas in Delhi, then here are some of the best startup ideas in Delhi.

Hand crafted items
The crowd of Delhi is all about thrift stores and handcrafted items. In the 21st century, that trend of handmade or handicraft items is returning to India’s capital. The demand for handmade and ethnic items like decorative items, embroidered clothes, handbags, etc., is relatively high in Delhi markets. So, opening a business of handcrafted items is undoubtedly going to make you huge profits with less investment. Above all, you can design your website or collaborate with online stores to sell your handmade items. You can promote your handcrafted items through Instagram, Facebook, and other social media platforms.

Printed Clothes
Delhi is famous for its fashion sense and statement clothing. The young population in Delhi is more attracted to printed clothes, especially the ethnic ones. Opening a printed cloth business is undoubtedly a good idea in Delhi because clothes are more than just an attire in Delhi. For Delhiites, clothes are vibes, so the printed clothes business is small yet a profitable business idea. You can build your own website to sell the clothes you have printed, or you can sell the clothes to wholesale markets.

Online Dietician service
Delhi is all about food and fitness. So, starting an online dietician business is an excellent idea if you have a background in food and nutrition. People in Delhi are getting health-conscious nowadays. You will find people eagerly waiting to adopt a healthy lifestyle, so if you can help them regulate their diet, setting up an online dietician service is a good startup idea. With the help of the dietitian business, you will not only earn money but also make a difference in the life of people who are fitness and health-conscious but do not know how to maintain their health. This is a low investment yet profitable business idea in Delhi.

Hostel services
Being the hub of educational coaching institutes, Delhi attracts many students from other states. Many students across the country come to Delhi to get a quality education. Such students need accommodation facilities, so opening a hostel service is undoubtedly an excellent startup idea. To open a hostel, you need considerable capital to invest in the business. Though this idea needs considerable investment, it will surely yield you long-term high profits.

What are the government loan schemes for start-ups & existing businesses in Delhi NCR?

Provided below are some of the most popular and notable government schemes which facilitate finance for start-ups and new businesses in Delhi NCR-

i. NABARD schemes for MSMEs and start-ups in Delhi NCR–

National Bank for Agriculture and Rural Development NABARD is a rural developmental bank that primarily emphasizes the development of the rural sector in India through the strengthening of small-scale businesses and industries cottage industries, and other rural projects by offering concessional loans to them under various policies and programs.

These policies & programs have been aimed at augmenting capital investment, sustained income flow, and employment areas of national importance. Additionally, it has been a channel partner of the Govt. under several schemes projects with objectives such as social innovations and innovative projects related to soil & water conservation.

Some of these schemes in Delhi NCR include-

1. Agricultural Marketing Infrastructure Scheme;
2. Agri Clinics and Agri-Business Centres Scheme;
3. National Livestock Mission for development of Entrepreneurship and generation of Employment.
4. Dairy Entrepreneurship Development Scheme;
5. National Project on Organic Farming Scheme.

ii. Pradhan Mantri Mudra Yojana (PMMY) in Delhi NCR–

Pradhan Mantri Mudra Yojana is a scheme launched in the year 2015 by the Prime Minister of India under the Micro Units Development and Refinance Agency (MUDRA), an institution set up by the government with the purpose to finance business activities of the MSMEs and start-ups operating in the non-farming and non-corporate sector.

Mudra Scheme essentially offers business loans in the nature of working capital cum term loans to start-ups and existing small scale businesses up to a sum of Rs.10 Lakhs engaged in all kinds of business activities in the manufacturing, trading, and service sector.

Under the aegis of Pradhan Mantri Mudra Yojana, the MUDRA scheme offers three loan products, each of whom indicates the stage of growth and funds requirement and also affords a reference point for the next phase of graduation/growth of the respective start-up, namely as-

1. Shishu covers loans up to the maximum value of Rs 50,000,
2. Kishore covers loans up to the values between Rs 50,000 and up to Rs 5 Lakhs and
3. ‘Tarun’ covers loans up to the values between Rs5 Lakhs and up to Rs 10 Lakhs.

Any start-up or entrepreneur aged between18 to 65 years is eligible to apply for and avail of a Mudra Loan for a newly incorporated or any existing business without having to worry about the collateral or third-party security issues at a subsidized and affordable interest rate. Also, women entrepreneurs could obtain funds at discounted interest rates.The borrower start-up or existing business could apply for a Mudra Loan either through prescribed lending partners or through Small Finance Banks, Regional Rural Banks (RRBs), Micro-Finance Institutions (MFIs), and Non-Banking Financial Companies (NBFCs) either by contacting them directly or applying through the Udyami Mitra portal online.

iii. Credit Guarantee Scheme by CGTMSE in Delhi NCR–

The Ministry of MSME and the Small Industries Development Bank of India (SIDBI) jointly launched the Credit Guarantee Scheme (CGS) for MSMEs and start-up businesses intending to build a strong credit delivery system and facilitate a seamless flow of credit for the under-served and underprivileged and ensuring availability of finance from conventional lenders to new generation entrepreneurs.

Further, the credit guarantee scheme also aims to give reassurance of the timely loan repayments through guarantee covers to would make good the loss so incurred by the lender up to 50-85% percent of the credit facility and instead focus on the viability of the business of the start-up business while offering loan services under the scheme.

The funds offered under the Credit Guarantee Scheme are facilitated through public banks, private banks, foreign banks, and regional rural banks, who have played a significant role in offering guarantee covers to collateral and/or third-party guarantee free credit facilities extended by eligible Member Lending Institutions established under the scheme since last two decades.

Any existing or newly incorporated start-up engaged in either manufacturing or service activities could avail of funds under the Credit Guarantee Scheme. However, businesses engaged in retail trade, agricultural institutions, training facilities, or self-help groups have been expressly excluded under the scheme.

iv. Stand–Up India Scheme in Delhi NCR–

The Stand-up India Loan Scheme was introduced by the government of India in the year 2016 headed by the Small Industries Development Bank of India (SIDBI) with the primary objective to encourage the spirit of entrepreneurship among women and people from SC/ST backgrounds and increase their participation in the business industry.

This loan scheme ensures the facilitation of start-up loans between Rs. One Lakhs to One crore at least one Scheduled Cast (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per branch of each bank to set up a Greenfield enterprise which means first-time business venture of the beneficiary in either manufacturing or services, or in the trading sector.  However, such women entrepreneurs or SC/ST must hold at least 51% of the shareholding and controlling stake in the start-up business.

The loans so offered under the scheme are composite and include both term loans and working capital which could be up to 85% of the cost of the project for a term of seven years with a maximum moratorium period of 18 months.

v. Coir Udyami Yojana in Delhi NCR–

Coir Udyami Yojana is another subsidy scheme launched in the year 2014 for the purpose of encouraging ease of doing business in India. The purpose of this scheme is to offer funds to start-ups and MSMEs to set –up their coir units with project cost up to Rs 10 Lakhs including one cycle of working capital which should not be more than 25% of the cost of the project.

Under the Coir Udyami Scheme in Delhi NCR, the working capital portion of the loan shall not be considered for subsidy. So, if the rate of subsidy is 40% of the cost of the project, bank credit is 55% of the project cost, and the contribution of the beneficiary will be 5% of the project cost. The interest rate chargeable will be equal to the base rate and the maximum tenure of the loans shall not be more than seven years after the first moratorium. Further, the beneficiary start-up need not provide any collateral, security, or guarantor for the loans availed as the scheme is covered under Credit Guarantee Trust Fund Scheme.

Individuals (aged between 18 to 65 years of age),Non-Governmental Organisations (NGOs) or Self-Help Groups, Societies registered under the Societies Registration Act 1860, Co-operative Societies, and charitable trusts will be eligible to apply for this scheme. However, if the project has already been under subsidy of any other scheme launched either by the Central or any state government, then the cost of the project will not be eligible to avail of the Coir Udyami Yojana.

vi. Market Development Assistance Scheme in Delhi NCR–

The Ministry of Commerce, under the Govt. of India, launched the Market Development Assistance Scheme for start-ups and MSMEs to enhance their competitiveness and boost their marketing capabilities, and encourage businesses to access and expand their presence overseas through participation in international fairs, sales-cum-study tours, trade delegations, publicity, etc. The primary objectives of the Market Development Assistance Scheme include-

1. Encouragement to Small & Micro businesses to tap and grow in markets overseas.
2. Increasing participation of the Indian MSEs and their representatives in International Trade Fairs/ Exhibitions from Indian MSME sectors.
3. Enhance exports from start-ups and small-scale business enterprises.

Eligibility Criteria for Government Loan in Delhi NCR

All MSME start-ups and other related organizations in Delhi NCR to the MSME sector will be eligible to make an application and avail of financial assistance.

Fiscal interventions include-

1. The maximum financial support towards the participation of a start-up/MSME in an international exhibition/trade fair shall be maximum up to Rs. 30 lakh per event for other countries & Rs.40 Lakh for countries in Latin America.
2. Financial assistance would be offered between 25-95% of the Air-Fare and space rent to entrepreneurs based on the size and type of the MSME start-up enterprise. Whereas financial assistance for co-sponsorship of an event would be restricted to 40% of the net expenditure with an upper ceiling of Rs. 5 Lakh
3. The maximum amount of assistance towards costs such as airfare, space rental & shipping/ transportation charges for the General Category (except for enterprises from the North-east States/Women/or SC/ST Category)

vii. Sustainable Finance Scheme in Delhi NCR–

To offer finances to start-ups specifically working towards sustainable development projects which contribute to developing energy efficiency and cleaner production yet are not covered under the international or bilateral lines of credit, the Small Industries Development Bank of India (SIDBI) has introduced the Sustainable Finance Scheme for MSMEs and start-ups. All newly incorporated start-ups or existing businesses who either wish to invest in the waste management or have been already working in the field could avail funds for all the new or existing sustainable development projects related to renewable energy, green micro-finance, green buildings, eco-friendly buildings, etc

However, in the case of existing units, they shall be required to provide a track record of satisfactory past performances and sound financial position of the start-ups.

viii. Udyogini Scheme in Delhi NCR–

Udyogini Scheme or Udyogini Yojana was launched in the year 2014 by the Women Development Corporation under the Government of India. The primary objective of the scheme is to ensure better participation and welfare of women entrepreneurs in the Indian start-up ecosystem up to a value of Rs.3 Lakhs with a repayment tenure of 6-7 years. This scheme is eligible only for women entrepreneurs with an annual income lesser than 1.5 Lakhs. However, this annual limit of Rs. 1.5 Lakhs shall not apply in the case of widowed or disabled women.

Thus, the loans are offered at concessional interest rates or even without interest at competitive interest rates without charging any processing fee as financial assistance to them. Further, the loans do not need any collateral or guarantor for repayment purposes. Besides, the Udyogini scheme also offers financial support for skill development training programs for women.

ix. Bank Credit Facilitation Scheme in Delhi NCR-

The National Small Industries Corporation (NSIC) has entered several Memorandum of Understanding with various private banks/financial institutions and nationalized banks to offer necessary credit support to start-ups and MSME units with the objective to provide a seamless flow of credit, and is therefore known as the Bank Credit Facilitation Scheme.

This scheme helps MSMEs to obtain loans at competitive interest rates from the partner banks the start-up gets a favorable rating awarded by the Performance and Credit rating from the Ministry of MSMEs. The scheme also allows the MSMEs to transfer their existing bank account or create a new one in a different bank. This bank credit scheme supports MSMEs by helping them to file their loan application and submit applications to the banks.

x. Credit Linked Capital Subsidy Scheme in Delhi NCR-

Credit Linked Capital Subsidy Scheme is a scheme that focuses on the technological innovation & up-gradation of the MSME start-ups by way of an upfront capital subsidy of 15% to induct well-established and improved technology in the specified 51 sub-sectors and products approved by the Govt. of India. The primary objective of the scheme is to upgrade the plant & machinery either with or without business expansion to set up their facilities with appropriate eligible and proven technologies duly approved under scheme guidelines.

The scheme aims to facilitate technological up-gradation by offering subsidies to a small-scale industrial holding a valid UAM number comprising khadi, village, and coir industrial units on the institutional credit facilities availed by them for modernization of their production equipment and techniques. The beneficiaries under this scheme could avail of funds up to the maximum value of Rs. One crore. All the small-scale business start-ups registered with the Directorate of Industries who wish to upgrade their plant & machinery with new technology are eligible for this scheme.

Factors Affecting Eligibility of a Loan Applicant/Enterprise in Delhi NCR

Some of the key factors which affect the eligibility of the borrower start-up business in Delhi NCR are-

1. Age of the entrepreneur;
2. History of Repayment of Loans & financial stability of the applicant;
3. Nature and type of business
4. Applicant’s credit score or the credit rating of the business
5. Preferred Loan amount
6. Annual business turnover along with financial statements
7. Capital Invested and goods/raw materials/equipment/machinery;
8. Debts or existing loans, if any.

Documents Required for Government Loan in Delhi NCR

Though, the number of documents required in Delhi NCR for each job may vary from the other, provided below are some of the documents generally required by MSMEs or start-up businesses to avail of loan facilities-

1. Duly filled application form along with passport-sized photographs
2. KYC documents of the entrepreneur or business owner containing documents such as proof of identification, proof of address, and copy of utility bills.
3. Previous six months Bank statements
4. Copy of Business incorporation/registration Certificate
5. Copy of registered address of the business & vintage proofs
6. Business PAN card
7. Proof of person belonging to SC/ST/OBC category, where applicable
8. Any other document as required by the lender.

Conclusion of Government Loans for Startups and businesses in Delhi NCR

Therefore, the Government of India has launched various schemes and policies to encourage new-age entrepreneurs including women entrepreneurs and persons from the SC/ST category to ensure an increase in their participation in the making of the nation through the introduction of credit schemes at affordable cost and competitive interest rates.

If you wish to avail any of the above-mentioned schemes and programs in Delhi NCR always make sure to prepare a detailed business plan with a summary of potential growth and financial returns expected in near future. Submission of a clear plan with your application will create a strong impression and help you to get the best offers for your start-up venture.