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UYEGP – Tamil Nadu Government Loan Scheme for Small Business

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UYEGP திட்டம்

To start up a new business, an entrepreneur has to arrange immediate finance besides facing many other business challenges. There are or could be instances when banks or NBFCs hesitate to finance first-time business owners due to lack of experience, income stability, repayment history, or trust. To overcome such a situation, the Tamil Nadu Government has introduced a loan scheme for small businesses. The scheme is introduced under the title UYEGP (Unemployed Youth Employment Generation Programme) to encourage unemployed youth to start up their own business and to promote entrepreneurship among youth.

Features of UYEGP

  • Loan assistance from Commercial Banks
  • Loan Amount: 90%-95% of the Project Cost
  • Interest Rate: As per RBI’s Guidelines
  • Repayment Tenure: Up to 5 years, as fixed by the Bank
  • Promoter’s contribution 10% for General and 5% for Special Category
  • Scheme for mitigating the unemployment problems of socially and economically weaker sections of the society
  • Project Cost: Manufacturing, Service & Business projects: Maximum Project costs Rs.10.00 lakh, Rs. 3.00 lakh, Rs. 1 lakh respectively
  • Individual-Based Capital Subsidy @ 25% of the Project cost (Maximum Rs. 1.25 lakh)
  • Lock-in Period for Govt. Subsidy: 3 years

Eligibility Criteria

Minimum Age 18 Years
Maximum Age 35 Years (For General Category Candidate)
45 Years (For Special Category Candidate)
Education Qualification Passed - Standard 8 or above
Maximum Family Income The family income of the beneficiary along with spouse should not exceed Rs. 1.5 lakh per annum
Residential Criteria The applicant must be a resident of Tamil Nadu state for more than the last 3 years
Applicant Profile Only Individual applicant is allowed to apply. No partnership is allowed
Previous Loan If the applicant has availed any loan or benefit for any other project previously, then he/she is not eligible for UYEGP
EDP Training Mandatory
Collateral/Security Up to Rs. 10 lakh of Project Cost no collateral is required

Financial Structure of Tamil Nadu Government Loan Scheme for Small Businesses

The scheme is a mix of subsidies and a generous bank loan for the youth applicants of Tamil Nadu state. Below is a snapshot of the financial structure of the total project cost.

Applicant Category Applicant's Contribution Loan Subsidy
General Category applicant 10% 90% amount of project cost 25% of the total project cost
Special Category applicant 5% 95% amount of project cost 25% of the total project cost

Special Category covers the following type of applicants:

  • Scheduled Cast
  • Scheduled Tribe
  • Backward Class
  • Most Backward Class
  • Minorities
  • Women
  • Transgender
  • Ex-servicemen
  • Physically Challenged

The loan and subsidy are jointly disbursed by the bank. Subsequently, the bank has to claim the subsidy amount from the government.

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Benefits of UYEGP Scheme

  • District-level selection of beneficiaries to ensure more participation from each and every district
  • Seven days Entrepreneur Development Programme (EDP) training to the beneficiaries of the scheme
  • Avail the loan from a wide range of financial institutions – nationalized banks, private banks, and Tamil Nadu Industrial Cooperative Bank
  • Convenient repayment plan for the loan provided by the bank
  • No collateral or security is required from the applicant. The credit guarantee trust will ensure the requisite security norms for the banks or financial institutions
  • Marketing support by the (DIC) District Industries Centre. DIC also arranges buyer-seller meet at regular intervals

Apply for Tamil Nadu Government Loan Scheme for Small Businesses

Apply for the Tamil Nadu Government loan scheme by following below-mentioned steps:

  • Download the application form by clicking here or by visiting the official website of the bank
  • Fill up the complete application form
  • Gather all the necessary documents, as per the list in the application form
  • Submit the application to the General Manager, District Industries Centre. You can submit the application online, in person, or by post
  • After submitted documents are verified and the bank approves the loan, the desired loan amount shall get disbursed to the mentioned bank account within defined working days

Documents required

  • Duly filled application form with passport-sized photographs
  • Quotation of the required assets in the project
  • Educational qualification certificate
  • Project report
  • Residential proof
  • Caste certificate (If applicable)
  • Differently-abled Certificate (If applicable)
  • Any other document required by the bank

How Can I Apply for a Business Loan Online?

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Step 1: Enter your mobile number in the application form.

Step 2: Enter OTP to verify your mobile number.

Step 3: Provide your personal details.

Step 4: Select a bank account for account aggregator consent.

Step 5: Compare offers and apply for the best-suited loan.

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FAQs

The capital expenditure to buy machinery and the cost of the first cycle of working capital are considered for the purpose of deciding project cost. The cost of land and building is not considered for the purpose of deciding the project cost.

The scheme is only for establishing a new unit. For existing units, you can approach the banks for a regular business loan.

The scheme is applicable in rural and urban areas of Tamil Nadu.

You can repay the loan within five years from the date of disbursement.

The applicants are selected by the interview process. The interview is organised by the District Task Force Committee headed by the General Manager of the concerned District Industries Centre.

Yes, there is a lock-in period of three years for the subsidy availed through the scheme. Hence, the applicant cannot exit from the project until three years from the date of availing the government subsidy. If he/she exits early, he/she has to repay the subsidy amount to the government, subject to applicable rules.

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