To start-up a new business, the 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 with lender. 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.
Eligibility Criteria of UYEGP Scheme 2019
|Eligibility Criteria of UYEGP Scheme|
|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||Rs. 1.5 Lakh (Family income includes the applicant’s income and spouse’s income)|
|Residential Criteria||The applicant must be the resident of Tamilnadu state for more than 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|
Financial Structure of Tamil Nadu Government Loan Scheme for Small Business
The scheme is the mix of subsidy and a generous bank loan for the youth applicants of Tamil Nadu state. Below is the 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
- Physically Challenged
The loan and subsidy is jointly disbursed by the bank. Subsequently, the bank has to claim the subsidy amount from the government.
Features and 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 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
- The applicant can avail the scheme with the project cost of Rs. 10 lakh in the manufacturing sector, Rs. 3 lakh in the service sector and Rs. 1 lakh in the business sector
How to apply for Tamil Nadu Government Loan Scheme for Small Business?
Applying for Tamilnadu Government loan scheme is extremely easy. You can follow below simple steps:
- Download the application form from the website https://msmeonline.tn.gov.in/uyegp/index.php or the applicant can click on ‘Apply Online’
- Fill up the complete application form
- Gather all the necessary documents, as per list in the application form
- Submit the application to the General Manager, District Industries Centre. You can submit the application in person or by post
- You can also submit the application online
- Duly filled application form
- Quotation of the required assets in the project
- Educational qualification certificate
- Project report
- Residential proof
- Caste certificate (If applicable)
- Differently-abled Certificate (If applicable)
Frequently Asked Questions
Ques. What components are included in the project cost under the UYEGP scheme for small business?
Ans. The capital expenditure to buy machinery and the cost of the first cycle of working capital is 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.
Ques. Can I avail the loan for my existing unit?
Ans. The scheme is only for establishing a new unit. For existing unit, you can approach the banks for a regular business loan.
Ques. In which area the scheme is applicable?
Ans. The scheme is applicable in rural and urban areas of Tamil Nadu.
Ques. What is the repayment tenure of the loan under the scheme?
Ans. You can repay the loan within five years from the date of disbursement.
Ques. What is the selection process for the Tamil Nadu government UYEGP loan scheme?
Ans. 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.
Ques. Is there any lock-in period of the government subsidy?
Ans. 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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