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What is Term Loan: Types, Eligibility, Documents

What is Term Loan:Types,Eligibility,Documents

Term loans are loans that are of a fixed amount distributed by the banks or NBFC to entrepreneurs. At the same time, entrepreneurs can use it for capital expenditure and expansion of business with fixed and floating rates of interest. It is a good way of quickly increasing capital with minimal risk involved. Flexibility in repayment, minimal documentation, and quick disbursal of funds are the benefits of these loans.

In the business aspect, term loans can be used to maintain the cash flow or to meet day-to-day business expenditures.

Considering the term loan as a source for your business plan/project report, this guide is useful to look forward to:

Types of Term Loans:
How to choose the right Term Loan for your Business?

Borrowers can classify term loans based on the tenure for which they borrow them; and also calculate the time for the asset to provide a return. Here’s what you need to know:

  • Short-term loan :

The loans mature within one year and 24 months. In the production industry, companies can use it as working capital for inventory purchases. It helps to boost the flow of cash in the business.

  • Intermediate-term loan :

The period for such loans could vary from 2 years – 5 years. These loans could be critical for the company’s cash flow. Typically, companies that are new and have established afresh may need such intermediate-term loans.

  • Long-term loan :

These loans can run anywhere between 3 years – 7 years and sometimes the maximum tenure will be 10 years. The company offers its assets as collateral. The repayment could be either monthly or quarterly as per the company’s profit or cash flow recognition. These loans are most appropriate for large construction businesses, purchasing heavy equipment, buildings, etc.

 Other than these, few other things to be considered in terms:
Term Loans Category
  • Secured Loan:

 Collateral security is required to be submitted to the lender by an applicant if he/she wants to avail secured loan from banks or NBFCs. Collateral submitted can be in the form of equipment, machinery, raw materials, stock, or residential/commercial properties.

  • Unsecured Loan: 

Business loans offered by most financial institutions are unsecured loans that do not require any collateral or security to be submitted to the lender. The interest rate offered by banks and NBFCs for unsecured loans is comparatively on the higher side.

Who can apply for a Term Loan?
  • Age Criteria: The minimum age of the applicant should be 21 years at the time of loan application and the maximum should be 65 years at the time of loan maturity.
  • The applicant should be an Indian citizen.
  • Applicants should possess a good credit score.
  • Applicants should maintain a regular source of income.
What Documents Required to Apply for a Term Loan?
  • Passport-sized photographs.
  • Project Report/ Business Plan.
  • Filled application form.
  • KYC Documents (Identity, Address, and Age Proof) – Passport, PAN card, Aadhar Card, Voter’s ID card, Driving License, Utility Bills (Electricity, Telephone or Water), etc.
  • Business address proof: Property papers, rent agreement, or lease document.
  • Income Proof: Last 6 months’ salary slips.
  • CIBIL report, if required by the lender.
  • Last 12 months’ bank statement.
  • ITR, Sales Tax report, Profit and loss statement of last 2 years.
  • Any other document required by the financial institution.

Once the applicant submits the application, the bank’s representative may contact them and will proceed with the bank formalities.

In the above list, a Business plan also known as a project report is a crucial document when applying for a bank loan. The bank uses this document to analyze the overall feasibility, risks, financial viability, and potential of a project. A well-crafted and convincing project report increases the chances of loan approval. With Finline you can craft a compelling project report in less than 10 minutes. That too in your language. All public and private sector banks working in India accept our reports. Click to create your project report.

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How to get a Startup Loan in India?

When hearing about a startup loan, we feel it is so simple.

Owning and operating your very own business can be a dream come true venture for most individuals who get involved in such an ordeal. However, when getting started, money turns out to be the major hurdle for every new entrepreneur. The universal solution to this is nothing but a business startup loan. A startup loan is the money lent to you to help you start operating your business but like every loan, you will have to pay it back. 

So, the next question is, how do you choose a business startup loan?

 A startup loan can be extremely difficult to obtain. The main reason is simply the fact that banks do not want to take risks. You need to have a lot of patience, effort, and determination to obtain a startup loan.

Where to obtain a loan from?

Once you have a solid business plan, the two places for you to approach for a startup loan would be banks and credit unions. Before you approach these two places make sure you have a flawless business plan and a good credit rating.

When you avail of a startup business loan from a bank or a financial body, the rate of interest charged by the bank will depend on the loan amount taken by you and the tenure of repayment. However, getting funding when the business is in its seed stage is still a challenging procedure. Also, the MSME (Micro, Small, and Medium Enterprises) sector in India has very limited access to formal credit which is the reason why the Government of India has decided to roll out startup business loan schemes for small startups and MSMEs.

What are the Eligibility Criteria for a Startup Business Loan in India?
  • The applicant should be between 18 years to 65 years of age
  • The startup should have a solid business plan
  • The startup must have a recommendation letter from an incubation
  • All the preferred registrations and licenses to function as a business firm are required
  • Approval from DIPP (Department of Industrial Policy and Promotion) is necessary
  • The startup should have a minimum annual income of 150000 p.a.
  • A good CIBIL score and good credit rating
  • Applicant should be a resident Indian Citizen without any criminal records
  • The applicant should be devoid of any previous loan defaults with any bank.
What are the Documents Required to apply for a Startup Business Loan?
  • Two passport-size photos of the applicant
  • Recently filled application form with all the required documents
  • Proof of stable income needs to be provided
  • KYC documents
  • A Flawless Business Plan
  • Proof of Identity: Passport, Voter’s ID or Driving License, PAN Card, Aadhar card
  • Proof of Age: PAN card, Passport or Voter’s ID card
  • Address proof: Passport, Voter’s ID card, Electricity or Telephone bills
  • CIBIL score and credit report of the business
  • Financial statements scrutinized by a CA
  • Proof of Address and Tenure of the business
  • Signature proof can be submitted by either a PAN card or by statements verified by the bank
  • Last 12 month’s bank statement and IFSC code proof (cancelled/scanned cheque)
  • Copy of Certificates, Registrations, Permits, and Licenses
  • Any other document as mentioned by the lender
Business Loan Types and Schemes for Startups In India:
  • MUDRA Scheme under PMMY

Micro Units Development and Refinance Agency Ltd was set up by the Government of India to provide funding to non-corporate, non-farm sector income-generating activities of micro and small enterprises whose credit needs are below 10 Lakh Rupees.

  • Startup India

The government of India launched this initiative on 16 January 2016. It renders a 3-year tax holiday. The government has provided 2500 crore for startups and also approved a credit guarantee fund of Rs 500 crore

  • Standup India

This credit provider scheme aims to provide credit to Scheduled Castes, Scheduled Tribes, and women to promote entrepreneurship in non-farm activities.

The government of India has launched this scheme in which to take a loan you don’t have to visit banks again and again. Rather you will be able to apply online for loans just by being at your home. The government has provided loans ranging from Rs. 1 lakh to Rs. 5 crores under this scheme.

Credit Guarantee Fund Trust for Micro and Small Enterprises is also an initiative by the government of India that provides loans to SMEs and MSMEs. The members of this section are eligible for a maximum credit of Rs 2 Crores.

  • Business Installment Loan

An installment loan is a personal or commercial loan that has an established payoff date or term length.

  • SIDBI’s Growth Capital and Equity Assistance Scheme

Small Industries Development Bank of India is a principal development financial institution for the promotion, financing, and development of the MSME sector in India.

  • Crowdfunding

One of the fastest-growing online industries – Crowdfunding is when individuals or startups use an online platform to gain funding for a project globally. There are four major types of crowdfunding sites – debt, equity, rewards, and donation-based.

  • Grants

A grant is simply a sum of money that is given by the government or other organizations for a particular purpose. What differentiates a grant from a loan is that a grant doesn’t require repayment, whereas a loan must be repaid.

About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline will help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Our reports are accepted by all public and private sector banks working in India. Click to create your report.

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What is a Profit & Loss Statement?

A profit and loss statement simply known as a P & L account or income statement is one among the financial statements which provide the company’s revenue, expenses, profit & loss over some time.

The P&L statement will help the investors and creditors to determine the past performance of the company. With the help of a profit & loss statement in a project report, we can predict the company’s sales, expenses, and cash inflows.

What is the Structure of Profit & Loss Statement?

The following items usually appear on the debit and credit side of a P & L Account.

On the debit side:
  1. Gross Loss (Transferred from Trading Account)
  2. All Indirect Expenses
On the credit side:
  1. Gross Profit (Transferred from Trading Account)
  2. All Indirect Revenues
What components include the P&L Statement?
  1. Revenue or Sales
  2. Cost of goods sold
  3. Gross profit
  4. Selling, General, and Administrative Expenses
  5. Depreciation
  6. Interest income/expenses
  7. Taxes
  8. Net profit/income
How to prepare a Profit and Loss Statement?

To prepare this statement you need to prepare another statement and collect data to make this statement. Follow the steps to prepare the statement.

  1. Prepare ledger accounts: With the help of a journal book, prepare a statement to get the ledger closing balance.
  2. Create trial balance: Trial balance gives the lists of all ledger accounts with the closing balance from the individual ledger.
  3. Preparing profit and loss statement: All ledger accounts having the nature of the purchase, sales, direct expense and income, indirect expenses, and income are posted to P&L statements.
 What is the Format of Profit & Loss Account?
Particulars Amount Particulars Amount
To Opening Stock xxx By sales xxx
To Purchases xxx By Closing stock xxx
To Direct Expenses xxx
To Gross Profit xxx
xxx xxx
To Operating Expenses xxx By Gross Profit xxx
To Operating Profit xxx
xxx xxx
To Non-operating expenses xxx By Operating Profit xxx
To Exceptional Items xxx By Operating Profit xxx
To Finance Cost xxx
To Depreciation xxx
To Net Profit Before Tax xxx
xxx xxx

About Finline

If you are an entrepreneur looking for a bank loan, A project report is a necessary document. By submitting a good project report, you increase the chances of your loan approval. Finline helps you do the same. Using Finline you can craft a compelling project report in less than 10 minutes. That too in your language. Our reports are accepted by all public and private sector banks working in India. Click to create your project report.

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Debt Service Coverage Ratio DSCR

What is the debt service coverage ratio?

In simple words, the Debt Service Coverage Ratio (DSCR) is a measure of whether a property generates enough income to cover its debt payments.

The sum of money needed to cover both the interest and principal on a mortgage or other debt for a predetermined period of time represents debt service. The phrase can apply to personal indebtedness like a mortgage or school loan in addition to corporate or government debt like company loans and debt-based instruments like bonds.

The ability to repay debt is a crucial factor to take into account when someone requests a loan or when a corporation wants to acquire more money to run its operations. “Servicing” a debt is executing the financial commitments on it.

The percentage of operational revenue accessible for debt servicing for interest, principal, and rental income to overall debt service is known as the debt service coverage ratio, or DSCR. It is a well-liked indicator for figuring out if a person or business will be able to make enough money to pay off its debt obligations.

More importantly, getting a loan is simpler the higher this percentage. The sum of money needed to cover both the interest and principal on a mortgage or other debt for a predetermined period of time represents debt service. In particular circumstances, violating a DSCR covenant may be deemed an act of breach.

Uses 
  • In corporate finance, the term “DSCR” designates the amount of cash flow available to cover yearly interest and capital payments on debt, including floating fund payments.
  • Bank loan officers utilize a ratio called the DSCR to assess a borrower’s capacity for debt payment.
  • The debt service coverage ratio (DSCR) serves as a key indicator for assessing whether a property possesses sufficient cash flow to repay its debts. In the late 1990s and early 2000s, banks normally demanded a DSCR of at least 1.2, although more aggressive institutions would accept lower ratios.
Calculation

Adjusted EBITDA = (Gross Operating Revenue – Operating Expenses)

Debt service equals principal repayment. In addition to interest payments and lease payments

First, ascertain the entity’s net operating income before calculating the debt coverage ratio (NOI). Gross sales minus operating expenditures equals net operating income (NOI). The NOI is meant to represent an entity’s or operation’s actual income, whether or not financing is involved. Therefore, finance charges (such as mortgage interest), proprietor or investor personal income tax, capital expenditures, and depreciation are not included in operational expenses.

The term “debt service” describes the fees and payments related to borrowing money. When you borrow money or use assets as collateral, you really pay interest and lease payments. The net does not change when a loan’s principal is paid off.

Advantages
  • One can contrast the operational effectiveness of various businesses using this.
  • Compared to other financial ratios, more financial categories—such as principal repayments—are included.
  • It frequently uses a rolling annual calculation method, which could offer a more thorough analysis of a company’s financial situation.
Disadvantages
  • A company’s finances may only be partially incorporated if some costs (like taxes) are omitted.
  • Heavily relies on accounting guidelines, which may not accurately reflect when cash is actually needed.
  • Compared to other financial measures, it has a more complicated calculation.
  • Between lenders, there is little uniformity in treatment or requirements.
Why is it important?

A frequent statistic used in loan contract negotiations between businesses and banks is DSCR. For instance, a qualifying corporation seeking a line of credit could require a minimum DSCR of 1.25. In this case, it’s possible to determine that the borrower has fallen behind on the debt. DSCRs may aid analysts and investors in evaluating a company’s financial soundness in addition to helping banks manage risk.

About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Our reports are accepted by all public and private sector banks working in India. Click to create your report.

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What is Depreciation?

When we purchase any fixed asset, its value decreases over time. It means that when we sell the asset, we are not selling it at its original price but at a lower price, and this lower value is known as depreciation.

An asset’s value decreases when use, damage, wear and tear, or obsolescence takes place. The term “Depreciation” measures this decline. The value of an asset may decrease for a variety of reasons, including unfavourable market conditions, among others.

Example: If we use your mobile phone as an example, it was likely purchased for $30,000 three years ago, but today it is no longer worth that amount because you have used it and it has depreciated in value.

ASSETS

An asset is something that has both current and potential value, such as a piece of machinery, a financial security, or a patent, and can frequently produce cash flows in the future. Personal property includes things like homes, cars, investments, works of art, and household goods.

Why do assets depreciate?

Generally speaking, newer assets are worth more than older ones. Depreciation calculates how much an asset loses in value over time, both directly from usage-related wear and tear and indirectly from factors like inflation and the introduction of new product models.

By charging depreciation, it lowers your company’s taxes. It reduces the earnings used to calculate taxes. Your taxable income decreases as depreciation expenses increase.

Which assets can be depreciated in accounting terms?
  • You owned it.
  • Be utilized in your business or to generate income.
  • Have a known useful life
  • Be anticipated to last for more than a year.

Assets include things like cars, buildings, furniture for offices, computers and other electronics, machinery and equipment, and some intangibles like computer software, copyrights, and patents.

Which assets do not include depreciation?

Items that do not wear out, become obsolete, or get used up cannot undergo depreciation because they do not meet IRS requirements.

  • Land
  • Collectables (art, coins, memorabilia)
  • Investments (stocks and bonds)
  • Any asset used for less than a year
  • Personal property.
DEPRECIATION SCHEDULE

You can see how much each of your assets will depreciate over time in a table called a depreciation schedule. Usually, it contains the following details:

  • A summary of the asset
  • purchased on the date
  • Cost of the asset as a whole Expected useful life
  • employed the depreciation method
  • Salvage value is the price you can get for an item after it has served its purpose (e.g., how much a scrapyard would pay for your old work truck).
  • The amount of depreciation that is currently deductible
  • The total amount of depreciation
  • The asset’s resulting net book value (the total price paid minus any cumulative depreciation)
TERMS
  • The useful life of a fixed asset is the time frame during which the organization considers it to be productive. The fixed asset is no longer cost-effective to operate after its useful life has passed.
  • Asset salvage value: After a fixed asset’s useful life has expired, the company may consider selling it for less money. This is called an asset’s salvage value.
  • The cost of an asset includes shipping, taxes, and setup and preparation costs.
  • Amortization: Amortization is the term for depreciation in the case of intangible assets.
Deprivation Calculation Methods
STRAIGHT-LINE METHOD

The straight-line method is the most typical (and easiest) way to depreciate a fixed asset. This distributes the value equally over the asset’s useful life.

Graph of straight-line depreciation

It’s for small companies with straightforward accounting procedures that might not have access to an accountant or tax advisor to handle their taxes.

Depreciation formula=(asset cost minus salvage value) / useful life

DEPRIVATION OF BALANCE ON TWO LEVELS

This method depreciates an asset in greater detail. It enables you to write off a larger portion of an asset’s value right away rather than later.

It’s for companies that want to recoup more of an asset’s value upfront because it depreciates rapidly during the first few years of ownership.

(straight-line depreciation rate * 2) is the formula.(book value at the beginning of the year)

DEPRECIATION OF THE SUM OF THE YEAR’S DIGITS (SYD)

It depreciates more of an asset’s cost in the early years of its useful life and less in the later years.

It’s for companies that want to recover a greater portion of an asset’s value up front with a distribution that is a little more even than what the double-declining balance method enables.

(Remaining Asset Life/SYD) Formula(asset cost—salvage value)

Unit of Production Determination

A straightforward method for depreciating equipment based on how much work it accomplishes is the units of production method. “Unit of production” can refer to either the product that the machinery produces, such as widgets, or the number of hours it is in operation.

It’s for small businesses that want to take more depreciation in years when they use the asset more and less depreciation in years when they use the asset less and are writing off equipment with a quantifiable, widely accepted output over its lifespan (based, for example, on the manufacturer’s specifications). Employers use this method for expensive machinery or equipment because it necessitates monitoring equipment usage.

(asset cost – salvage value) / Units produced over the useful life

As a result, almost everything you see around you is depreciating. Depreciation is the wear and tear on an asset over its useful life.

About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. Also, our reports are accepted by all public and private sector banks working in India. Click to create your report.

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What is Current Ratio?

The current ratio is a liquidity ratio that calculates a company’s ability to meet its short-term debt and obligations, or those due in a single year, using balance-sheet assets. The working capital ratio is another name for it. Investors prefer a current balance of one or more. It is less than one indicates that the company may be unable to service its short-term debt. On the other hand, a current balance more significant than one can suggest that the company has an excess of unsold inventory or cash on hand.

Calculating the Current Ratio

Current assets constitute the total assets that will be used or converted to cash in the coming year. Cash, inventory, and accounts receivable are all on this list. Current liabilities are the total of all liabilities due within the following year. Wages, accounts payable, mortgage payments, and loans are all on this list. A company’s ideal current ratio is 0.6 if it has $100,000 in existing assets and $150,000 in current liabilities.

What Is the Ratio Used?

It can differ depending on the industry, company size, and economic conditions. For example, consumer goods industries with predictable, recurring revenue often have lower ratios, whereas cyclical sectors, such as construction, have high ratios. In addition, it can vary between companies, even within the same industry. Supplier agreements, for example, can affect the number of liabilities and assets. A large retailer, such as Walmart, may negotiate favourable terms with suppliers, such as keeping inventory for extended periods and having generous payment terms or liabilities.

What Is an Appropriate Ratio?

During periods of economic expansion, investors prefer lean companies with low ratios and demand dividends from companies with high ratios. During a downturn, however, they flock to companies with high ratios because they have existing assets that can help them weather the storm. Unfortunately, ratios are only sometimes a good indicator of a company’s liquidity because they assume that the company can convert all inventory and purchases to cash immediately.

This may only sometimes be the case, particularly during economic downturns. Acid-test ratios are used in such cases because they subtract inventory from asset calculations to calculate immediate liquidity.

About Finline!

Finline is an online platform for creating financial reports for getting bank loans and investments. It’s like ‘Canva’ but for financials. If you are an entrepreneur looking for a bank loan, you need to have a well-crafted project report. We, at Finline help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. All public and private sector banks working in India accept our reports. Click to create your report.

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How to write a Business Plan?

If you are one of the many people thinking about starting a small business. Then having a business plan is one of the first things you should have on your list of things to do. It does not matter if the size of the business you are starting is small or big. Having a plan for your business is considered a blueprint for a successful small business. The hardest part of the business process is to write a business plan. A business plan sprouts from a business idea. Once you have developed an idea of the business, its market trends and growth opportunities, the method of developing a business plan should follow easily.

How to write a business plan to start your own new company?

In this article, let’s see some of the major points to ponder while creating a business plan.

Usually, a traditional business plan consists of the following elements:

  • Executive Summary
  • Company description
  • Market research and analysis
  • Description of products/services
  • Operational Strategy
  • Marketing and sales strategy
  • Financials
Executive Summary

This is the most important and critical part of your plan and will be a short outline of the content of the entire business plan. If you are planning to raise your business plan to venture capitalists, banks, or potential investors, make sure that your executive summary captures their attention and urges them to read on beyond the first page. The executive summary is usually given to potential financial backers, board members, and other interested parties for review. The executive summary should be developed in such a way that it makes the job of reading easier for the responsible person.

What points are to be covered in an executive summary?
  • The vision and mission statements of your company
  • Your product or service and the problems solved by your company
  • A short description of your target market
  • Your purpose in writing a business plan
  • The size, scale, margins, or sales forecasts of your company

If you are a beginner, you might have to rewrite the executive summary several times at the end of the business plan development.

Company description

The company description is simply an overview of your company. This section of your plan should include:

  • The official name of your company
  • Company location
  • Business structure
  • Ownership or management
  • Company background
  • Company description
  • The mission statement of your company
  • Product and market information
  • Goals and objectives of your company
Market research and analysis:

Utilize graphs and charts to highlight the precise market analysis. You need to discuss both present and future trends and mention how your organization will capitalize on those trends. Also, do a competitive analysis and try categorizing your competitors. Once this is done identify the products, strategies, advantages, and disadvantages of your competitors and bring out methods and plans to improve the performance of your company.

SWOT Analysis which includes Strengths, Weaknesses, Opportunities, and Threats can also be performed in this stage. 

Description of products/services

Businesses can take many forms and may deliver either products, services, or a combination of the two. Provide a detailed explanation of the products or services offered through your business.

Operational strategy:

This is the section of your business plan where you explain in detail the goals, objectives, procedures, and timeline of your company. Some of the factors to be included in this section include Cash Flow forecasting, variance report, weekly position report, management settings, executive review, team operating plan, organization structure, delegation of authorities, hiring procedure, employee compensation, profit-based incentive system, performance evaluation, etc.

Marketing and sales strategy

Sales planning is critical to sales success. Return on Time Invested(ROTI) should be the key criteria that every salesperson should consider while evaluating their account base.

Four things to consider while preparing your marketing and sales strategy are to know your:

  • Customers
  • Market
  • Sales performance
  • Target objectives
Financials

The finance section is a very short section that deals only with your break-even point, financial strategies, etc. It will be just a page long. A finance part that is vaguely developed honestly creates a poor impression on the reader. To avoid this it is necessary to create a well-crafted financial plan considering the below-mentioned points.

Balance sheet, cash flow statement, tax impacts, income statement, startup costs, operational costs, cash inflow, and periodic review of your budget versus actual expenses.

So, the final question is do you need a business plan?

Well, the answer is Yes and the following are reasons that showcase its importance:

 We, at Finline will help you with that. Our team will help you create a powerful business plan in ten minutes. That too in your language. All public and private sector banks working in India accept our project report. Click to create your report.

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Loan Schemes

Chief Minister Employment Generation Programme, CMEGP

Chief Ministers Employment Generation Programme (CMEGP)

Karnataka launched the Chief Ministers Self-Employment Generation Programme (CMEGP) to establish micro-enterprises in rural parts of the state. CMEGP – Govt of Karnataka, promotes self-employment among aspiring rural entrepreneurs by investing capital up to INR 10 lakhs through the District Industries Centre and Karnataka State Khadi and Village Industries Board. The core concept behind this scheme’s launch is to reduce unemployment and create jobs.

Targets of Chief Ministers Self-Employment Generation Programme (CMEGP):
  • To create opportunities for jobs in Karnataka
  • Providing and encouraging self-employment in Karnataka
  • To inspire the Rural Youth of the state to set up micro, small and medium enterprises.
  • To provide training and financial assistance to the new entrepreneurs of the state.
What are the Benefits of Chief Ministers Self-Employment Generation Programme (CMEGP)
  • The maximum project cost loan allowed under the CM Self Employment Scheme (CMEGP) is Rs.10.00 lakhs per unit.
  • Entrepreneur Development (EDP) training under the CM Self Employment Scheme is provided by the Karnataka government. The Centre for Entrepreneurship Development of Karnataka (CEDOK) and Rural Development & Self Employment Training will complete the EDP training (RUDSET).
Project Criteria:
  • The project must be based in rural areas of the state.
  • The unit must be new with a ‘Negative List’.
  • 10% of the project cost as own contribution must be paid by the general category entrepreneur, and 5% of the project cost must be paid by the SC/ST/OBC/Minorities/Women, Ex-servicemen, and Physically Disabled category entrepreneur.
What are the Eligibility Criteria for the Chief Minister’s Self-Employment Generation Programme (CMEGP)?
  • The applicant must be a permanent resident of Karnataka
  • The applicant can set up only one unit under the scheme
  • The age limit for the entrepreneur belonging to the General category is 21 to 35 years and for (SC / ST / OBC / Minorities/Women, Ex-servicemen, Physically handicapped), 21 to 45 years.
What are the Documents needed for CMEGP?
  • Project Report/Business Plan
  • Passport-size photograph of the applicant
  • Academic qualifications of the applicant
  • Birth Certificate
  • Voter ID/Ration Card
  • EDP training certificate
  • The rural certificate for the proposed unit
  • Ex-servicemen certificate, if applicable
  • Approval from Gram Panchayat
  • Caste Certificate in case of SC, ST, OBC.
  • Physically handicapped certificate, if applicable
  • List of equipment to be purchased.

In the above list, a Business plan also known as a project report is a crucial document when applying for a bank loan. The bank uses this document to analyze the overall feasibility, risks, financial viability, and potential of a project. A well-crafted and convincing project report increases the chances of loan approval. With Finline you can craft a compelling project report in less than 10 minutes. That too in your language. All public and private sector banks working in India accept our reports. Click to create your project report.

How to apply: 

The following website should be visited to apply for the CM Self Employment Scheme (CMEGP)

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What is Mukhyamantri Yuva Udyami Yojana?

Mukhyamantri Yuva Udyami Yojana

The Mukhyamantri Yuva Udyami Yojana was developed by the MSME Department of the Madhya Pradesh Government & incorporated this scheme to provide loans through banks to the unemployed youth of Madhya Pradesh to help them set up their industry (manufacturing) / (service enterprises). Under the scheme, the benefit of margin money assistance, interest grants, loan guarantees, and training will be given to the beneficiaries by the government. The Mukhyamantri Yuva Udyami Yojana has priority for agro-based industries such as agro-processing, food processing, cold storage, milk processing, kettle feed, poultry feed, custom hiring centres, vegetable dehydration, tissue culture, pulses mill, rice mill, oil mill, floor. The government will prioritize mills, bakeries, spice making, seed grading/shorting, and other agro-based/subsidiary projects.

Who all are Eligible for Mukhyamantri Yuva Udyami Yojana?
  • For Mukhyamantri Yuva Udyami Yojana, the applicant must be a resident of Madhya Pradesh.
  • Educational Qualification: Minimum 10th-grade pass.
  • The applicant’s age should be between 18 to 40 years on the application date.
  • The applicant should not be a defaulter in any national bank.
  • If a person is getting assistance under any government entrepreneur/self-employment scheme, he will not be eligible.
What are the Benefits of Mukhyamantri Yuva Udyami Yojana?
  • The project cost under this scheme will be a minimum of Rs 10 lakh to a maximum of Rs two crore.
  • This scheme requires payment of 15% of the project cost as margin money, with a maximum of Rs. 12 lakhs.
  • Under this scheme, the interest subsidy will be payable at the rate of 5 per cent for a maximum of 7 years on the project cost.
  • Under this scheme, the guarantee fee will be payable at the prevailing rate for a maximum period of 7 years. Business activities will not be eligible under this scheme.
Assistance and loan repayment:
  • 15 per cent (maximum Rs. 12 lakhs) on the project cost. The beneficiary will pay the margin money on behalf of the government/corporation, and if necessary, the beneficiary himself must deposit the remaining margin money.
  • The minimum period of the moratorium will be 6 months.
  • After the initial moratorium, the loan repayment will be between 5 and 7 years.
Documents Needed for What is Mukhyamantri Yuva Udyami Yojana?
  • For Mukhyamantri Yuva Udyami Yojana, the applicant’s Resident certificate from Madhya Pradesh
  • Project Report/Business Plan
  • Caste Certificate of the applicant
  • Applicant’s photograph
  • Birth certificate of the applicant.
  • Academic qualification certificate of the applicant.
  • Enterprise Development Training Proof
  • Current rate quotation of machinery/equipment/furnishing etc. for the enterprise, If applicable
  • PL Certificate

The following website should be visited to apply for the Mukhyamantri Yuva Udyami Yojana.

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Loan Schemes

Unemployed Youth Employment Generation Programme (UYEGP)

The Unemployed Youth Employment Generation Programme (UYEGP) scheme

The Unemployed Youth Employment Generation Programme (UYEGP) scheme to alleviate the unemployment problems of socially and economically weaker segments of society, particularly among educated and unemployed people, to become self-employed by setting up Manufacturing / Service / Business enterprises.

Eligibility for The Unemployed Youth Employment Generation Programme :
  1. The applicant should be at least an 8th
  2. Age Limit: 18 to 45 Years
  3. 18 to 35 Years (Other Community Men)
  4. Family Annual Income: Should not exceed Rs.1,50,000/-
  5. Residence: Should be a resident of a minimum of 3 years in the same area
Scheme Highlights
  1. For the General Category of entrepreneurs, the Promoter contributes 10% of the project cost, while for the Special Category, the Promoter contributes 5%.
  2. Subsidy@25% of project cost (not exceeding Rs. 1.25 lakhs).
  3. 7 days of EDP training is mandatory for the selected beneficiaries. The District Task Force Committee will conduct interviews to select beneficiaries at least once every fortnight.
What are the Benefits of the Unemployed Youth Employment Generation Programme?

The Unemployed Youth Employment Generation Programme helps eligible youth avail of loans for the following industry

  1. Manufacturing up to 10 lakhs
  2. Service industry – up to 2 lakhs
  3. Trading – up to 1 lakh
What are the Documents needed for the Unemployed Youth Employment Generation Programme?
  1. Transfer certificate/ Record Sheet issued by School/College. (Two Copies)
  2. Ration Car. (Two Copies)
  3. In the case of applicants who don’t possess a valid Ration Card, a Nativity certificate from the Thasildhar / Aadhar card xerox / Election voters identity card xerox. (Two Copies)
  4. Project Report/Business Plan
  5. Valid Quotations (Original & Duplicate ) with GST number
  6. Community Certificate(Two Copies)
  7. Ex-Serviceman /Differently abled /Transgenders should apply with a valid certificate (Two copies ) ➢ Affidavit – A format enclosed herewith for reference to the candidate which should be typed in an Rs.20/- Non-Judicial Stamp Paper duly Certified and Signed by the Notary Public and then submitted along with a copy of Rental/Lease Agreement to the bank while sanctioning of the loan.

You should enclose the aforementioned documents with the District Industries Centre.

In the above list, a Business plan also known as a project report is a crucial document when applying for a bank loan. The bank uses this document to analyze the overall feasibility, risks, financial viability, and potential of a project. A well-crafted and convincing project report increases the chances of loan approval. With Finline you can craft a compelling project report in less than 10 minutes. That too in your language. Also, our reports are accepted by all public and private sector banks working in India. Click to create your project report.

How to apply for the Unemployed Youth Employment Generation Programme?

The given website should be visited to apply for the UYEGP Scheme: