Business Loan for Minorities

Minority business loans are specifically curated to help entrepreneurs who come from minority groups get capital to grow and manage their business needs. Racial or ethnic groups with a population less than 50% of the total population of a country are considered minority groups. Entrepreneurs who belong to such minority groups can apply for these loans.

Several banks, credit unions, government programs, and non-profit organisations provide such loans. The goal is to support minority business owners in overcoming financial barriers and boosting economic equality.

The National Minorities Development & Finance Corporation (NMDFC) is one of the apex institutions that provides business loans to promote self-employment among the minority communities such as Muslims, Christians, Buddhists, Jains, and Parsis in India.

The Corporation, under the Ministry of Minority Affairs, also aims to promote the economic development of backward sections from minority communities.

The NMDFC provides business loans to minority sections through State Channelising Agencies (SCAs) under two credit lines:

1. The Credit Line-1 benefits are available to those having an annual family income of up to ₹3 Lakhs (₹98,000 for people living in rural areas and ₹1.2 Lakhs for urban areas, respectively)

2. On the other hand, it extends the Credit Line-2 benefits to beneficiaries with an annual family income of up to ₹8 Lakhs

Here are the interest rates and maximum amount provided by NMDFC on different business credit facilities under Credit Line-1 and Credit Line-2 categories:

Take a look at various loan schemes NMDFC provides:

1. Term Loan Scheme

Under this scheme for minorities, NMDFC finances up to 90% of the project cost of up to ₹30 Lakhs. You have to bear the remaining cost along with the State Channelising Agencies (SCAs).  The following are the eligible sectors of commercially viable and technically feasible businesses under the Term Loan scheme:

• Agriculture and allied

• Artisans and traditional occupations

• Small businesses 

• Technical trades

• Transport and services

2. Virasat Scheme

Virasat scheme is part of the Term Loan facility designed to cater to the artisans’ working and fixed capital requirements. Artisans from minority communities can get a loan amount of up to ₹10 Lakhs. NMDFC finances 90% of the loan amount with a minimum 5% contribution from the beneficiary.  

3. Micro Finance Scheme

Self-Help Groups (SHGs) of up to 20 members can get up to ₹30 Lakhs under this scheme . It lays a special focus on minority communities’ women-led groups in remote rural areas and rural slums. In other words, each member of the SHGs can get up to ₹1.5 Lakhs as loan amount.

You need to qualify for the following eligibility criteria to get loan schemes from NMDFC:

• The applicant must be from notified minority communities under the National Commission of Minorities Act, 1992

• The annual family income of the applicant must not exceed ₹8 Lakhs

Here are the list of documents required to apply for a minority business loan:

• Personal Identification documents like Aadhaar card, PAN card, voter ID

• Proof of minority status 

• Passport-size photographs

• Residential proofs like electricity bills, rent agreements

• Income proof like an income certificate issued by a competent authority

• Business Proposal along with any quotations for goods or services required for the proposed business

• Proof of business premises like any lease agreement

Here are the steps to apply for a business loan for minorities:

• Step 1: First find a suitable scheme for you by visiting https://nmdfc.org/home/nmdfc_schemes. Out of the 3 schemes, Term Loan and Virasat schemes are available for businesses. Check which one suits you best.

• Step 2: Scroll down and select the scheme you choose from the drop-down menu under “Select Loan Type”

• Step 3: Select your state or union territory from the dropdown menu under “Select State/UT”

• Step 4: Once you fill in these two details, a window will pop up mentioning the list of documents required for the scheme along with the name and address of the respective State Channelizing Agency(SCA)

• Step 5: Now click on the “Download Loan Application Form”

• Step 6: You will have to submit the application form along with the required documents to the respective SCA

Reference of all T&C necessarily refers to the terms of the Partners as regards to pre-approved offers and loan processing time amongst other conditions.