Minority Business Loans

Minority business loans aim to help entrepreneurs who come from minority groups grow and manage their business needs. Minority groups constitute populations numbering less than 50% of the total population in India. Many banks, government programmes, and non-profit organisations offer these loans to support such business owners. 

 

The goal is to support minority business owners in overcoming financial barriers and boosting economic equality. In India, the National Minorities Development & Finance Corporation (NMDFC) provides business loans to communities including:

• Muslims

• Christians

• Sikhs

• Buddhists

• Parsis

• Jains

 

These loans assist them in achieving self-employment and enhancing their business operations and income.

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

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:

Here are the various types of minority business loan schemes offered by NMDFC in India:

• Term Loan Scheme

The Term Loan Scheme provides funding to support income-generating business ventures. Under Credit Line-1, borrowers can obtain up to ₹20 Lakhs at an interest rate of 6% per year, while Credit Line-2 offers up to ₹30 Lakhs at 8% interest per year. 

 

Additionally, women borrowers under Credit Line-2 receive a 2% concession. 

• 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.  

• Micro Finance Scheme

The Micro-Finance Scheme provides small loans to women in Self-Help Groups (SHGs) from minority communities. This scheme helps those who cannot access regular bank loans. 

 

Members can borrow ₹1 Lakh at 7% interest or ₹1.5 Lakhs at 10% interest, with women getting a 2% discount. This helps them start businesses and improve their income.

 

The Micro-Finance Scheme extends small loans to women belonging to Self-Help Groups (SHGs) from minority communities. This initiative assists those unable to secure conventional bank loans. 

 

Members are able to borrow ₹1 Lakh at 7% interest or ₹1.5 Lakhs at 10% interest, with women receiving a 2% discount. This facility enables them to establish businesses and enhance their income.

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

• Preference is given to women and occupational groups belonging to the notified minority communities 

 

Here is 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 minority loan for a business:

• Step 1: First, find a suitable scheme for you by visiting https://nmdfc.org/home/nmdfc_schemes. Out of the 3 schemes, the 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 dropdown 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 Channelising 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.