KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr
An interest subsidy from KSFC that cuts the effective rate on business loans of ₹20 lakh to ₹10 crore to 4% for SC/ST-owned micro enterprises, small-scale units and service-sector businesses in Karnataka.
- Funding amount
- ₹20L – ₹10Cr (subsidy)
- Funding type
- Subsidy
- Provider
- Karnataka State Financial Corporation (Government)
- Application deadline
- Rolling
- Eligible stage
- Any stage
- Location
- Open to startups registered in India
Overview
The Interest Subsidy Scheme for Scheduled Caste and Scheduled Tribe Entrepreneurs is a Government of Karnataka initiative delivered through the Karnataka State Financial Corporation (KSFC). It is built for SC/ST-owned micro enterprises, small-scale units and service-sector businesses, and its core promise is straightforward: a KSFC business loan on which the borrower pays an effective rate of just 4%.
Funding per sanction runs from ₹20 lakh to ₹1,000 lakh (₹10 crore). That ceiling can cover a term loan together with a one-time term loan for working capital, though the working capital portion is limited to ₹50 lakh. The money may be used either to set up a new unit or to expand, diversify or modernise one that already exists.
The subsidy equals the gap between the rate KSFC normally charges and the 4% rate the entrepreneur pays. The Government of Karnataka reimburses that gap directly to KSFC, so the borrower does not file a separate claim — the relief simply shows up as a smaller interest outgo on the loan.
Repayment stretches up to 8 years for loans of up to ₹5 crore, and up to 10 years when the loan is above ₹5 crore and within the ₹10 crore ceiling, with any moratorium period counted inside that timeline. Applications are handled through KSFC branch offices, and there is no closing date — the scheme stays open on a rolling basis.
Highlights
- Interest subsidy that brings the effective rate on a KSFC business loan down to 4%
- Loan size from ₹20 lakh to ₹1,000 lakh (₹10 crore) per sanction
- Working capital term loan component limited to ₹50 lakh
- Repayment up to 8 years for loans up to ₹5 crore, and up to 10 years for loans above ₹5 crore up to ₹10 crore
- Open only to enterprises fully owned by SC/ST entrepreneurs in Karnataka
- No fixed last date — applications are accepted on a rolling basis at KSFC branch offices
Who can apply
Eligibility turns on two things: who owns the business, and how the business has behaved with government-backed credit.
- Full SC/ST ownership is mandatory. In a proprietary concern, a partnership or a company, every promoter and owner must belong to the Scheduled Caste and/or Scheduled Tribe communities. A unit with even one non-SC/ST owner does not qualify.
- Enterprise type. The scheme is meant for micro enterprises, small-scale units and service-sector businesses.
- New or existing. Both work. You can apply to set up a fresh unit, or to expand, diversify or modernise a unit that is already running.
- No other interest subsidy. A unit that has already taken an interest subsidy under any other Government of Karnataka or Government of India scheme is not eligible.
- No KSFC default. The unit must not have defaulted on repayments to KSFC.
- Location. It is a Government of Karnataka scheme, applicable within Karnataka, and applications are submitted at KSFC branch offices.
KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr is open to startups at any stage. It is open to startups registered anywhere in India.
- Eligible stage
- Any stage
- Location
- Open to startups registered in India
Deadline & timing
KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr accepts applications on a rolling basis — there is no fixed cut-off date, so eligible startups can apply at any time. Because rolling programmes can pause without notice, confirm the window is still open on the official site before you start.
What the funding covers
The benefit is a reduction in the cost of borrowing rather than a cash payout.
- Effective rate of 4%. That is what an eligible entrepreneur actually pays on the loan. The difference between KSFC's standard lending rate and 4% is reimbursed by the Government of Karnataka to KSFC, so the borrower receives the concession through the loan itself.
- Loan size of ₹20 lakh to ₹1,000 lakh (₹10 crore). The sanctioned amount can combine a term loan with a one-time term loan for working capital.
- Working capital capped at ₹50 lakh within that overall ceiling.
- Long repayment windows. Up to 8 years for loans of up to ₹5 crore, and up to 10 years for loans above ₹5 crore and up to ₹10 crore. Any moratorium period is included in these timelines.
- Flexible use. Funds support setting up a new unit or expanding, diversifying or modernising an existing one.
About the provider
KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr is offered by Karnataka State Financial Corporation, a government body. As a government-backed subsidy, it is publicly funded and open to eligible startups across India.
How to apply
Applications are submitted on the . Confirm the current deadline and document checklist there before you start.
Selection process
Every application reaches KSFC through a branch office, and KSFC officials then screen and evaluate the proposal. The assessment covers three things: whether the project is viable, whether the entrepreneurs satisfy the ownership and other eligibility conditions, and whether the application complies with all the terms and conditions of the scheme.
The scheme does not describe multiple selection rounds or a pitch presentation. What a strong application needs to demonstrate is a sound business plan and clear potential to establish or grow a micro or small enterprise.
Final loan sanction, along with approval of the interest subsidy, depends on KSFC's credit appraisal and the reimbursement guidelines laid down by the Government of Karnataka.
Documents you’ll need
Before you apply to KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr, keep the following documents ready:
- A pitch deck or short business plan describing the problem, product and traction
- Company registration documents and PAN
- Founder identification (PAN / Aadhaar) and brief profiles
- Recent financial statements or projections
- Product details — a demo, prototype or working link if available
Exact requirements are confirmed on the official application portal — treat this as a preparation checklist.
Who this is best for
KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr is best suited for startups in India seeking non-dilutive funding of ₹20L – ₹10Cr. If that describes your startup, review the eligibility criteria above before applying.
Frequently asked questions
How much funding can I get under this scheme?
Loans start at ₹20 lakh and go up to ₹1,000 lakh, which is ₹10 crore. A single sanction can combine a term loan with a one-time term loan for working capital, but the working capital portion cannot go beyond ₹50 lakh.
What rate of interest will I actually pay?
You pay an effective rate of 4%. KSFC's standard lending rate is higher, and the difference is reimbursed by the Government of Karnataka directly to KSFC. That means the benefit reaches you through your loan account rather than as a separate payment.
Does this scheme take equity in my business?
No. It works as an interest subsidy attached to a KSFC business loan. You borrow from KSFC and repay the loan, while the government's support comes in the form of a reduced interest burden. Equity or a stake in your company is not part of the scheme.
Who is eligible to apply?
Ownership is the deciding factor. The unit has to be entirely owned by Scheduled Caste and/or Scheduled Tribe entrepreneurs — whether it is a proprietary concern, a partnership or a company, every promoter must belong to the SC/ST community. A unit with any non-SC/ST owner will not qualify.
Do I need DPIIT recognition or MSME registration?
The published terms of the scheme do not list DPIIT recognition or Udyam/MSME registration as a separate condition. What they do require is that the enterprise be a micro, small-scale or service-sector unit that is fully SC/ST-owned, that it has not availed an interest subsidy under any other Government of Karnataka or Government of India scheme, and that it is not in default on repayments to KSFC.
Can an existing business apply, or is this only for new ventures?
Both are covered. The scheme supports setting up a new unit as well as expanding, diversifying or modernising an existing one.
What is the repayment period?
Loans of up to ₹5 crore can be repaid over up to 8 years. For loans above ₹5 crore and up to ₹10 crore, the repayment period extends to 10 years. Any moratorium period is counted within these timelines.
What documents do I need to submit?
You collect the prescribed form from a KSFC branch office and attach self-attested copies of your supporting papers. These typically include caste certificates for every promoter, proof of identity and address, business registration documents, a project report setting out the plan in detail, and financial statements if the unit is already operating. Always take a submission receipt that records the date, time and any reference number.
How and where do I apply, and is there a deadline?
Applications are made offline at a Karnataka State Financial Corporation branch office during working hours. Ask the staff for the prescribed application form, fill in every mandatory field accurately, sign it and submit it along with your documents. There is no fixed last date — the scheme runs on a rolling basis, so you can apply whenever your proposal is ready.
How are applications evaluated?
KSFC officials screen and evaluate each proposal. They look at the viability of the project, whether the entrepreneurs meet the eligibility conditions and whether the application adheres to all scheme terms. No pitch rounds or multiple selection stages are mentioned. Final sanction of the loan and approval of the interest subsidy both depend on KSFC's credit appraisal and the Government of Karnataka's reimbursement guidelines.
Who offers KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr?
KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr is offered by Karnataka State Financial Corporation, a government body. It is provided as non-dilutive funding.
How do I apply for KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr?
Apply directly through the official application link on this page. Review the eligibility criteria and prepare your startup documents before you begin.
Alternatives to KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr
Not sure KSFC Interest Subsidy Scheme for SC/ST Entrepreneurs — Loans up to ₹10 Cr is the right fit, or already applied? These are other subsidies open to Indian startups that founders shortlist alongside it.
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