Business Loan Benefits for Disabled in India

India has witnessed a significant shift in its approach toward inclusivity, and one area where this change is particularly visible is entrepreneurship. Entrepreneurs with disabilities are increasingly breaking barriers and proving that talent knows no boundaries. To support this wave of inclusivity, various financial institutions and government initiatives in India have introduced business loan benefits tailored specifically for individuals with disabilities.

The National Handicapped Finance initiative provides subsidised loans for physically handicapped and challenged individuals embarking on business ventures. These loan schemes are crafted to offer financial assistance to People with Disabilities (PwDs) for business expansion, education, skill development, equipment purchase for social rehabilitation, and more. While these loans are generally Collateral-free, in some instances, modest collateral may be required, or family members may act as co-borrowers/guarantors. This article delves into Business loans designed for disabled individuals and explores the role of NHFDC in providing financial support to disabled individuals to initiate or expand their businesses.

What is the National Handicapped Finance and Development Corporation (NHFDC)?

The National Handicapped Finance and Development Corporation (NHFDC) is a government-owned entity that provides business loans for disabled individuals. It facilitates Income generation activities and empowerment for PwDs through identified public sector and regional rural banks.

The NHFDC scheme caters to diverse needs and offers financial aid for:

• Women with disabilities at a reduced interest rate
• Loans for higher education, skill development, and vocational training with no age limit
• Funding for skill development training, self-employment ventures, and empowerment

Business Loan Schemes for Disabled Individuals in India

Under NHFDC, there are three significant business loan schemes for disabled individuals:

1. Divyangjan Swavalamban Yojana

Under this scheme, concessional loans are provided to PwDs, enabling them to engage in self-employment activities for income generation and overall empowerment. The loan amount can go up to Rs. 50 lakhs, depending on the borrower's requirements and repayment capacity.

With favourable interest rates and a maximum repayment period of 10 years, this scheme aims to promote financial independence and self-sufficiency among individuals with disabilities, fostering inclusivity and Economic Growth within this community.

• Loan Amount: Up to Rs. 50 lakhs (maximum) for self-employment activities
• Type of Loan: Working Capital loan or term loan
• Interest Rate: 5%-9% p.a. (1% rebate for women with disabilities for self-employment loans up to Rs. 50,000)
• Loan Tenure: Maximum of 10 years from the disbursement date
• Eligibility: Indian citizens aged 18 and above and 40% or more disability
• Purpose: Startup business or education after Class 12 (Bachelors, Masters, Professional programs, vocational courses, etc.)

2. Vishesh Microfinance Yojana (VMY)

This scheme facilitates quick, need-based financing through various entities such as NBFCs, MFIs, SHG Federations, state Government Missions, and others. It primarily targets the Unbanked population, providing funds for small and micro-businesses and development activities. Key features of this business loan for disabled persons in India include:

• Project Unit Cost: Not exceeding Rs. 60,000
• Repayment Period: Up to 3 years from the loan disbursement date
• Interest Rate: 5% p.a.
• Eligibility: Similar to loans offered by SIDBI and NABARD

3. NHFDC Swavalamban Kendra (NSK)

Initially a pilot project, this scheme aims to evolve into a comprehensive initiative addressing credit, skill, and business linkage needs. It is set to expand to every district, Offering one NSK loan to each district. Some key highlights of this business loan are:

• Capital Cost: Rs. 12 lakhs for each NSK funded by PwD entrepreneurs
• Financing: 100% from NHFDC

These kendras will also serve as small incubation centres, training local PwDs to become self-sufficient with ample self-employment opportunities.

4. Loans to Physically Challenged Persons – TNSC Bank

This loan scheme by TNSC Bank aims to empower people with disabilities and specially-abled individuals to initiate self-employment endeavours and economic development.

Loan Amount:

• Up to Rs. 3 lakhs – Startup business loan for disabled individuals for building a business in service or trading
• Up to Rs. 3 lakhs – Self-employment for people with mental retardation/autism/cerebral palsy
• Up to Rs. 5 lakhs – For purchasing a vehicle for commercial hiring purposes
• Up to Rs. 5 lakhs – For setting up a small industrial unit

Rate of Interest

• 5% p.a. – For loans up to Rs. 50,000
• 6% p.a. – For loans from Rs. 50,000 to Rs. 5 lakhs
• 8% p.a. – For loans more than Rs. 5 lakhs
• 1% p.a. – Rebate to women with disabilities.

Loan Tenure / Repayment

• Up to 10 years (maximum)
• Moratorium – 3 years

How to Apply for NHFDC Loans for Disabled People?

To apply for loans for disabled individuals from NHFDC, follow these steps:

• Apply through State Channelised Agencies (SCAs) appointed by State Governments or Union Territories
• Apply through designated public sector banks such as Punjab National Bank, Andhra Bank, IDBI Bank, and Regional Rural Banks (state-specific)
• Seek assistance from approved and recognised NGOs to facilitate the application process through SCAs

Documents Required for Subsidy Loan for Physically Handicapped

Here is the list of documents you must submit to get a subsidy loan:

• Application form
• Disability certificate
• income certificate
• Age certificate
• Affidavit confirming no other aid from another government agency

Eligibility for Subsidy Loan for Physically Handicapped

To get a subsidised loan in India, you must meet the following criteria:

• Any Indian citizen with 40% or more disability
• Age between 18 and 55 years
• Annual income below Rs. 1 lakh
• Relevant education

Benefits of Business Loans for the Disabled in India

Here is the list of benefits you can get by taking a disability loan in India:

• Financial Inclusion: Business loans for disabled entrepreneurs promote Financial Inclusion by giving them the necessary capital to start or expand their ventures. This inclusion is crucial for fostering economic independence and self-reliance among disabled individuals.

• Accessible Funding: Financial institutions offer accessible funding options with flexible terms and conditions. This includes lower interest rates, extended repayment tenures, and simplified application processes, making it easier for disabled entrepreneurs to secure the necessary funds.

• Government Initiatives: The Indian government, recognising the potential of disabled entrepreneurs, has introduced various schemes and subsidies. These initiatives aim to provide financial support and create an enabling environment for the disabled to establish and sustain their businesses.

• Skill Development Programs: Some business loan schemes come bundled with skill development programs. These programs equip disabled entrepreneurs with the essential skills to manage and grow their businesses effectively, ensuring long-term sustainability.

• Collateral-Free Loans: Many financial institutions offer collateral-free loans for disabled entrepreneurs. This removes the burden of providing valuable assets as security, making the loan application process more accessible and less daunting.

• Tax Benefits: In certain cases, disabled entrepreneurs may be eligible for tax benefits on the interest paid on business loans. These incentives further enhance the affordability of loans and encourage entrepreneurship within the disabled community.

• Specialised Loan Products: Some financial institutions have introduced specialised loan products catering specifically to the needs of disabled entrepreneurs. These products may include equipment financing, working capital loans, and startup funding tailored to the unique requirements of disabled-owned businesses.

• Networking and Mentorship: Beyond financial assistance, business loans for disabled entrepreneurs often come with networking opportunities and mentorship programs. Connecting disabled entrepreneurs with experienced mentors and a supportive business community can significantly contribute to their success.

Conclusion

The landscape for disabled entrepreneurs in India is evolving positively, thanks to the concerted efforts of financial institutions and government bodies. Business loans designed for individuals with disabilities provide essential financial support and contribute to fostering a culture of inclusivity and empowerment. As more entrepreneurs with disabilities venture into the business world, the collective impact on the Economy and society is poised to be transformative. The government has undertaken significant initiatives to provide financial aid, enabling people with disabilities to empower themselves. While private sector banks may have limited schemes for PwD, there are accessible business loans to consider for those aiming to start or expand their business, including startup business loans offered by the government.