Self employment in Small Business Schemes

The corporation can assist a wide range of income regenerating activities. Infrastructure development schemes alone will not qualify for financing unless it leads directly to income generation.

For a disabled person living below the income/economic criteria, the proposals should be such which generate adequate income to the disabled person to rise above the economic criteria limit.

1. Self employment in Small Business e.g. Service/Trading sector:Loan will be provided for self employment of disabled persons in service sector or for trading activity. The Small Business, project or activity for which financial assistance has been sought, will have to be operated by the disabled person himself and employing at least 15 % disabled persons in his venture.Maximum loan available under this scheme is Rs.2.50 lakh.

   Indicative areas of financing are:

   1. Shops or Stores of any type
   2. Workshops or repair shops or service centres
   3. Health centre/Beauty parlour
   4. Computer centre (training & job work)
   5. Studio/Photography
   6. Printing press
   7. Telephone/Fax/Email booth
   8. Tailoring
   9. Travel agency
   10. Xerox centre
   11. Transport service
   12. Poultry farming
   13. Handicraft
   14. Brassware
   15. Dealership
   16. Franchise
   17. School for disabled
   18. Weaving
   19. Book Binding
   20. Leather work
   21. Physiotherapy
   22. Music schools
   23. Computer hardware Dealership
   24. Dealership of petroleum products
   25. Candle and chalk making

Criteria of Disability

The beneficiary should be a disabled person or a cooperative society of disabled persons or a legally constituted association of disabled persons or a firm promoted by disabled persons unless otherwise mentioned in the scheme for financing.

In order to be eligible for loans on concessional interest rates from the Corporation, minimum degree of disability shall not be less than 40 percent.

A person with disability means a person:

1. Who is blind or
2. Who is a person with low vision, or
3. Who is speech and hearing handicapped, or
4. Who has a locomotor disability on account of orthopedic or neurological impairment (including cerebral palsy) or
5. Who is mentally retarded, or
6. Who is multiple handicapped, and includes any persons who is unable to ensure by himself/herself, wholly or partly, the necessities or a normal individual or social life including work as a result of deficiency, whether congenital or not, in his/her physical or mental capabilities.

Explanation for the purpose of the disabilities mentioned above:

1. a person shall be deemed to be blind if he suffers from either of the following conditions, namely:
   
   1. total absence of sight, or
   2. visual acuity not exceeding 6/60 or 20/200 (snellen in the better eye with correcting lenses ) or
   3. limitation of field of vision subtending an angle of 20 degree or worse.
2. a person with low vision is one who has impairment of visual functioning even after treatment and/ or standard refractive correction, but who uses, or is potentially able to use vision for the planning or execution of a task with appropriate assistive device.
3. a person shall be deemed to be deaf if he/she has lost sixty decibels or more in the better ear in the conversational range or frequencies.
4. a person shall be deemed to have locomotor disability if he is having disability of the bones, joints or muscles leading to substantial restriction of the movement of the limbs or if has any form of cerebral palsy.
5. mental retardation refers to sub-average general intellectual functioning, which originates during the development period and is associated with impairment in a adaptive behaviour.
6. mentally ill person shall have the same meaning as assigned to the word in para (i), Section 2, Chapter I of Mental Health Act. 1987.
7. Leprosy-cured persons mean and included leprosy cured persons –
   
   1. with loss of sensation in hands or feet as well as of sensation and paresis in the eye and eye lid but with no manifest deformity;
   2. with manifest deformity and paresis but having sufficient mobility in their hands and feet to enable them to engage in normal economic activity;
   3. suffering from extreme physical deformity as well as advanced age which prevents them from re-entering into any economic activity;
8. multiple handicapped means and includes a person with more than one disability.

Economic/Income Criteria

Unemployed disabled persons whose family income is below Rs.22,000/- p.a. for rural areas and Rs.24,000/- p.a for urban areas (two times of poverty line) are eligible for availing loan facility. (Family means parents or spouse of dependent disabled)

In case of self dependent disabled, the income of the individual will only be taken into account.

The economic criteria will also be applicable to each member of a cooperative society of disabled persons, association of disabled persons and firm promoted by disabled persons seeking financial assistance from NHFDC.

Minimum age limit for availing loan is 18 years and maximum age is 55 years. However, the maximum age could be relaxed in the case of professionally, qualified entrepreneurs.

The sanctioned loan amount and repayment period will depend on the age of applicant.

Other Requirements

The applicant:

1. should be an Indian citizen;
2. should be domicile of the state where the project is proposed to be put up;
3. should have relevant educational/technical/vocational qualification/experience/background;
4. should not have any large outstanding debt from other organisation and should not be financial defaulter;
5. should be from agriculture background and project location should be in agriculture area if seeking loan under the scheme ‘ Assistance for Agricultural Activities’.

Types of Funding:

NHFDC can consider following types-of loans;

Term Loan

The Corporation can consider grant of Term Loan to a disabled entrepreneur or group of disabled entrepreneurs through the channelising agency.

Under Term Loan Scheme, loans are given upto 100% of project cost as follows:

For the project with high working capital component, quantum of loan will depend upon the total cost of the project as follow:

1. Where the total cost of the scheme does not exceed Rs.50,000 the scheme will be treated as a composite loan and no distinction will be made between fixed asset and working capital. In such cases loans can be granted upto 100% of the total cost.
2. Where the unit cost of the project is more than Rs.50,000 but does not exceed Rs.1,00,000 the ratio of fixed assets to working capital will not exceed 1:3.
3. Where the unit cost of the scheme exceed Rs.1.00 lakh, only 50% of the working capital requirement will be added in the project cost as working capital margin to arrive at the unit cost of the project, remaining amount of the working capital will have to be financed by the banks as cash credit limit.

In order to cover maximum number of beneficiaries, 75% of the amount of term loans sanctioned in any financial year to a Channelising Agency shall be for those projects where NHFDC loan component is below Rs.1,00,000 per unit.

1. Margin Money Loan (Seed Capital)
   1. Seed Capital assistance is provided to entrepreneurs availing term loan from State Financial Corporation (SFCs) / other financial institution but not able to bring in their share of equity stipulated by the term lending institutions.
   2. Seed Capital assistance is to meet the gap in the equity stipulated by the term lending institutions as per their norm of debit equity ratio.
   3. The entrepreneur is to bring in a minimum of 20% of the equity.
   4. NHFDC may provide Seed Capital assistance upto 80% equity required to be funded by the beneficiary for the total project cost upto Rs.50 lakhs.
   5. Seed Capital assistance is free of interest but the channelising agencies will levy a service charge of 1% p.a from the beneficiaries and pay 0.5% p.a to NHFDC.
   6. Seed Capital is to be repaid within a maximum period of 7 years from the date of first disbursement, inclusive of suitable moratorium. In cases where seed Capital assistance remains unpaid beyond 7 years, the same shall be converted in to term loan at the expiry of 7^th year at an interest applicable to NHFDC term loan and shall be paid within 3 years in quarterly instalments from the date of conversion into term loan.
      The Margin Money Loan may be recovered from the beneficiary alongwith bank loan in the same proportion, which the Margin Money bears to the bank loan. Based on such recoveries the Channelising Agency or other agency will make the repayment schedule of margin money.
   7. Projects considered for Seed Capital assistance shall not be eligible for any other financial assistance from NHFDC
      

      Rate of Interest

      Loan Amount	Interest by NHFDC	Interest (Channelising Agency)	Total
      Loan amount less than Rs.50,000	3%	2%	5%
      Loan amount above Rs.50,000 and upto Rs.1,00,000	4%	2%	6%
      Loan amount above Rs.1,00,000 and upto 5,00,000	7%	2%	9%
      Loan amount above Rs.5,00,000	8%	2%	10%

      • For women with disability, a rebate of 2% on interest is provided.
      • A rebate of 0.5% on interest is provided for timely repayment of loan.

Allocation of Available Fund for Disbursement

1. In order to cover maximum number of beneficiaries, 75% of available fund is earmarked for those projects where NHFDC loan is below 1.0 lakh.
2. In order to ensure economic empowerment of disabled women and to ensure general balance, channelising agencies are to be given due weightage to women applicants and special efforts should be made to attract projects form women.

Sanction of Loan

1. Loan will be sanctioned by channelising agency for final disbursement to beneficiary with prior approval of NHFDC. The channelising agency will send all applications for loan duly recommended for approval of NHFDC.
2. For loan under scheme(5) production of assistive devices and scheme (6) assistance for skill & entrepreneurial development, application will be received and appraised by NHFDC directly. The loan will be sanctioned and disbursed by NHFDC.
3. Board of Directors of NHFDC will sanction all projects with loan component exceeding Rs.10 lakhs.

Recovery of Loan

1. The entire loan shall be repaid within a reasonable period but not exceeding 7 years including the moratorium period. The repayment shall be on half yearly/ quarterly/monthly basis. For agriculture and horticulture projects repayment shall be on yearly basis. The repayment period will be worked out during appraisal and sanction of scheme on the basis of income potential of the proposed project.
2. A suitable moratorium period depending on the merit and requirement of the project will be allowed.
3. A rebate of 0.5% on interest is provided for timely payment of all instalment.
4. A penal interest of 3% will be charged from channelising agency for default in timely repayment. The channelising agency will also charge panel interest of 3% from the beneficiary for default in repayment.

Security

1. Block Government guarantee is required from concerned State Government for the sanction and disbursement of loan by NHFDC to State Channelisng Agencies. In case of persistent default, the NHFDC will be at liberty to invoke the guarantees or deduct its instalments from the future projects of the concerned agency to be financed.
2. NHFDC may also accept Bank Guarantee or any other form of security acceptable to it for grant of loans.

For Application Form for Financial Assistance and Further Details Please Contact:

National Handicapped Finance and Development Corporation
(Ministry of Social Justice and Empowerment, Government of India)
Red Cross Bhavan, (opp. Mini Secretariat)
Sector – 12, Faridabad – 121 007 (Haryana)