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Business & Entrepreneurship

Interest Subsidy Scheme for Scheduled Caste/Scheduled Tribe Entrepreneurs

The scheme aims to encourage SC/ST entrepreneurs to establish micro or small-scale service enterprises & to expand, diversify, or modernize their existing units. Under this scheme, a loan amount ranging from a min. of ₹20.00 lakhs to a max. of ₹1,000.00 lakhs is provided at an interest rate of 4%.

Authority

State/ UT

Region

Karnataka

Status

Verified 2026

Updated

March 2026

What you get

Loan Amount: | - Minimum loan amount under the scheme is ₹20.00 lakhs. | - Maximum loan amount under the scheme is ₹1,000.00 lakhs which includes term loan and one time working capital term loan based on the project proposal but working capital term loan is restricted to maximum of ₹50.00 lakhs. However, repetition of working capital term loan sanction is not allowed. | - The loan can be availed for establishing new units or expanding / diversifying / modernizing their existing units for more than one occasion, but the aggregate loan extended shall not be more than maximum limit under the scheme. | Rate of Interest: | - The effective rate of interest is 4% only. | Repayment Period: | - The repayment period is 8 years including moratorium period in case of loan upto ₹500.00 lakhs and upto 10 years in case of loan above ₹500.00 lakhs but below ₹1,000.00 lakhs.

Who can apply

The unit shall be fully owned by SC / ST entrepreneurs i.e., all promoters in proprietary / partnership / company shall belong to SC/ST community only.; The ownership / share holdings of units even in part by other than SC/STs are not eligible for interest subsidy.; Entrepreneurs either can be SCs / STs or both.; The units which have availed the interest subsidy under any other scheme of Government of Karnataka/Government of India are not eligible for interest subsidy under this scheme.; To be eligible for interest concession under the scheme, the units should not be in default in repayment to KSFC.; KSFC is at liberty to consider any amount of project cost. However, the interest subsidy is restricted to ₹1,000.00 lakhs of the loan. Interest amount on the balance loan amount beyond ₹1,000.00 lakhs is required to be borne by the entrepreneurs.; KSFC may sanction loans with normal applicable rate of interest, the effective interest rate to be paid by the beneficiary / borrower will be 4%. The difference between the normal lending rate of KSFC and effective interest rate of 4% will be reimbursed by Government of Karnataka.

Required Paperwork

  • Aadhaar Card
  • PAN Card
  • Income Certificate
  • Residence Proof (Domicile)

Common Questions

What is the minimum loan amount I can apply for?

The minimum loan amount is [?]20 lakhs.

What is the maximum loan amount I can apply for?

The maximum loan amount is [?]1,000 lakhs, including a working capital term loan of up to [?]50 lakhs.

Can I avail of more than one loan under this scheme?

Yes, but the total loan amount across projects must not exceed [?]1,000 lakhs.

Can I apply for a loan to expand my existing business?

Yes, the scheme supports expansion, diversification, and modernization of existing units.

What is the Interest Subsidy Scheme for SC/ST Entrepreneurs?

It is a scheme introduced by the Government of Karnataka to provide interest subsidies on loans for SC/ST entrepreneurs through KSFC.

What is the effective interest rate under the scheme?

The effective interest rate is 4%, with the difference covered by the GoK.

Who is eligible to apply for this scheme?

SC/ST entrepreneurs who fully own their enterprises are eligible.

What is the repayment period?

The repayment period is 8 years for loans up to [?]500 lakhs and 10 years for loans above [?]500 lakhs.

Are units that have availed of other GoK/GoI subsidies eligible?

No, units that have availed of interest subsidies under other schemes are not eligible.

What happens if I default on loan repayment?

The unit will not be eligible for the interest subsidy if it defaults on KSFC loan repayments.

Can I get a loan for a new business under this scheme?

Yes, loans can be availed for establishing new units.

Is there a restriction on the type of business I can start?

The scheme supports Micro, Small Scale, and Service Enterprises only.