Interest Subsidy Scheme for Scheduled Caste/Scheduled Tribe Entrepreneurs
By Karnataka State Financial Corporation
Check your eligibility
Sign up and we'll tell you whether your startup qualifies for this grant.
Quick Answer
Karnataka State Financial Corporation offers an interest subsidy on business loans up to ₹10 crore for SC/ST entrepreneurs to establish or expand micro/small enterprises, reducing the effective interest rate to 4%.
About this subsidy
Business loans from Karnataka State Financial Corporation (KSFC) for SC/ST entrepreneurs carry an interest subsidy that brings the effective rate down to 4%. It is open to micro, small scale and service enterprises, whether new or expanding, diversifying or modernising. Loans run from ₹20 lakhs to ₹10 crore. Every promoter must belong to the SC or ST community. The Government of Karnataka reimburses KSFC the difference between its normal lending rate and 4%. Units that took an interest subsidy under another scheme, or are in default to KSFC, are not eligible.
Eligibility
See if you're eligible
Full eligibility criteria — entity type, stage, sector, founder profile and registration requirements — plus your fit for this program. Sign up to view.
Subsidy providers
Karnataka State Financial Corporation (KSFC) is a state-level financial institution, established by the Government of Karnataka in 1959 under the State Financial Corporations' Act, 1951. It lends to micro, small and medium enterprises in Karnataka. Its main offer is loans, and…
Learn moreBenefits & Funding
- Amount
- ₹20L – ₹10Cr
What You Get
The scheme offers significant financial relief by subsidizing interest on business loans, ensuring an effective interest rate of 4% for eligible SC/ST entrepreneurs. This substantial reduction in borrowing costs makes capital more accessible and affordable. Loans range from ₹20 lakhs to ₹1,000 lakhs (₹10 crore), providing flexible funding options for various project sizes. The maximum loan includes both term loan and a one-time working capital term loan, restricted to ₹50 lakhs for working capital. Entrepreneurs can avail this loan for establishing new units or for expanding, diversifying, or modernizing existing ones. The generous repayment period extends up to 8 years for loans up to ₹5 crore and up to 10 years for loans above ₹5 crore and up to ₹10 crore, inclusive of any moratorium period, further easing the financial burden on entrepreneurs. The interest subsidy amount, which is the difference between KSFC's normal lending rate and the 4% effective rate, is reimbursed directly by the Government of Karnataka to KSFC, benefiting the borrower directly.
- Disbursement
- Reimbursement
- Bootstrap friendly
- Yes
Timelines & Process
Applications
Rolling basis
Selection Process
Applications submitted to the KSFC Branch Offices will undergo a thorough screening and evaluation process by KSFC officials. The project proposals will be assessed based on their viability, the eligibility of the entrepreneurs, and adherence to all scheme terms and conditions. While the scheme does not explicitly mention multiple rounds or a pitch, successful applications will demonstrate strong business plans and clear potential for establishing or growing micro/small enterprises. The final loan sanction and interest subsidy approval will be subject to KSFC's credit appraisal and the Government of Karnataka's reimbursement guidelines.
Application Process
- 1
Visit Branch Office & Request Form
Visit the KSFC Branch Office during office hours to obtain the hard copy of the prescribed application form.
You - 2
- 3
- 4
- 5
How to apply
Four steps from draft to disbursement — one action each.
- 1
See the questions before you start
Download every question this programme's application form asks, so you can prepare your answers offline before opening the portal.
- 2
Line up your documents
Keep every document from the checklist ready in one folder. Missing docs are the #1 reason applications get bounced.
- 3
Submit on the official portal
Use the official application link and verify all details before final submission.
- 4
Follow up
Reach out 5–7 days after submitting to confirm receipt and ask about the review timeline.
Program templates & documents
Files the program publishes for applicants — download these and apply in the prescribed format.
Frequently Asked Questions
Who is eligible for the Interest Subsidy Scheme?
The scheme is exclusively for micro/small scale/services enterprises where all promoters and owners are from the Scheduled Caste (SC) or Scheduled Tribe (ST) community. No partial ownership by non-SC/ST individuals is allowed.
What is the maximum loan amount I can avail under this scheme?
The maximum loan amount under this scheme is ₹1,000 lakhs (₹10 crore), which can include both term loan and a one-time working capital term loan (working capital capped at ₹50 lakhs).
What is the effective interest rate under this scheme?
Eligible entrepreneurs will pay an effective interest rate of only 4% on their loans. The difference between KSFC's normal lending rate and 4% will be reimbursed by the Government of Karnataka.
Can I apply if I already have an existing business?
Yes, the scheme supports both the establishment of new units and the expansion, diversification, or modernization of existing units.
Is this scheme available across India?
No, this scheme is specifically introduced by the Government of Karnataka and is applicable only within the state of Karnataka.
What documents are typically required for application?
While specific documents will be detailed in the application form, generally you would need identity proof, caste certificate, business registration documents, project proposal, financial statements (for existing units), and other relevant statutory clearances.
Sources
Data on this page is compiled from official program and provider references.
