Kerala Financial Corporation, a leading State-owned lending institution, has announced a comprehensive scheme of funding up to ₹10 crore for start-ups, to support them in all stages of growth — from proof of concept to prototype development, product trials, market entry, commercialisation and scaling up.
Called ‘KFC Start-up Kerala’, it also envisages venture debt scheme as well as provision to finance purchase orders received by start-ups. Those registered with Kerala Start-up Mission or the Department of Industrial Policy and Promotion (DIPP) and having the registered office in Kerala are eligible.
Varied utilisation avenues
The loan will be extended to: set up the workshop, purchase necessary machinery, computers, servers, software and infrastructure; purchase raw materials; use for working funds or working capital; fund cloud expenses; secure licences or permits; defray consultancy charges, marketing expenses, preliminary and pre-operative expenses; and pay interest during the implementation period, among others.
The scheme packages the funds being provided as a soft loan with an option to convert into equity capital on condition that the share of Kerala Financial Corporation shall not exceed 30 per cent.
Venture debt option
Once the start-up gets a firm purchase order, is becomes eligible to get loans up to ₹10 crore for executing the order. Entities having undergone due diligence by a SEBI-registered venture capital fund also can apply for a venture debt of ₹10 crore, a spokesman for the Corporation said here.
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“This scheme is the first of its kind where all stages of start-ups are considered for loans ranging from ₹25 lakh to ₹10 crore. Kerala Financial Corporation will provide mentoring and hand-holding to start-ups and there will be liberal exit options,” said Sanjay Kaul, Chairman and Managing Director.
‘Viable models welcome’
All viable projects with a scalable business model and a high potential of employment generation or wealth creation will be considered under the KFC Start-Up Kerala, Sanjay Kaul added.
The milestone-bound assistance will be made available in the following manner: ₹25 lakh for productisation; ₹50 lakh for commercialisation and ₹1 crore for scaling up. This will be subject to a maximum of 90 per cent of the project cost in each stage, Sanjay Kaul said.
Loans will be provided at concessional interest rates of 7 per cent without any collateral. Repayment period will be 60 months, including moratorium period of maximum of 12 months. Start-ups need to apply online at www.kfc.org. The Head Office will process it and an expert committee will decide on the sanction.
Lack of capital, of credit
“Scarcity of capital and inadequate availability of credit are major problems confronting start-ups. These entrepreneurs should be encouraged through incentives and assistance on easy terms”, Kaul observed.
The State government had, through the 2021-22 Budget, declared a six-point programme to encourage start-ups. There are 3,900 start-ups registered in Kerala and the government plans to add 2,500 more.