Why in news?
The Union Cabinet has approved five more years of Stand-Up India, extending the entrepreneurship-finance scheme until 31 March 2031. The 11 November 2026 announcement targets financial assistance for an additional 2.5 lakh entrepreneurs and approves a ₹4,111-crore credit-guarantee corpus. The scheme supports women and entrepreneurs from Scheduled Castes and Scheduled Tribes in establishing new businesses. Its lending and guarantee arrangements address two connected needs: finance for an enterprise and protection for the lender against eligible default risk. The extension continues this support across manufacturing, services, trading and agriculture-allied activities.
Who the scheme supports
Stand-Up India was launched in April 2016. It uses institutional lending to help women, Scheduled Caste and Scheduled Tribe entrepreneurs start enterprises. Banks provide the credit through the scheme's lending arrangements. The Cabinet says the scheme has facilitated loans to more than 2.75 lakh entrepreneurs from these groups since its launch.
The scheme focuses on greenfield enterprises. In this context, greenfield means the beneficiary's first venture in the relevant business activity. This focus connects credit support with establishing a new business. Such a venture may involve producing goods, providing services, trading products or undertaking an eligible activity allied to agriculture.
The scheme's background eligibility rules cover entrepreneurs above 18 years of age. For a company or another non-individual enterprise, eligible promoters must hold at least 51% of both shareholding and controlling stake. This connects ownership and control of the enterprise with the groups the programme is intended to support.
What the loan finances
The continuation provides for loans above ₹10 lakh and up to ₹1 crore. Support may take the form of a term loan or a composite loan combining term finance and working capital. These forms serve different business needs within the same enterprise.
A term loan finances an investment and is repaid over an agreed period. Equipment is a common example of such an investment. Working capital supports the operating cycle, including requirements such as buying stock and meeting day-to-day expenses. A composite loan brings these financing needs together.
The announced loan can cover up to 85% of the project cost. Project cost is the total cost of setting up the proposed enterprise. Financing a share of that cost determines how much the loan contributes to establishing the business.
How the guarantee supports lending
The Cabinet announcement also specifies credit-guarantee coverage of 85% of the loan amount. A credit guarantee protects the lending institution against eligible loss if a covered borrower defaults. Default means failure to meet the required repayment obligations. The guarantee operates under its applicable claim conditions.
The two 85% figures use different bases. The project-financing limit compares the loan with the full project cost. The guarantee-coverage figure compares the protection with the loan amount. Keeping those bases clear explains how the financing and risk-sharing arrangements fit together.
The standard guarantee fee is 0.50%. This is the charge associated with guarantee cover. The borrower also has a loan agreement with the lender, setting out repayment and other lending terms. Guarantee support gives the lender a way to manage eligible default risk while providing enterprise credit.
The corpus and the beneficiary target
The ₹4,111-crore corpus provides financial backing for the credit-guarantee arrangement. The additional 2.5 lakh entrepreneurs are the government's coverage target for the five-year continuation. The corpus and the target describe different parts of the policy: the backing for risk-sharing and the intended reach of lending support.
Access to credit is one part of starting an enterprise. The scheme's background design also includes handholding support for potential borrowers. This can help entrepreneurs navigate the process of establishing a business and approaching institutional finance. The programme links that support with lending through the banking system.
Conclusion
The continuation combines enterprise loans with a credit guarantee for lenders. Its practical purpose is to help women, Scheduled Caste and Scheduled Tribe entrepreneurs establish new ventures. The five-year period, guarantee backing and additional-beneficiary target set the framework for that effort.