Stand-Up India extended to 2031: Rs 1 crore loans, 85% guarantee, 0.5% fee

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday, 11 November 2026, approved the continuation of the Stand-Up India scheme for five more years, up to 31 March 2031, with a credit guarantee corpus of Rs 4,111 crore. The scheme helps first-time entrepreneurs from Scheduled Castes, Scheduled Tribes and women get bank loans of more than Rs 10 lakh and up to Rs 1 crore to start a new business. Under the revised terms announced at the Cabinet briefing, the government guarantee will cover 85% of the loan, and the guarantee fee is set at a flat 0.5% a year, with no extra risk premium. The government aims to support about 2.5 lakh more entrepreneurs over the five years.

For a first-time entrepreneur, the hardest part of getting a bank loan is often not the business plan but the bank's fear of default, especially when the borrower has little property to offer as collateral, the security a bank can claim if a loan goes bad. A government guarantee changes that calculation. If a guaranteed loan fails, the guarantee fund repays most of the bank's loss, so banks are more willing to lend.

The two numbers announced matter directly to borrowers and banks. An 85% guarantee means the bank carries only 15% of the risk on the loan. A flat fee of 0.5% a year, with no extra charge for riskier borrowers, keeps the cost of the guarantee predictable.

The scheme is meant for people who are under-represented among business owners: Scheduled Caste and Scheduled Tribe entrepreneurs and women. The loan band, from just above Rs 10 lakh to Rs 1 crore, is aimed at businesses bigger than a small shop but smaller than a large factory, such as a workshop, a small processing unit, a service business or an agriculture-allied enterprise.

What readers should do next: entrepreneurs who fit the scheme can approach a bank branch with a business plan; the scheme is for setting up a new enterprise, so existing businesses seeking expansion should check the conditions with their bank first.

Peepals calculation: Spread across the target of 2.5 lakh new entrepreneurs, the Rs 4,111 crore corpus works out to about Rs 1.64 lakh of guarantee backing per entrepreneur (4,111 crore ÷ 2.5 lakh). On a Rs 1 crore loan, the 85% guarantee covers Rs 85 lakh, leaving Rs 15 lakh of risk with the bank. The new target of 2.5 lakh equals about 91% of the more than 2.75 lakh entrepreneurs reportedly supported since 2016 (2.5 ÷ 2.75). Our calculation from the reported figures.

Short-term: Banks can keep sanctioning Stand-Up India loans under the extended scheme with the new guarantee terms.

Long-term: If the target is met, about 2.5 lakh more SC, ST and women-led enterprises would be set up by 2031, adding jobs and business ownership in groups under-represented among entrepreneurs.

Who is affected: SC, ST and women first-time entrepreneurs, banks that lend under the scheme, and the credit guarantee fund that backs the loans.

What to watch next: The detailed operational guidelines for the extended scheme, including how the 85% cover and 0.5% fee will be applied by banks.

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