Madhya Pradesh Startup Policy 2022: Margin Money & Interest Subsidy Scheme

• Women, SC, ST or OBC founders running a revenue-stage DPIIT-recognised startup in Madhya Pradesh.

About this scheme

The Madhya Pradesh Startup Policy 2022 introduces a Margin Money & Interest Subsidy Scheme designed to bolster emerging businesses within the state. This initiative is spearheaded by the Department of MSME, Government of Madhya Pradesh, an entity dedicated to fostering industrial growth and supporting micro, small, and medium enterprises across the region. Their mandate includes creating an enabling environment for businesses, driving innovation, and generating employment opportunities through various support mechanisms. This specific policy aims to cultivate a robust startup ecosystem, encouraging new ventures, and accelerating economic development by providing essential financial cushions.

Under this scheme, eligible startups can receive significant financial support, directly addressing two critical challenges: initial capital outlay and the cost of debt. It provides margin money assistance amounting to up to 15% of the sanctioned term loan, with a maximum cap of Rs. 12,00,000 (Rs. 12 Lakh). This margin money helps reduce the upfront equity requirement for startups, making it easier to secure larger loans for significant investments. Additionally, an annual interest subsidy of 5% is offered on term loans secured from scheduled banks or other approved financial institutions. This interest subsidy is capped at Rs. 5,00,000 (Rs. 5 Lakh) per year and can be availed for a substantial period of up to seven years, significantly lowering the effective cost of borrowing over the long term.

The funding is specifically designed to support various business operations and setup costs that are typically covered by a conventional term loan. This ensures that startups have access to crucial capital for their foundational and expansion phases, whether for acquiring assets, setting up infrastructure, or managing operational expenses tied to growth. To further promote inclusive growth and diversity within the startup ecosystem, the scheme includes enhanced benefits, providing a 6% interest subsidy for startups that are majority-owned by founders belonging to Scheduled Caste (SC), Scheduled Tribe (ST), Other Backward Classes (OBC) categories, or by women entrepreneurs. This incentive is aimed at empowering underrepresented groups and fostering a more equitable entrepreneurial landscape.

Who can apply

• The applicant startup must hold valid recognition from the Department for Promotion of Industry and Internal Trade (DPIIT), Government of India. This ensures that the venture meets national criteria for innovation and scalability, making it eligible for various government support initiatives.
• The startup must be officially registered and operating within the geographical boundaries of Madhya Pradesh. This criterion underscores the policy's objective to stimulate local economic growth and create employment opportunities within the state.
• A sanctioned term loan from a scheduled commercial bank, Non-Banking Financial Company (NBFC), or other approved financial institution is mandatory. This loan must be specifically intended for eligible business operations or setup costs, demonstrating a clear financial plan and commitment.
• The term loan must be exclusively issued in the startup's name, confirming its independent legal and financial standing.
• For startups wishing to avail the enhanced interest subsidy, verified majority ownership by founders belonging to Scheduled Caste (SC), Scheduled Tribe (ST), Other Backward Classes (OBC) categories, or by women entrepreneurs is required. Documentary proof of such ownership will be necessary during the application process.

Eligible entity types: Private Limited, LLP, Partnership

Benefits & funding

• Eligible startups receive margin money assistance up to 15% of the term loan (max Rs.
• 12 Lakh), reducing upfront equity.
• An annual interest subsidy of 5% (max Rs.
• 5 Lakh/year) is provided for up to seven years.
• Startups majority-owned by SC/ST/OBC/women founders receive an enhanced 6% interest subsidy.

How the application process works

The journey below is informational, compiled from the official program guidelines. Applications are submitted directly with Department of MSME, Government of Madhya Pradesh, in your own name.

1. 1

   Applicants initiate the process through the MP Startup portal with documentation of their loan, interest payments, and DPIIT status.

2. 2

   Applications are reviewed for compliance with the Madhya Pradesh Startup Policy 2022's lending terms.

3. 3

   Approved startups receive margin money assistance and interest subsidy on qualifying loans.

Documents checklist 5

• DPIIT Certificate
• Loan Sanction Letter
• Loan Repayment Schedule
• Category Certificates (if applicable)
• Bank Details for Subsidy Disbursement (e.g., cancelled cheque, passbook copy)

Need help getting these in order? IncorpX provides assistance for incorporation, DPIIT recognition, MSME and GST registrations along with document preparation.

Frequently asked questions