Scheme for Interest Subvention on Term loan and Working Capital Loan
The Scheme for Interest Subvention on Term Loan and Working Capital Loan is a financial support initiative implemented by the Directorate of Industries and Commerce, Government of Kerala. The scheme was launched to reduce the interest burden of Micro, Small, and Medium Enterprises (MSMEs) by providing interest subsidy on eligible term loans and working capital loans availed from banks and financial institutions. The scheme is ongoing and aims to improve cash flow, encourage formal credit usage, and enhance the financial sustainability of MSMEs operating in Kerala
Key Features
- Interest Cost Reduction: The scheme reimburses a portion of the interest paid by MSMEs, making institutional credit more affordable and manageable.
- Coverage of Both Loan Types: Both term loans (for capital expenditure) and working capital loans (for operational needs) are covered, ensuring holistic financial support.
- Encouragement of Formal Finance: By lowering borrowing costs, the scheme motivates MSMEs to rely on formal banking channels instead of informal credit.
- District-Level Implementation: Applications, verification, and subsidy release are managed through DICs to ensure proper monitoring.
Financial Assistance
Note: Exact subsidy rates, ceilings, and duration are subject to latest government notifications.
Eligibility Criteria
Who can apply:
- Micro, Small, or Medium Enterprises registered under Udyam
- Units functioning within Kerala
- Manufacturing and service sector MSMEs
- Enterprises availing term loan or working capital loan from recognised banks
Who cannot apply:
- Unregistered enterprises
- Units with defaulted or non-performing loans
- Enterprises availing similar interest subsidy schemes beyond permissible limits
Documents Required
- Udyam Registration Certificate
- Loan sanction letter (term loan / working capital)
- Bank interest statement / certificate
- Proof of interest payment
- Enterprise address proof
- Bank account details
- Self-declaration of operational status
- Any additional documents required by DIC
Application process for the scheme
Option 1: Apply with Bullit (Recommended)
Click here to start instantly with guided support. Our team verifies eligibility, reviews your loan details, compiles documents, and files the interest subvention application on your behalf. You can track progress while focusing on your business – we coordinate end-to-end with banks and DICs.
Recommended for: MSMEs seeking time-saving, error-free claims.
Option 2: Apply through District Industries Centre (DIC)
- Ensure your MSME loan account is regular and interest has been paid.
- Download/obtain the Interest Subvention application form.
- Submit the filled form with required documents to the District Industries Centre (DIC).
- DIC verifies eligibility and processes the subsidy claim.
Option 3: Assisted Application via Taluk Industries Office
MSMEs may approach Taluk Industries Offices or DIC help desks for clarification and assisted submission.
Power combo with the scheme
Related Schemes
Frequently asked questions
What is the objective of the Interest Subvention Scheme?
The scheme aims to reduce the effective interest cost for MSMEs by subsidising interest paid on eligible loans, thereby improving profitability and sustainability.
Does the scheme cover both term loan and working capital loan?
Yes. Interest subvention is applicable to both, subject to scheme conditions and ceilings.
Is the subsidy given upfront?
Generally, the subsidy is provided as reimbursement after interest payment and verification.
Can service-sector MSMEs apply?
Yes. Both manufacturing and service-sector MSMEs are eligible if they meet the criteria.
Can MSMEs apply every year?
Yes, subject to limits and continued eligibility under the scheme.
Is the scheme currently active?
Yes. The scheme is active, subject to annual budget allocation by the Kerala Government.