Kerala Financial Corporation unveils program for start-ups


Kerala Financial Corporation, one of the leading state-owned lending institutions, has announced a comprehensive funding program of up to 10 crore yen for start-ups to support them at all stages of their growth – from proof of concept to prototype development, product testing, market entry, commercialization and scaling.

Called “KFC Start-up Kerala”, it is also considering a risky debt program as well as a provision to finance purchase orders received by start-ups. Those registered with the Kerala Start-up Mission or the Department of Industrial Policy and Promotion (DIPP) and headquartered in Kerala are eligible.

Various ways of use

The loan will be extended to: set up the workshop, buy the necessary machines, computers, servers, software and infrastructure; buy raw materials; use for working capital or working capital; fund cloud-related expenses; obtain licenses or permits; cover consulting costs, marketing costs, preliminary and preoperative costs; and pay interest during the implementation period, among other things.

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The program combines the funds provided in the form of a reduced rate loan with an option of conversion to equity provided that Kerala Financial Corporation’s share does not exceed 30 percent.

Venture Capital Debt Option

Once the start-up obtains a firm purchase order, it becomes eligible for loans of up to 10 crore for the fulfillment of the order. Entities that have undergone due diligence by a SEBI-registered venture capital fund can also apply for venture capital debt of 10 crore, a company spokesperson said here.

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“This program is the first of its kind where all start-up steps are taken into account for loans ranging from ₹ 25 lakh to ₹ 10 crore. Kerala Financial Corporation will provide mentoring and support 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 high potential for job creation or wealth creation will be considered under KFC Start-Up Kerala, added Sanjay Kaul.

Stage-related assistance will be made available as follows: 25 lakh for production; ₹ 50 lakh for marketing and ₹ 1 crore for scaling. This will be subject to a maximum of 90 percent of the cost of the project at each stage, said Sanjay Kaul.

The loans will be made at concessional interest rates of 7 percent without any collateral. The repayment period will be 60 months, including the moratorium period of maximum 12 months. Start-ups must apply online at The head office will process it and a committee of experts will decide on the sanction.

Lack of capital, credit

“The scarcity of capital and the insufficient availability of credit are major problems facing start-ups. These entrepreneurs should be encouraged with incentives and assistance on easy terms, ”Kaul observed.

The state government had, through the 2021-2022 budget, declared a six-point program to encourage start-ups. There are 3,900 registered start-ups in Kerala and the government plans to add 2,500 more.

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