Under National Equity Fund Scheme equity support is available to entrepreneurs for setting up new projects in tiny/small scale sector, for undertaking expansion, modernisation, technology upgradation and diversification by existing tiny, SSI and service enterprises and for rehabilitation of viable sick units in the SSI sector which fulfill the specified eligibility criteria.
Assistance from NEF helps the small scale units in strengthening their equity base and thereby improving their acceptability for term financing by primary lending institutions (PLIs).
Project cost (including margin money for working capital) should not exceed Rs. 50 lakhs in case of new projects. To meet the gap in equity as per prescribed debt equity norm, after taking into account promoters' contribution, subject to a maximum of 25% of project cost or Rs. 10.00 lakhs per project, which is lower is available under the scheme. No interest is charged on the soft loan component except service charge of 5% p.a.