Organic farming in India is gaining momentum due to the increasing demand for chemical-free, sustainable agricultural products. If you’re looking to start or expand an organic farming business, there are several loan options and government-backed schemes available to help finance your venture. Here are the best loan options for organic farming businesses in India:
1. Agriculture Loans from Banks
Many public and private sector banks offer agriculture loans specifically tailored to farmers and agribusinesses, including those engaged in organic farming.
- Loan Amount: ₹1 lakh to ₹50 lakh or more (depending on the scale of operations).
- Interest Rate: 7% to 12% (can be lower with government subsidies).
- Tenure: 3 to 7 years.
- Collateral: Collateral may be required for larger loans; smaller loans may be collateral-free under government schemes.
- Eligibility: Farmers, agribusiness owners, or entrepreneurs involved in organic farming activities.
Popular Banks Offering Agriculture Loans:
- State Bank of India (SBI): SBI offers agricultural loans for both conventional and organic farming under its “Agri Loan” scheme.
- Punjab National Bank (PNB): Provides agriculture loans with favorable terms for organic farmers.
- HDFC Bank: Offers various agriculture loans for farming activities, including organic farming.
2. NABARD Loans for Organic Farming
The National Bank for Agriculture and Rural Development (NABARD) offers refinancing schemes to banks and financial institutions that lend to organic farming and other agricultural activities. NABARD also provides direct assistance through various initiatives.
- Loan Amount: Up to ₹1 crore or more, depending on the project.
- Interest Rate: NABARD offers loans at concessional rates, typically lower than standard agricultural loans.
- Tenure: 3 to 7 years.
- Eligibility: Entrepreneurs, farmers, and agribusiness owners involved in organic farming.
NABARD Schemes:
- Capital Investment Subsidy Scheme for Organic Farming: NABARD provides subsidies for organic input production, vermicomposting units, bio-fertilizer units, and more.
- Sustainable Development of Agriculture (SDA): Focuses on sustainable and organic agricultural practices.
3. Kisan Credit Card (KCC) for Organic Farming
The Kisan Credit Card (KCC) is a widely used credit scheme for farmers, including those engaged in organic farming. It offers short-term credit for purchasing inputs like seeds, fertilizers, bio-pesticides, and other farming needs.
- Loan Amount: ₹50,000 to ₹3 lakh.
- Interest Rate: 4% to 7% (with government subsidies).
- Tenure: 1 to 5 years (revolving credit).
- Collateral: Collateral-free loans up to ₹1.6 lakh.
- Eligibility: Farmers involved in organic farming or allied activities.
4. Organic Farming Subsidy Schemes
The Government of India offers various subsidies to promote organic farming. These schemes provide financial assistance for the adoption of organic farming practices and for infrastructure development.
- Subsidy: Up to 50% of the project cost, with maximum limits depending on the specific scheme.
- Eligibility: Farmers, agribusinesses, and entrepreneurs engaged in organic farming.
Popular Subsidy Schemes:
- Paramparagat Krishi Vikas Yojana (PKVY): This scheme promotes organic farming by providing financial assistance for organic inputs, certification, and marketing.
- Mission Organic Value Chain Development for North Eastern Region (MOVCDNER): Focuses on organic farming development in the North-Eastern states with financial support for value chain development.
5. MSME Loans for Organic Agribusiness
If your organic farming business is registered as a Micro, Small, and Medium Enterprise (MSME), you can benefit from MSME loans provided by banks and financial institutions. These loans are designed to support small and medium-sized businesses in sectors like agriculture.
- Loan Amount: ₹1 lakh to ₹5 crore (depending on business size).
- Interest Rate: 7.65% to 13%.
- Tenure: 1 to 7 years.
- Eligibility: MSMEs involved in organic farming or the production of organic inputs.
Popular MSME Loan Providers:
- HDFC Bank: Provides MSME loans for agriculture-related businesses, including organic farming.
- ICICI Bank: Offers business loans to MSMEs engaged in organic farming or agribusiness.
6. Mudra Loans (Pradhan Mantri Mudra Yojana)
The Pradhan Mantri Mudra Yojana (PMMY) is a government initiative aimed at providing financial support to small and micro-enterprises, including organic farming ventures. The scheme has three categories: Shishu, Kishore, and Tarun, depending on the loan amount.
- Loan Categories:
- Shishu: Up to ₹50,000 (ideal for small organic farming operations).
- Kishore: ₹50,000 to ₹5 lakh.
- Tarun: ₹5 lakh to ₹10 lakh.
- Interest Rate: Starts at 8.4% (varies by lender).
- Tenure: 1 to 5 years.
- Eligibility: Micro and small businesses, including organic farming businesses.
7. Loan Against Property (LAP)
For larger-scale organic farming projects, you can consider a loan against property (LAP). This loan allows you to leverage your residential or commercial property as collateral to raise funds for your organic farming business.
- Loan Amount: ₹10 lakh to ₹5 crore (depending on the property’s market value).
- Interest Rate: 8% to 10%.
- Tenure: Up to 15 years.
- Eligibility: Property ownership and proof of a viable organic farming business.
8. Personal Loans for Organic Farming
If you need quick funding for smaller organic farming operations, a personal loan might be a good option. Personal loans are unsecured and can be used for any business-related purpose, including purchasing organic seeds, bio-fertilizers, and irrigation equipment.
- Loan Amount: ₹1 lakh to ₹25 lakh.
- Interest Rate: 10% to 24%.
- Tenure: 1 to 5 years.
- Eligibility: Based on income, credit score, and financial stability.
9. SBI Green Fund Scheme
The State Bank of India (SBI) has a Green Fund Scheme, which offers financial assistance for projects focused on sustainable agriculture, renewable energy, and organic farming.
- Loan Amount: Up to ₹20 lakh for organic farming projects.
- Interest Rate: Concessional rates starting at 7%.
- Eligibility: Farmers and agribusinesses involved in organic farming or allied sectors.
10. Crowdfunding and Peer-to-Peer Lending
For innovative or community-driven organic farming projects, you can explore crowdfunding or peer-to-peer lending platforms. These options allow you to raise funds directly from individuals who are interested in supporting sustainable agricultural initiatives.
- Popular Platforms: Ketto, Rang De, Faircent, and Milaap.
- Loan Amount: ₹50,000 to ₹10 lakh (varies by platform).
- Interest Rate: Varies by platform (peer-to-peer lending rates are typically lower than traditional loans).
Important Considerations Before Applying for Loans:
- Credit Score: Maintain a good credit score (above 700) to secure lower interest rates and favorable loan terms.
- Collateral: Many agriculture loans are collateral-free, but larger loans might require collateral, especially for infrastructure development.
- Subsidies: Explore available government subsidies to reduce the overall cost of financing your organic farming business.
- Eligibility: Ensure that your business is eligible for specific loans or schemes based on the type of farming and the scale of operations.
Conclusion:
There are numerous loan options available for organic farming in India, ranging from government-backed subsidies to traditional bank loans. Depending on the scale of your organic farming project and financial needs, you can choose between agriculture loans, MSME loans, Mudra loans, or NABARD schemes. Additionally, leveraging personal or collateral-based loans can help you expand your organic farming business while keeping costs manageable.