A. Venture Capital Assistance

SFAC would provide equity to qualifying projects on the recommendations of the bank financing the project. This equity capital will be repayable back to SFAC after the project has repaid the term loan of the financing bank. SFAC would provide financial assistance to agri-business projects by way of equity participation on the fulfilment of the following conditions.

1. Qualifying projects under Venture Capital

i) Project should be in agriculture or allied sector namely horticulture, floriculture, medicinal and aromatic plants, minor forest produce, sericulture, organic farming, vermi compost, apiculture, plantation crops, and fisheries. However, poultry and dairy projects will not be convered under the scheme.

ii) Project should provide assured market to farmers / producer groups.

iii) Project should encourage farmers to diversify into high value crops, to increase farm incomes.

iv) Project should be accepted by banks for grant of term loan.

1. The quantum of SFAC venture capital assistance will depend on the project cost and will be the lowest of the following: -

•  10% of the total project cost assessed by the bank

•  26% of the project equity

•  Rs. 75.00 lakhs.

1. Higher venture capital assistance can be considered by SFAC to deserving projects on merit and / or to project that are located in remote and backward areas, North-eastern and hilly States and projects recommended by State agencies.
2. Beneficiary will submit the project proposal in the form DPR to area lending bank.
3. On receipt of project proposal, bank will apprise, assess and sanction requisite amount of term loan /working capital required by the beneficiary for execution of the project..
4. Bank will also workout the amount of Venture Capital, as per criteria laid down at para 3 (a, b, & c) and communicate it to SFAC with its recommendation.
5. SFAC will make said amount available to the recommending bank on case to case basis for disbursement to the beneficiary either in lump sum or in stages, as may be considered appropriate by the bank.
6. Term Loan / working capital and equity amount from SFAC as Venture Capital assistance will be extended to the beneficiary through a single-window of the project financing bank.
7. Financial assistance from SFAC would be in the nature of equity, till the banks term loan is fully repaid by the project and would automatically be converted into a term loan on the last date of such repayment.
8. The venture capital after it becomes term loan could be repaid to SFAC in lump sum or in four quarterly instalments with the amount of interest at the same rate as the term loan.
9. During the pendency of loan, the bank will be having charge over the primary / collateral securities available with the beneficiary. After repayment of bank term loan, available securities will be automatically charged to the SFAC for recovery of its Venture Capital.
10. The bank will provide SFAC with full details of the terms and conditions under which the term loan is sanctioned including repayment schedule fixed for the loan.
11. The bank will also keep SFAC posted of the progress in implementation of the project and repayment of its term loan from time to time and its performance on yearly basis after the project becomes operational.
12. The funds received from SFAC will be kept in a separate account by the bank and released to promoters for the project implementation, as and when required.

B. Project Development Facility

•  SFAC will provide financial support to farmers, Producer Groups. Agripreneurs. Units in Agri-Export Zones, and Agriculture gradates (called beneficiary) in the preparation of bankable Detailed Project Reports (DPR) through empanelled consultants / institutions. SFAC will provide for the cost of preparation of DPR upto a ceiling of Rs. 5.00 lakhs depending upon size, location, activity and coverage on a case basis.

•  The beneficiary desirous of seeking assistance for preparation of DPR can approach nearest branch of the commercial bank along with the details / pre-feasibility of the proposed project for the recommendation of the bank.

•  The bank on being satisfied about the feasibility of the intending project will recommend it to SFAC for providing financial assistance for the preparation of DPR. Intending projects must be over RS. 50 lakhs (Rs. 25 lakhs in case of NE states and other hilly areas) in size.

•  Based on the activity and location of the project, SFAC will entrust preparation of DPR to one of the consultants on its panel.

•  SFAC will release cost of DPR preparation to the area Lending Bank with an intimation to the consultant.

•  Bank will release 25% of cost to empanelled consultant at the first stage, 50% on receipt of DPR and 25% within fortnight of receipt of DPR after having satisfied itself about the quality of DPR. Consultant will submit three copies of DPR, one each for beneficiary, bank and SFAC.

•  The DPR received from SFAC or directly from the consultant will be examined in detail by the lending bank for sanction of term loan and release of venture capital. A copy of the term loan sanction advice to the borrower will also be addressed to SFAC for its record.

•  PDF will also provide financial assistance to State SFACs for undertaking promotional activities for agribusiness development PDF will also arrange training and visits etc., of the entrepreneurs setting up the identified Agri-business projects.