The Kerala Financial Corporation (KFC) has introduced a major boost for small businesses with its brand-new KFC Machinery Loan Scheme for MSME. Launched in 2025, the scheme is designed to help micro, small, and medium enterprises (MSMEs) in Kerala upgrade or expand operations by financing machinery purchases.
For many MSMEs, lack of funds for modern equipment is a huge barrier to growth. This scheme aims to solve exactly that—by offering collateral-free loans backed by CGTMSE with flexible repayment terms.
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The machinery loan scheme can be a game-changer for industries like textiles, food processing, coir, rubber, and small-scale engineering units that often struggle to modernize due to high capital costs.
By enabling easy access to machinery finance, MSMEs can:
One of the most attractive aspects of the scheme is that it is backed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). This means MSMEs can avail loans without collateral, removing one of the biggest hurdles faced by small entrepreneurs.
Entrepreneurs can approach the Kerala Financial Corporation (KFC) branch offices or apply online through their official website.
From KFC’s website (and other reliable sources) here are some of the other loan schemes and features offered by KFC alongside the Machinery Loan Scheme:
| Scheme / Feature | Details |
|---|---|
| CMEDP (Chief Minister’s Entrepreneurship Development Programme), Edition II | Loans up to ₹2 crores under this scheme; covers both fixed assets and working capital. Subsidised interest rate ~5%. Helps startups, MSMEs, women entrepreneurs, return emigrants, agro-projects etc. 46 XX+2Kerala Financial Corporation+2 |
| KFC Agro-based MSME Loan Scheme (KAMs) | Special scheme for MSMEs in the agriculture sector. Aim is to assist a minimum of 400 agro‐based MSMEs annually. Kerala Financial Corporation+1 |
| LoC Scheme for MSMEs | Line of credit scheme, working capital support and for executing work orders, discounting bills etc. Upper limit up to ₹50 crores under certain conditions. Kerala Financial Corporation+1 |
| Modernisation, Upgradation, Expansion & Diversification | For existing industrial units, hotels, hospitals etc to modernise or diversify; loans may cover a high proportion (up to ~90%) of the expansion cost, with moratorium periods. Kerala Financial Corporation+1 |
| Startup Kerala Scheme | Designed for startups at various stages: proof of concept, prototype development, product trials etc. Helps with collateral-free or subsidised interest facilities. Kerala Financial Corporation+2Invest Kerala+2 |
| Working Capital / CUB (Current Utilization Borrowing) Arrangement | Smaller loan amounts (e.g. minimum ~₹5 lakh) for working capital, to support day-to-day operations. Kerala Financial Corporation |
Q1. What is the maximum loan amount under the KFC Machinery Loan Scheme?
MSMEs can get loans up to ₹5 crore covering 80% of machinery costs.
Q2. Do I need to provide collateral?
No. The scheme is collateral-free, as loans are backed by CGTMSE.
Q3. What is the repayment period?
MSMEs get up to 7 years to repay, with a 1-year moratorium.
Q4. Who is eligible for this scheme?
Registered MSMEs in Kerala planning to purchase or upgrade machinery.
Q5. How can I apply?
Applications can be submitted through Kerala Financial Corporation (KFC) offices or their official portal with necessary documents.
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