Collateral-free loan of up to ₹50,000 for women entrepreneurs starting food catering businesses — thelas, canteens, tiffin services, and catering units. 36-month repayment with 1-month moratorium. Assets purchased serve as security. Apply through participating banks.
Complete walkthrough — from eligibility check to bank application, documentation, loan sanction, and combining with Mudra or PMEGP for larger amounts.
What is the Annapurna Scheme?
The Annapurna Scheme is a government-backed loan programme for women entrepreneurs who want to start or expand a food catering business. It provides loans of up to ₹50,000 at market-linked interest rates for purchasing utensils, kitchen equipment, and working capital needed to set up thelas (food carts), canteens, tiffin services, mess operations, and catering units. The scheme is designed to empower women who have cooking skills but lack the capital to start a food business.
Eligibility Criteria
Women aged 18 years and above who wish to start or expand a food catering/preparation business are eligible. The applicant should have experience or basic skills in food preparation (formal training not required — home cooking experience is sufficient). There is no specific income or education criterion. The applicant must not have defaulted on any previous bank loan. Both first-time entrepreneurs and existing small food business owners looking to expand are eligible under the scheme.
Loan Amount & Interest Rate
The maximum loan amount is ₹50,000. The interest rate is linked to the prevailing market rate (typically the bank’s base rate/MCLR, approximately 11–13% p.a.). While the interest rate is not subsidised, the scheme’s key advantage is easy accessibility and no collateral requirement. The loan is provided for purchasing cooking utensils, kitchen equipment (stove, mixer, grinder, refrigerator), crockery, serving items, and initial working capital (raw materials, packaging).
Collateral & Guarantee Requirements
No traditional collateral (property, fixed deposit) is required for the Annapurna loan. The assets purchased from the loan (utensils, equipment) serve as primary security — they are hypothecated to the bank. Additionally, a group guarantee or personal guarantor is required. A group guarantee means 2–3 women from the same locality jointly guarantee each other’s loans. Alternatively, a family member or known person can act as guarantor. This makes the scheme accessible to women without property or savings.
Repayment Terms
The loan is repaid in 36 equal monthly instalments (EMIs) after a 1-month moratorium (grace period) from the date of disbursement. This means your first EMI starts from the second month after receiving the loan. For a ₹50,000 loan at approximately 12% interest, the monthly EMI works out to roughly ₹1,660. The moratorium period gives you time to set up the business and start earning before repayment begins. Timely repayment builds your credit history for accessing larger loans in the future.
Types of Food Businesses Covered
The Annapurna Scheme covers a wide range of food businesses: thelas/food carts (chaat, momos, snacks, juice), tiffin/lunch delivery services, canteens (in offices, factories, schools), mess operations, home-based catering (for events, functions), small restaurants/dhabas, bakery from home, and packaged food preparation (pickles, papad, sweets). Essentially, any food preparation and selling activity run by a woman entrepreneur qualifies under this scheme.
Documents Required
Identity: Aadhaar card, PAN card (or Form 60 if PAN not available). Address: Voter ID, passport, or utility bill. Business: Brief description of the food business plan (1–2 pages — what you will sell, where, estimated daily sales). Photographs: 2 passport-size photos. Guarantee: Details of group guarantee members or personal guarantor (their Aadhaar, address proof). Bank account: Savings account statement for last 3 months (if available). No complex financial statements or project reports are required.
How to Apply — Participating Banks
Apply through participating banks including State Bank of Mysore (now merged with SBI), and other public sector banks that offer the Annapurna product. Visit the nearest bank branch → ask for the Annapurna Scheme loan application → fill the form with personal and business details → submit documents and guarantor information → the bank processes the application within 7–15 working days. Some banks accept walk-in applications while others may require an appointment. TaxClue can help identify participating bank branches in your area.
Combine with Mudra or PMEGP for Larger Amounts
If you need more than ₹50,000, combine the Annapurna Scheme with: PM Mudra Yojana — Shishu category (up to ₹50,000 additional, no collateral), Mudra Kishore category (₹50,000 to ₹5 lakh for expansion), or PMEGP (for larger food processing units with 25–35% subsidy). Start with the Annapurna loan, establish a track record, and then access larger funding. A good repayment history on the Annapurna loan significantly improves your chances of getting a Mudra Kishore or Tarun loan.
Tips for Success & Licence Requirements
To maximise your food business success: obtain an FSSAI Basic Registration (free for turnover up to ₹1.5 crore, apply online at fssai.gov.in), get Udyam MSME registration (free, instant online), maintain proper hygiene and quality standards, start with a focused menu, and use social media (WhatsApp, Instagram) for marketing. Consider registering on Zomato/Swiggy for delivery orders once established. Also, open a separate bank account for business transactions to maintain clean financial records for future loan applications.