SFAC Schemes and Funding Support for FPOs in India (2025)

Unlocking Equity Grants, Credit Guarantees, and Institutional Support for Farmer Producer Organisations

By Prashant Kumar

Introduction

Once an FPO (Farmer Producer Organisation) is registered, the next challenge begins — funding and sustainability. While incorporation gives farmers a legal identity, scaling operations requires access to working capital, equity, and credit. Recognising this, the Government of India launched the Formation and Promotion of 10,000 FPOs Scheme, implemented through SFAC, NABARD, and NCDC.

This initiative bridges the gap between policy and practice — ensuring every genuine, compliant FPO can access grants, credit, and market linkages. If you’ve already completed your incorporation process (see our guide on how to register an FPO in India), this article explains how to unlock funding through SFAC equity and credit schemes, and why compliance readiness is key to eligibility.

What is SFAC and Why It Matters for FPOs

The Small Farmers’ Agribusiness Consortium (SFAC) is the national-level institution under the Ministry of Agriculture that promotes and funds Farmer Producer Organisations (FPOs) through equity grants, credit guarantees, and capacity-building, enabling small farmers to operate as structured, market-ready enterprises.

SFAC plays the role of financial enabler and policy bridge — ensuring that smallholder collectives registered as Producer Companies or Cooperatives can access credit without collateral and strengthen their equity base. It partners with Cluster-Based Business Organisations (CBBOs) to train directors, review governance, and verify documentation before approving grants.

The “Formation and Promotion of 10,000 FPOs” Scheme

Launched as a five-year flagship programme, this scheme aims to create 10,000 sustainable FPOs across India by mobilising farmers into producer collectives and providing them with financial and technical support. Each cluster of FPOs is assigned to a CBBO, which acts as a professional handholding agency.

Key Objectives

• Organise small farmers into collective business entities.
• Strengthen FPOs through capacity-building, funding, and governance support.
• Facilitate bank linkages, institutional credit, and market access.
• Create self-sustaining rural enterprises within five years of formation.

Eligibility

Any legally registered Producer Company, Cooperative, or Farmer Society engaged in agricultural or allied activities can apply under this scheme through the SFAC FPO Portal or via a designated CBBO.

If you’re still setting up your FPO, read our step-by-step guide on how to register a Farmer Producer Organisation (FPO) before proceeding to funding.

SFAC Equity Grant Scheme (EGS)

The SFAC Equity Grant Scheme provides matching equity support up to ₹15 lakh to strengthen an FPO’s capital base and creditworthiness, enabling it to raise higher bank finance and expand its business activities sustainably.

Purpose

The equity grant doubles the FPO’s member capital, enhances its balance sheet, and increases its borrowing capacity. The grant is non-repayable and directly credited to the FPO’s bank account.

Eligibility

• The applicant must be a legally registered FPO (preferably a Producer Company).
• At least 50 active producer-members with valid records.
• Audited financial statements for the previous year.
• Properly maintained member and share registers.

Key Benefits

• Maximum grant: ₹15 lakh per FPO (one-time).
• Matching ratio: 1:1 with member equity contribution.
• Direct benefit transfer to the FPO’s account.
• Monitored by CBBO and SFAC for utilisation compliance.

For legal and compliance clarity on maintaining records post-grant, see our guide on [Post-Incorporation Compliance for FPOs in 2025].

SFAC Credit Guarantee Fund Scheme (CGFS)

SFAC’s Credit Guarantee Scheme allows FPOs to avail collateral-free loans from banks and financial institutions, with up to 85% of the loan covered under a government-backed guarantee, enabling new producer companies to access working capital and term loans without land or asset collateral.

Highlights

• Loan amount: Up to ₹1 crore.
• Guarantee coverage: 75–85% of sanctioned amount.
• Tenure: Up to five years.
• Eligible lenders: Scheduled banks, NABARD affiliates, RRBs, and cooperative banks.

This scheme solves the most common problem faced by early-stage FPOs — lack of collateral. It empowers Producer Companies to access loans for seed procurement, aggregation, and storage, supporting their first trading season or processing unit.

NABARD and NCDC Support for FPOs

NABARD – Capacity and Credit Support

Under its Producer Organisation Development Fund (PODF), NABARD provides working capital, equity support, and training grants. It also funds FPO incubation and bookkeeping workshops, helping FPOs transition from informal collectives to structured agribusinesses.

NCDC – Infrastructure and Cooperative Support

The National Cooperative Development Corporation (NCDC) focuses on infrastructure creation and long-term financing for FPOs formed as cooperatives. Typical support includes cold storage, grading units, transport facilities, and warehousing for agri-produce.

For a comparative view, read our article on Producer Company vs Cooperative – Which is Better for FPOs?

Application Process for SFAC Schemes

1. Incorporate the FPO – typically as a Producer Company under the Companies Act, 2013.
2. Register on the SFAC Portal – https://fpo.sfacindia.com.
3. Select the Scheme Type – choose “Equity Grant” or “Credit Guarantee.”
4. Upload Documents – COI, MoA, AoA, financials, member list, bank details.
5. Verification – by CBBO or State Nodal Agency.
6. Grant Approval – SFAC transfers funds directly upon compliance clearance.

In most cases, professional assistance from a Company Secretary or legal advisor helps streamline the process and ensures all statutory filings (like AOC-4 and MGT-7A) are up to date before submission.

Compliance Readiness — The Hidden Eligibility Test

A common reason why FPO funding applications fail is non-compliance. SFAC and NABARD require evidence that the FPO is legally active and properly managed. Before applying, ensure:

• Latest ROC filings are completed.
• Board meetings and AGM minutes are properly recorded.
• Member and share registers are maintained.
• Accounts are audited by a qualified professional.

For a step-by-step compliance calendar, refer to our detailed guide on Post-Incorporation Compliance for FPOs (2025)— part of the FPO Legal Series by Eclectic Legal.

Frequently Asked Questions

1. Can a newly registered FPO apply immediately for SFAC grants?
Yes. Once incorporation and bank account setup are complete, the FPO can apply for the Equity Grant Scheme. However, for the Credit Guarantee Scheme, most banks require at least one year of operational history.

2. Can an FPO avail both Equity Grant and Credit Guarantee benefits?
Yes, both schemes are independent. An FPO can first apply for the Equity Grant to strengthen its capital and later for the Credit Guarantee to access collateral-free credit.

3. How long does it take to receive SFAC assistance?
On average, 45–60 days, depending on documentation and verification speed. Delays usually occur if audited accounts or membership records are incomplete.

4. Do private agritech startups qualify as FPOs under SFAC schemes?
No. Only farmer-owned Producer Companies, Cooperatives, or Federations are eligible. Private companies may collaborate but cannot directly receive SFAC benefits.

5. Is the Equity Grant refundable?
No. It is a non-repayable government grant. However, utilisation is strictly monitored, and mismanagement can lead to withdrawal of future eligibility.

6. Are state governments also providing top-up schemes for FPOs?
Yes. States like Maharashtra, Madhya Pradesh, and Uttar Pradesh offer additional grants and subsidies for FPOs registered under the central scheme.

Why This Matters

For any FPO, access to SFAC and NABARD funding can be a turning point. But to benefit, registration, governance, and compliance must go hand in hand. The most successful FPOs are those that combine legal precision with financial discipline.

Once registered and compliant, your FPO is not just a farmer collective — it becomes a recognised agribusiness capable of receiving capital, participating in e-NAM, and forming export linkages.

For next steps, explore:

• Post-Incorporation Compliance Checklist for FPOs (2025)
• FPO Taxation and Accounting Rules in India (2025)
  — both part of the ongoing FPO Legal Series by Eclectic Legal.

About the Author

Prashant Kumar is a Company Secretary, Published Author, and Partner at Eclectic Legal, a full-service Indian law firm advising on corporate, regulatory, and transactional matters. He specialises in FPO structuring, agricultural law, and corporate compliance, helping farmer groups, startups, and agri-businesses build legally sound and sustainable organisations.
📩 prashant@eclecticlegal.com | ☎️ +91-9821008011