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  • SIDBI - Small Industries Development Bank of India

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  • Small Industries Development Bank of India (SIDBI) offers a wide range of finance schemes to the Micro, Small, and Medium Enterprises (MSME) industry. Loan amounts can range from Rs.10 lakh to Rs.3 crore. Loan repayment tenures can go up to 10 years. These loans, which are offered at attractive interest rates, help provide necessary capital for the growth and expansion of MSMEs. Loans above Rs.1 crore can be availed without any collateral required. Loan subsidies are also available.

    Direct loan schemes offered by SIBDI

    The direct loan schemes offered by SIDBI are given below:

    Loan Scheme Loan Tenure Loan Amount Eligibility Criteria
    SIDBI Assistance to Facilitate Emergency Response Against Coronavirus (SAFE) Up to 5 years including moratorium Up to Rs.50 lakh New customers: 2 years of cash profits and account not in SMA1/2 category
    Existing customers: Cash profits in last audited balance sheet not in the SMA1/2 category
    SIDBI Assistance to Facilitate Emergency Response Against Coronavirus Plus (SAFE PLUS) Repayable over 4-month cycle Linked to unit turnover-up to Rs.1 crore New customers: 2 years of cash profits and account not in SMA1/2 category
    Existing customers: Cash profits in last audited balance sheet not in the SMA1/2 category
    Smile Equipment Finance (SEF) Up to 72 months Minimum loan amount of Rs.10 lakh can be availed Should have 3 years' experience in the financial or business sector
    SIDBI Make in India Soft Loan Fund for MSME (SMILE) Up to 10 years, including 3-year moratorium Between Rs.10 lakh and Rs.25 lakh New or existing enterprises
    Working Capital (Cash Credit) As per the terms and conditions Depends on the financial ability of the applicant Existing customers under SIBDI or of other banks can apply
    Loans under partnership with OEM (Original Equipment Manufacturer) Up to 5 years with eligible moratorium Up to Rs.1 crore with higher amounts subjected to guidelines Should have 3 years' experience in the financial or business sector
    SIDBI Trader Finance Scheme (STFS) Up to 5 years including moratorium Between Rs.10 lakh and Rs.1 crore Should have retailing, financial or business experience of 3 years
    SIDBI – Loan for Purchase of Equipment for Enterprise’s Development (SPEED) Up to 5 years including moratorium of up to 6 months New customers: Up to Rs.1 crore
    Existing customers: Up to Rs.2 crore
    3 years of existing business and profit-making for at least 2 years
    SIDBI-Loan for Purchase of Equipment for Enterprise’s Development Plus (SPEED PLUS) Up to 5 years including moratorium of up to 6 months New customers: Up to Rs.2 crore
    Existing customers: Up to Rs.3 crore
    5 years of business experience making profits for at least 3 years
    SIDBI - RETAIL LOAN SCHEME FOR TRADE FINANCE (RLS) Up to 5 years including 3-month moratorium Up to Rs.1 crore Should have 3 years of business experience
    TOP UP LOAN FOR IMMEDIATE PURPOSES (TULIP) Up to 5 years 30% of existing exposure or 20% of net sales subject to Max Rs.2 crore You should have availed a SIDBI loan scheme for at least a year and have satisfactory financial records
    SIDBI TERM-LOAN ASSISTANCE FOR ROOFTOP SOLAR PV PLANTS (STAR) Up to 5 years including moratorium of up to 6 months Up to Rs.2.5 crore Proof of 2 years of cash profit and satisfactory financial records

    Benefits of availing a loan from SIBDI

    Listed below are the key benefits of availing a loan from SIBDI:

    • Tailor-made - SIDBI designs loans according to the needs of your enterprise. If your needs do not fall into the usual and ordinary category, SIDBI will help fund you in the right way.
    • Specialised Size - Loans are altered according to the size of the enterprise. So micro, small and medium enterprises can get different loans tailored to suit their business.
    • Attractive Rates - SIDBI has a tie-up with many banks and international financial institutions and can get concessional rates of interest. The tie-ups include KfW, World Bank and Japan International Cooperation Agency.
    • Assistance - SIDBI doesn’t just give you a loan, it also gives your assistance and much needed advice. Relationship managers help entrepreneurs make the right decisions and provide assistance till the end of the loan process.
    • Collateral Free - Entrepreneurs can get up to Rs. 100 lakhs without offering collateral. This is done through the establishment of a Trust called Fund Trust for Micro and Small Enterprises (CGTMSE).
    • Risk and Growth Capital - Without diluting the ownership of the company, entrepreneurs can acquire sufficient capital to meet growth requirements.
    • Venture and Equity Funding - SIDBI has a wholly owned subsidiary called SIDBI Venture Capital Limited that can provide growth capital in the form of equity through venture capital funds that are focussed on MSMEs.
    • Government Subsidies - Take advantage of various schemes that have concessional rates and relaxed terms offered by the Government. SIDBI has a wider understanding and in-depth knowledge of loans and schemes available and can help you make the best decision for your company.
    • Transparency - The process and rate structure is transparent. There are no hidden charges.

    Objective of SIDBI

    The objective and goal of SIDBI is to offer short-term loans and refinancing solutions to companies listed in the Micro, Small and Medium Enterprises (MSME) sector as well as for financial institutions directly related to such companies – offering loans for development and sustenance.

    Key functions of SIDBI

    Listed below are the chief functions of SIDBI:

    • Aid financial institutions (cooperation and commercial banks) lending to small-scale industries in the Small and Medium Enterprises (MSME) sector to ensure their financial health.
    • Offer SIBDI direct loans to companies categorised in the Small and Medium Enterprises (MSME) sector.
    • Carry out marketing initiatives for small-scale industries on a global scale.
    • Offer venture funding possibilities for industries in the Small and Medium Enterprises (MSME) sector.
    • Promotion of employment and upgradation of technology in the sector.
    • Offer job opportunities for individuals who wish to work in the sector. SIDBI recruitment updates are displayed on the website - https://www.sidbi.in/en/careers/archived
    • Loan offers for development and maintenance of small-scale industries in the country.
    • Marketing of small-scale industries on a global scale.
    • Promotion of employment-oriented industries in the small-scale industry sector.
    • Ensure technology upgradation in the small-scale industry.
    • Ensures the financial health of cooperation banks and commercial banks' lending to small-scale industries.
    • Promotion of venture funds.

    Products offered under SIDBI

    1. SIDBI Assistance to Facilitate Emergency Response Against Coronavirus (SAFE)

      This scheme supports MSMEs in tiding over the economic challenges induced by the coronavirus crisis by providing up to 100% financing for working capital requirements. It ensures that MSMEs receive loans within 48 hours. There are no processing charges or no pre-payment charges. Repayment tenure for the term loan is up to 5 years including moratorium and for the Working Capital Term Loan (WCTL) it is for 18 months including moratorium. Maximum quantum of finance is Rs.50 lakh.

    2. SIDBI Assistance to Facilitate Emergency Response Against Coronavirus Plus (SAFE PLUS)

      This scheme provides MSMEs up to 100% financing for working capital requirements for specific orders to overcome financial challenges that arise out of the coronavirus pandemic. The credit guarantee cost is borne by SIDBI. Loans are disbursed within 48 hours. There are no processing charges or no pre-payment charges. The Working Capital Term Loan (WCTL) repayment tenure is a revolving one that is repayable over a 4-month cycle. Maximum quantum of finance is Rs.1 crore and is linked to the unit’s turnover.

    3. SIDBI Make in India Soft Loan Fund For Micro Small and Medium Enterprises (SMILE)

      The main aim of this scheme is to cover both manufacturing and service sector. If you wish to start a business in the manufacturing or service sector, you can avail this loan. The minimum loan amount is Rs.10 lakh with Rs.25 lakh being the maximum. The loan repayment tenure can go up to 10 years.

    4. SMILE Equipment Finance (SEF)

      You can avail this loan if your MSME entity has been in existent for at least three years. The maximum loan amount you can avail is Rs.10 lakh with a maximum repayment tenure of 72 months.

    5. Loans under partnership with OEM

      If your business has been in existence for at least three years and is in a stable financial position, you can avail this loan so that you can purchase the necessary machineries and plants from OEMs. You can avail up to Rs.10 lakh with the maximum repayment tenure of 60 months.

    6. Working Capital (Cash Credit)

      You can avail this if you have a business of your own and wish to raise funds for venture expansion.

    7. SIDBI Trader Finance Scheme (STFS)

      If you are a MSME retailer, wholesaler, distributor, etc. and own a business which has been in existence for a minimum of 3 years, you can avail this SIDBI loan scheme. Your business should be doing well financially and in case there is a drop in sales turnover then it should not be more than 10% yearly for 2 years. You can avail a loan amount between Rs.10 lakh and 1 crore with repayment tenures up to 5 years.

    8. SIDBI – Loan For Purchase of Equipment For Enterprise's Development (SPEED)

      If you own a stable business which has been in existence for a minimum of 3 years and is making suitable profits, you can avail this loan scheme to raise capital and expand your business. You can avail a loan at rates of interest ranging between 9.25% p.a. and 10% p.a. with repayment tenure ranging between 2 years and 5 years.

    9. SIDBI - Loan For Purchase of Equipment For Enterprise's Development PLUS (SPEED PLUS)

      If you own a business which has been doing well for the past 3 years and has been in existence for a minimum of 5 years, then you are eligible to avail this loan scheme. You can avail this loan to purchase high end machineries for your business.

    10. SIDBI - Retail Loan Scheme For Trade Finance (RLS)
    11. You can avail this loan if you wish to avail a loan so that you can raise working capital, then you can avail this loan scheme. Your business must be in existence for a minimum of 3 years and should be making profits for the past 3 years. You can avail a loan between Rs.10 lakh and Rs.1 crore with rates of interest levied between 10% p.a. and 11.50%.

    12. Top up Loan For Immediate Purposes (TULIP)
    13. If you have availed a SIDBI loan scheme for at least a year and need more capital to build your business, you can avail this scheme. You will be eligible to receive up to 100% finance on 10% FD and extension of charge at interest rates ranging between 10% p.a. and 11% p.a.

    14. SIDBI Term-loan Assistance For Rooftop Solar PV Plants (STAR)

      You can avail this SIDBI loan scheme if you own a MSME and wish to reduce the power bill. You can avail a loan between Rs.10 lakh and Rs.2.5 crore with interest rates ranging between 9.10% p.a. and 10.20% p.a.

    Indirect Loan Schemes Offered under SIDBI

    SIDBI also offers indirect loans to various banks, NBFCs, and other types of financial entities. The indirect loans that a financial body can avail from SIDBI are given below:

    1. Assistance to NBFCs
    2. Non-Banking Financial Companies (NBFCs), Asset Loan Companies, or any finance company which is registered with RBI and are engaged in providing finance enterprise in MSME sector can apply for loan under SIDBI. The eligibility criteria will depend from lender to lender.

    3. Refinance Scheme
    4. SIDBI will provide financial assistance to schedule banks under various refinance scheme. Schedule banks with strong financials are eligible for loans under SIDBI.

    5. Assistance to Small Finance Banks (SFBs)
    6. SIDBI provides assistance to those banks by providing equity investments for capitalisation of SFBs to meet their equity gap. SIDBI has also been providing refinance support to MFIs and NBFCs post their transformation to SBFs.

    5 steps to apply for a loan from SIBDI

    Applicants should follow the steps mentioned below to apply for a loan from SIBDI:

    Step 1: Visit the official website of SIBDI

    Step 2: Click on the ‘Borrower’s Corner’ tab.

    Step 3: Enter your username and password.

    Step 4: The applicant has to then enter the desired loan amount and choose a scheme.

    Step 5: The applicant has to enter personal details such as his/her name, username, email ID, mobile number, business address, state, district, etc. Click on ‘register’ to complete the application process.

    Finance Schemes for Sustainable Development including Energy Efficiency and Cleaner Production in MSMEs

    These schemes are aimed at helping companies and manufacturers who deal with saving energy, facilitating cleaner production and the like. These schemes strive to provide attractive rates of interest to encourage energy saving projects. Companies can reduce their energy costs and enhance their profit. The schemes help achieve waste reduction, control pollution, recover valuable by-products during production and participate in sustainable growth.

    Purpose

    • To promote energy efficient enterprises in the MSME sector.
    • Contribute to reducing the severity of climate change by reducing greenhouse gas emission especially Carbon Dioxide.
    • Use financial products to help reduce pollution and emissions.
    • Provide support for MSMEs who want to increase their scale, and invest in the development and commercialization of projects based on innovative technology.

    Funding

    The schemes are funded in the following ways:

    • Direct funding by SIDBI
    • Refinance to Primary Lending Institutions (PLIs)
    • Refinance to Non-Banking Financial Companies (NBFCs)

    Who can Borrow?

    • MSME Units
    • The borrower’s business should be in existence for at least three years where the applicant will have to show a profit for at least two years
    • Proposal should be in the range of C1-C8
    • The unit should be audited by a technical agency
    • The unit in order to avail this loan should not have availed Performance Linked Grant under the WB-GEF Project
    • The unit should be in compliance with the Environment & Social Management Framework

    Loan amount and tenure

    • Loan amount: Up to Rs.10 lakh or 90% of the project cost. The maximum loan the unit can avail is up to Rs.1.5 crore
    • Repayment tenure:Not more than 3 years for loan amount up to Rs.50 lakh, and not more than 5 years for loan amount above Rs.50 lakh

    Schemes

    • JICA Phase 3 - Scheme for Energy Saving Projects in MSME Sector
    • Sustainable finance Scheme (SFS)
    • Financing End to End Energy Efficiency Investments in MSMEs (4E Financing Scheme)
    • Green Loan Scheme (GLS)

    Eligibility

    • MSMEs that fall under the definition of Government of India (MSMED Act).
    • Existing customers of SIDBI who meet the criteria of internal rating.
    • Enterprises that have been profitable for the past three years. It must have two years of satisfactory conduct related to banking credit history. The enterprise must either meet the internal rating criteria or submit external ratings from ICRA, D&B, SMERA or CRISIL.

    Receivable Finance Scheme

    Many MSMEs face the problem of delayed payments for the credit sales made to larger purchaser companies. SIDBI recognises the problems that can arise out of this situation for the MSME and how it can significantly affect the financial health of the company. Therefore, it devised a scheme under which these companies can acquire finance against the bills or invoices that the MSME holds against the credit purchase made by the purchaser company.

    Objectives

    To help MSMEs maintain their financial health which depends greatly on how quickly their receivables are realised. This scheme helps reduce the issues suppliers face with receivables belonging to MSMEs. It aims to help them improve their liquidity and cash flow. The scheme’s objectives are to help the MSMEs in the following activities.

    • Efficient Cash Management
    • Discounting at competitive rates
    • Quicker realization of receivables

    Usage of Funds

    • The finance covers discounting of bills of exchange and invoices that arise out of sale of indigenous components, accessories, parts, sub-assemblies, intermediates by an MSME.
    • The finance also covers the services provided by an MSME in the services sector to a Purchaser Company.

    Eligibility

    • The seller or the purchaser must qualify to be an MSME in the manufacturing or service sector.
    • MSMEs that are engaged in undertaking or manufacturing related to the sale of components, accessories, parts, sub-assemblies, intermediates and services to large and medium scale units.
    • Large Corporates that procure raw materials from MSMEs.

    Finance for Upgradation / Modernisation

    There is a need for constant upgrading when dealing with technology. Companies need to modernize and upgrade their technological processes to stay on par with the current conditions. Companies also need to expand their capacity every now and then. SIDBI plays an important role in these situations to help companies meet their financial needs. SIDBI has been marked as a Nodal Agency to help in assisting and monitoring the interface and coordination with banks, financial institutions and the Government.

    Schemes

    • Technology and Quality Upgradation Support to Micro, Small and Medium Enterprises
    • Credit Linked Capital Subsidy Scheme (CLCSS)
    • FPTUFS – Scheme for Food Processing Industries
    • Integrated Development of Leather Sector Scheme (IDLSS)

    TIFAC - SIDBI Revolving Fund for Technology Innovation

    Under this scheme, SIDBI provides financial assistance to MSMEs who want to invest in development and upscaling. It also helps out in the demonstration of innovative technology based projects and the need for commercialization.

    Funding

    SIDBI provides assistance in the form of early stage “debt” funding. The terms are relaxed to help the MSME in developing, demonstrating and commercializing new innovations. The scheme supports emerging technology, new products, unproven technology and new processes that have not been commercialized yet. Assistance granted is usually 80% of the cost of the project. The maximum funding granted per project is Rs.1 crore. It could exceed this limit in special cases based on the innovative factor of the project.

    Process

    • Once a proposal for finance is submitted, it will be subjected to a technical evaluation by TIFAC.
    • The proposal will have to be evaluated for financial viability by SIDBI.
    • The Project Approval Committee (PAC) consisting of officials of SIDBI and TIFAC will ten approve the assistance?

    Usage of funds

    • Capital expenditure which includes factory shed or industrial housing, and plants. It also includes machinery, equipment, utilities, quality control and testing equipment.
    • Working capital margin
    • Cost of manpower
    • Pre-operative expenses
    • Intangible asset expenses such as copyrights, patents, technology transfer fees, marketing, licensing, research and development, and branding.
    • Contingencies
    • Any other overheads that are required for the project

    Interest Rate

    The Project Approval Committee is in charge of approving the interest rate granted under this scheme. The interest rate offered does not exceed 5% per annum.

    Other Charges

    An upfront fee of 0.5% of the sanctioned amount + taxes is charged.

    Repayment

    The loan should be repaid within 6 years from the date of project completion. This 6-year period includes the moratorium period granted. In special cases, this period can be extended.

    Security

    • Personal guarantee of the promoters
    • First charge on moveable and immoveable assets created out of the project.
    • First or second charge on other assets of the unit to be created. This depends on if the prior charge is insufficient.

    Eligibility

    New and existing MSME units are eligible to apply for finance under this scheme.

    SIDBI has a lot to offer to MSMEs and has been identified as a Nodal Agency when it comes to Government Schemes for this sector. Enterprises can secure finance more conveniently. SIDBI will provide assistance to go about it the right way and get the most which will benefit the company and ultimately benefit the country.

    Small Industries Development Bank of India FAQs

    1. Are MUDRA loans offered by SIBDI?

      Yes, MUDRA loan is one of the loan products offered by SIBDI.

    2. What documents should I submit if I wish to apply for a SIDBI direct loan?

      Applicants for the SIBDI direct loan should submit proof of identity and address, PAN card, documents proving their business, etc.

    3. Is the credit score of the individual taken into consideration when applying for a SIBDI loan?

      No, the credit score of the individual or partners are not taken into consideration.

    4. What the types of finance offered by SIBDI?

      SIDBI offers direct finance, in-direct finance and Micro Finance.

    5. Is SIBDI a subsidiary of the Reserve Bank of India?

      No, it is not a subsidiary of the RBI. Shares of SIDBI are owned by the Government of India and other institutions which are owned or controlled by the Central Government.

        

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