Small industrial Development Bank of India (SIDBI) is the top development financial institution in the country and was established on 2 April 1990, following the Indian Parliament Act to offer financial solutions for Micro, Small and Medium Enterprises (MSME) sector. Headquartered in Lucknow, SIDBI is one of the All India Financial Institutions (AIFIs) that are regulated and supervised by the Reserve Bank of India (RBI). The biggest shareholders of SIDBI are State Bank of India (SBI), Life Insurance Corporation of India (LIC), and Government of India.
Table of Contents
|Loan Scheme||Loan Tenure||Loan Amount||Eligibility Criteria|
|Small Equipment Finance (SEF)||Up to 72 months||Loans up to Rs.1 crore||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||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||Minimum loan amount of Rs.1 crore||Should have 3 years' experience in the financial or business sector|
|SIDBI Trader Finance Scheme (STFS)||Up to 5 years||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||Up to Rs.1 crore if you are a new customer and up t0 Rs.2 crore if you are an existing customer||Should have an existing business for at least 3 years and should be making profits for at least 2 years|
|SIDBI-LOAN FOR PURCHASE OF EQUIPMENT FOR ENTERPRISE’S DEVELOPMENT PLUS (SPEED PLUS)||Up to 5 years||Up to Rs.2 crore||Should have 5 years of business experience. The business should be making profits for at least 3 years|
|SIDBI - RETAIL LOAN SCHEME FOR TRADE FINANCE (RLS)||Up to 5 years||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 `2 Crore||You should have availed a SIDBI loan scheme for at least a year and must have a satisfactory financial record|
|SIDBI TERM-LOAN ASSISTANCE FOR ROOFTOP SOLAR PV PLANTS (STAR)||Up to 5 years||Up to Rs.2.5 crore||You must be able to show your venture’s cash profit for at least 2 years and must have a satisfactory financial record|
Listed below are the key benefits of availing a loan from SIBDI:
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.
Listed below are the chief functions of SIDBI:
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.
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.
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.
You can avail this if you have a business of your own and wish to raise funds for venture expansion.
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.
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.
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.
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%.
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.
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.
SIDBI offers a loan facilitation and syndication service through partnerships with banks, accredited consultants and rating agencies. SIDBI helps existing manufacturing and service sector units get loans from banks through a structured mechanism. The process is transparent and strives for timely loan sanction or consideration of these loan applications. This initiative helps business avoid delays in the loan application process. It enhances the flow of financial assistance to the MSME sector.
The accredited consultants provide a number of useful services for the purpose of loans.
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 ‘applicant’ 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.
To process a loan through SIDBI, the entrepreneur will have to go through the following process.
Step 1: Accredited consultants empanelled with SIDBI will prepare the documents required. Based on the information and requirements indicated by the MSMEs, the ACs will draft a Basic Information Memorandum (BIM). This document will contain all information relevant to the banks and rating agencies.
Step 2: The BIM is approved by the MSME entrepreneur. The ACs will then submit the BIM to SIDBI.
Step 3: If needed, the proposal will be rated by a rating agency approved by the RBI.
Step 4: SIDBI will directly handle the following cases:
Step 5: For any other case, the loan application will be submitted to Public Sector Banks. SIDBI has a memorandum of understanding (MOU) with public sector banks for the purpose of loans.
SIDBI will assist the entrepreneur through every stage till the loan is processed. MSMEs have a much better chance of getting their loan sanctioned in time and can avoid unnecessary delays.
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.
The schemes are funded in the following ways:
The financing received through these schemes are intended for the following use:
The aim of this project is to encourage and improve energy efficiency through commercial investments. The target of this scheme is the small and medium enterprises that invest and deal with energy efficiency goods and services that help reduce greenhouse gases. MSMEs can apply for finance under such grants by submitting an application to SIDBI with a brief about the business and requirements.
Under this initiative, World Bank and Global Environment Facility (GEF) are helping MSME clusters in India through SIDBI and the Bureau of Energy Efficiency (BEE) to reduce greenhouse gases and improve energy efficiency through better financing. On September 13th, 2010, the grant agreement was signed and was effected on 28th October, 2010. SIDBI was granted $9.05 million under this grant to be utilized over a period of four years. GEF also granted $2.25 million to BEE to be utilized for the implementation of energy efficiency in MSMEs in India.
SIDBI set up a Project Management Unit at New Delhi to coordinate the disbursement of the grant to the target group which consists of five energy intensive clusters.
Activities under the grant
SIDBI played a major role in this project providing the following services.
Growth Capital & Equity Assistance
SIDBI helps existing small and medium business meet their needs for capital in order to grow.
Under this scheme, SIDBI provides assistance in form of mezzanine or convertible instruments, subordinated debt and equity to deserving enterprises.
For debt-based instruments, SIDBI requires the following security to be provided when applying for finance under this 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.
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.
Usage of Funds
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.
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.
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. 100 lakhs. It could exceed this limit in special cases based on the innovative factor of the project.
Usage of funds
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.
An upfront fee of 0.5% of the sanctioned amount + taxes is charged.
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.
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.
Ans: Yes, MUDRA loans are one of the loan products offered by SIBDI.2. What documents should I submit if I wish to apply for a SIDBI direct loan?
Ans: 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?
Ans: No, the credit score of the individual or partners are not taken into consideration.4. What the types of finance offered by SIBDI?
Ans: SIDBI offers direct finance, in-direct finance and Micro Finance.5. Is SIBDI a subsidiary of the Reserve Bank of India?
Ans: No, SIDBI is listed under the Reserve Bank of Indian and the Department of Financial services. In fact, State Bank of India, Life Insurance Corporation and the Government of India are the largest stakeholders in SIBDI.
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