SIDBI in Granting Direct

Role of SIDBI in Granting Direct & Indirect Loans in India

Online Legal India LogoBy Online Legal India Published On 17 Feb 2023 Category Business

SIDBI is IDBI's wholly owned subsidiary, established under a special Act of Parliament in 1988 that went into force on April 2, 1990.

SIDBI manages the Small Industries Development Fund and the National Equity Fund, which IDBI formerly managed. It is primarily in charge of encouraging, funding, and advancing middle and small-sized businesses. SIDBI is also involved in the promotion of energy-efficient activities.

Objectives of SIDBI

  • Assist financial institutions on their way to becoming micro, small, and medium-sized enterprises (MSMEs) in confirming their financial health.
  • It makes direct loans to organisations classified in the MSME category.
  • It conducts global promotional initiatives for small-scale enterprises.
  • It provides bill discounting and rediscounting services.
  • It refinances loans to small-scale entities expedited through PLIs and offers resource support to them.
  • It offers services such as factoring, leasing, and others to firms operating in the MSME sector.
  • It supports employment-oriented industries, particularly in semi-urban regions, to develop work possibilities, preventing people from moving to cities.
  • SIDBI also takes measures to modernise and enhance existing businesses technologically.
  • SIDBI also co-promotes state-level venture funds.
  • It also promotes the timely flow of operating cash and term loans to small businesses.

Products Offered

SIDBI Soft Loan Fund For Micro, Small, and Medium Enterprises (SMILE)

  • The loan has a payback duration of up to ten years (including a moratorium period of 36 months).
  • Interest rates are competitive.
  • The service and industrial industries will be prioritised.
  • Coverage under the Credit Guarantee Scheme may be offered for loans of up to Rs.2 crore.

Finance for SMILE Equipment (SEF)

  • The minimum loan amount is Rs.10 lakh.
  • Interest rates are competitive.
  • The loan has a payback duration of up to 72 months (including the moratorium period).
  • Loans are made available to MSMEs operating for at least three years. MSMEs must also be financially solid.

Loans made in collaboration with the OEM

  • The highest loan amount that may be granted is Rs.1 crore.
  • Loans are made available to MSMEs operating for at least three years. MSMEs must also be financially solid.
  • The loan must be utilised for the purchase of Plant and Machinery.
  • The loan has a payback duration of up to 60 months (including the moratorium period).
  • Interest rates are competitive.

SIDBI - Loan for the Purchase of Equipment for the Development of an Enterprise (SPEED)

  • Financing up to 100% is possible.
  • Quick payment.
  • Loans are made available to MSMEs operating for at least three years. In addition, MSMEs must also be financially solid.
  • The loan payback duration is between 2 and 5 years (including a moratorium period of 3 to 6 months).
  • The interest rate is between 9.25% and 10% per year.

SIDBI - Loan for the Purchase of Equipment for the Development of an Enterprise PLUS (SPEED PLUS)

  • Purchases of high-end machinery may be eligible for 100% financing.
  • Quick payment.
  • There is no requirement to furnish collateral.
  • The interest rate varies from 8.80% to 10.50% per annum.
  • The loan payback duration is between 2 and 5 years (including a moratorium period of 3 to 6 months).

Top-up Loan for Immediate Needs (TULIP)

  • The loan is approved within seven days.
  • There is no requirement to furnish collateral.
  • The interest rate ranges from 10.00% to 11.00% per year.
  • The loan has a payback duration of up to 60 months (including a moratorium period of 6 months).

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

  • MSMEs are given loans to assist them in reducing their electricity bills.
  • The loan amount might range from Rs.10 lakh to Rs.2.5 crore.
  • The annual interest rate ranges from 9.10% to 10.20%.
  • The loan has a payback duration of up to 60 months (including a moratorium period between 3 months and six months).

Sidbi Supports the Healthcare Sector in the Fight Against the Second Wave of Covid-19 (Shwas)

  • 100% financing is possible.
  • Competitive interest rates are available.
  • There is no processing cost.
  • The interest rate fluctuates between 4.50% and 5.00% per annum.
  • The highest loan amount available is Rs.2 lakh.

Sidbi Supports Msmes for Recovery, and Organic Growth During the Covid-19 Pandemic (Arog)

  • 100% financing is possible.
  • Competitive interest rates are available.
  • A small amount of collateral is required.
  • There is no processing cost.
  • The interest rate is between 5.50% and 6.00% per annum.
  • The highest loan amount available is Rs.2 lakh.

Timely Working Capital Assistance to Revitalise Industries in times of Corona Crisis (Twarit)

  • The annual interest rate is 8.25%.
  • The loan has a payback duration of up to 48 months (including a moratorium period of 12 months).
  • There is no prepayment penalty.

Benefits of SIDBI

Some of the critical advantages of SIDBI are as follows:

Custom-made

SIDBI makes loans based on the requirements of the organisation. If the firm's needs do not fall into one of the standard categories, SIDBI will give appropriate funds.

Dedicated Dimensions

SIDBI tailors credits and loans to the size of the organisation. As a result, firms that fit the MSME criteria can get various loans tailored to their individual company needs.

Strike Interest Rates

SIDBI has links with various banks and financial organisations worldwide and may be able to offer loans at lower interest rates.

Assistance

SIDBI not only grants loans but also provides advice and recommendations. Relationship managers at SIDBI assist entities in selecting the best choice and providing assistance till the loan procedure is finished.

Free Security 

Without putting up any security, entrepreneurs may obtain loans of up to 100 lakhs.

Capital Development

An organisation's owner can obtain sufficient cash to satisfy its expansion goals without diluting ownership.

Subsidies

SIDBI has offered a number of plans with low-interest rates and simple conditions. It provides precise information and a deeper understanding of the schemes and loans available, and it may help owners make sensible business decisions.

Transparency

SIDBI's price and procedure are straightforward. The organisation does not impose any hidden fees.

Direct Loan Schemes

Some of the direct loan schemes provided under SIDBI are given below-

Schemes

Loan Amount

Time Period

Suitability

SIDBI Make in India Soft Loan Fund for MSME 

The smallest loan size for equipment financing is ten lakhs.

 

Twenty-five lakhs for other reasons

Maximum terms of ten years, with a three-year moratorium.

New companies in the manufacturing and service industries and established entities seeking to expand.

SEF (Small equipment finance) 

The smallest loan amount is ten lakhs.

Maximum Time Period- 72 months

MEMEs that have been in operation for at least three years have respectable financial performance.

Working Capital

Depends on financial capability

As per rules

Existing entities that are SIDBI or other bank clients

Loans made in collaboration with the Original Equipment Manufacturer

The highest amount- 1 crore

Maximum Time Period- 5 years

MEMEs that have been in operation for at least three years have respectable financial performance.

SIDBI stands for SPEED ( loan is provided for the purchase of devices for the development of the enterprises )

One crore maximum for new clients

 

Existing customers = maximum of 2 Crores

Maximum of ten years, with six-month moratorium

MEMEs that have been in operation for a minimum of three years and a minimum of two years are profitable.

SIDBI - SPEED (+ loan is available for the acquisition of equipment for the growth of businesses plus)

New customers = maximum of two crores

 

Existing clients = three crores maximum

Maximum of ten years, with six-month moratorium

MEMEs that have been in operation for a minimum of five years and three years are profitable.

 

Net sales must exceed five crores, with no operational losses in the previous two years.

SIDBI Provides Indirect Loan Schemes

SIDBI also provides indirect loans to banks, NBFCs, and other financial institutions. The following are the indirect loans that a financial institution can obtain from SIDBI:

Support for NBFCs

Non-Banking Financial Companies (NBFCs), Asset Loan Companies, or any finance firm registered with the RBI that provides credit to the MSME sector can apply for a loan through SIDBI. The eligibility conditions will differ from one lender to the next.

Scheme of Refinance

Under different refinancing programmes, SIDBI would give financial support to scheduled banks. SIDBI loans are available to schedule banks with excellent financials.

Small Finance Bank Assistance (SFBs)

SIDBI assists those banks by investing in SFB capitalization to close the equity gap. SIDBI has also provided refinancing assistance to MFIs and NBFCs following their conversion to SBFs.

Loan Procedure

  • To obtain a loan from SIDBI, the individual needs to go through the following steps:
  • The known advisor appointed by the SIDBI prepares a basic information memorandum.
  • The MSME entrepreneur then authorises it.
  • If a rating is required, the rating agency must assign a rating to the RBI-approved plan.
  • SIDBI will deal with the cases directly, providing equity or semi-equity to existing growth-oriented firms.
  • In other cases, the loan application will be forwarded to public-sector banks.

Conclusion

SIDBI assists MSMEs in getting the funding they require to expand, promote, enhance, and commercialise their innovative procedures and products. The bank provides a variety of plans, as well as financial services and products, to meet the needs of people in various industries.

Documents Necessary for Your Business Loans in India


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