What is SIDBI?
Small Industries and Development Bank of India (SIDBI) mainly focuses on the financing, promotion and development of the Micro, Small and Medium Enterprises (MSMEs). SIDBI’s primary objective is to strengthen the MSME sector by facilitating cash flow. The bank assists MSMEs to get funds for the development, commercialization and marketing of their innovative technologies and products. SIDBI offers customized financial products under several loan schemes and provides relevant services to meet the demands of various business projects.
Features of SIDBI (Small Industries and Development Bank of India)
- SIDBI provides refinance support to Small Scale Industries (SSIs)
- Funding support to MSME sector
- Helps in discounting the bills of Small Scale Industries
- Provides refinance to financial institutions, including banks, NBFCs & Small Finance Companies
- Offers financial services, such as hire purchase, factoring and leasing services
- Promotes employment opportunities among SSIs
- Provides assistance to exports
- Bank loans to women and underprivileged group of people
Benefits of availing business loans from SIDBI
- Concessional interest rates
- Customized form of credit and loans
- Most of the loans are Collateral Free
- Custom-made funding for MSMEs
- Subsidies on various schemes
- Transparent funding process
- Capital growth for business owners
- Assistance and advice provided by relationship managers
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Loan products offered by SIDBI
SIDBI covers mainly 6 products under Direct Loans that are discussed below:
- SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE)
- Smile Equipment Finance (SEF)
- Loans under Partnership with OEM
- Working Capital (Cash Credit)
- SIDBI Trader Finance Scheme (STFS)
- Loan for Purchase of Equipment for Enterprise’s Development (SPEED)
Let’s further have some basic understanding of these products:
- SMILE (SIDBI Make in India Soft Loan Fund for MSME): SMILE focuses on covering the financial requirements for new enterprises which are in the manufacturing or in the services sector. The loan amount offered under this scheme is minimum Rs. 10 lakh for equipment finance and Rs. 25 lakh for other purposes. Under SIDBI’s SMILE, Machinery loan is also a loan option that can be availed under Equipment loan segment. Repayment tenure is maximum of 10 years, including moratorium period of up to 36 months
- SMILE Equipment Finance (SEF): SEF has a simplified application format with competitive interest rate. MSME entities that want to purchase any new equipment or need financing for the same are covered under this loan scheme. Repayment period is of 72 months and the loan amount starts from Rs. 10 lakh
- Loans under Partnership with OEM (Original Equipment Manufacturer): This loan scheme is helpful for MSMEs that can purchase machines from OEMs. Minimum 3 years of business existence is required and the repayment period is of 60 months. Loan amount offered is maximum up to Rs. 1 crore
- Working Capital (Cash Credit): Working Capital is available for MSME units and offers seamless approvals, as per the loan applicant’s requirement
- SIDBI Trader Finance Scheme (STFS): STFS loan scheme is for MSME Retails/Wholesalers who are in existence for at least 3 years with a satisfactory financial position. The minimum loan amount offered is Rs. 10 lakh and maximum up to Rs. 1 crore. The repayment period shall depend on the cash flow and size of business and the repayment tenure is maximum up to 60 months
- Loan for Purchase of Equipment for Enterprise’s Development (SPEED): Under this loan scheme, SIDBI offers 100% financing with loan amount up to Rs. 1 crore for New to Bank and Rs. 2 crore for existing customers. Minimum 3 years of operations are required to get this loan wherein the repayment period is 2 to 5 years, including Moratorium period of 3-6 months. Borrowers can avail this loan at an interest rate of 9.25% to 10% per annum
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Types of Loan Schemes from SIDBI
|Loan Scheme||Eligibility Criteria||Repayment Tenure||Loan Amount||Features|
|SIDBI Make in India Soft Loan Fund for MSME (SMILE)||New Enterprises in the manufacturing as well as service sector and existing enterprises who want to expand their operations can apply for SMILE||Up to 10 years||Starts from Rs.10 lakh up to Rs.25 lakh||SMILE offers affordable interest rate with a longer repayment period|
|Small Equipment Finance (SEF)||MSME entities who have had three years of existence with good financial position can apply for SEF||Up to 72 months||Minimum loan amount is Rs.10 lakh and the maximum loan amount depends on the financial profile of the applicant||The loan scheme provides simplified application format which is easier for the applicants and the rate of interest is affordable and competitive|
|Loans under partnership with OEM (Original Equipment Manufacturer)||MSME entities who have decent financial position for at least 3 years can apply for this loan scheme||Up to 60 months||Minimum loan amount is Rs.1 crore. One can apply for higher loan amount as well as per the bank’s guidelines||The loan scheme works as a one stop solution for the MSMEs where they can purchase machines|
|Working Capital (Cash Credit)||Existing customers under SIDBI or other banks can apply for Working Capital|
|Tenure depends as per the bank guidelines||Depends on the loan applicant’s financial profile||Working Capital gives the option of choosing the banking facilities from at least 2-3 banks|
|SIDBI Trader Finance Scheme (STFS)||Retailers and Wholesalers in distribution, retailing, malls, and super markets with a financial profile for three years can apply for this scheme||The tenure depends on the loan amount and the maximum repayment tenure is up to 60 months||The minimum loan amount starts from Rs.10 lakh up to Rs.1 crore||The rate of interest is competitive along with flexible repayment options|
|Funds of Funds for start-ups||Start-ups who require funds for operational or day to day purpose, can apply for this scheme||As per the loan amount and financial profile of the loan applicant||As per the loan amount and financial profile of the loan applicant||This loan scheme was launched with the idea of supporting Alternative Investment Funds which can help in the contribution of SIDBI|
|Aspire Fund||Enterprises who are enlisted with SIDBI that can support the AIF’s for the contribution to SIDBI can apply for this scheme||Up to 6 years||As per the loan amount and financial profile of the loan applicant||Aspire fund helps in contributing to the early stages of a start-up in the form of manufacturing, service delivery etc|
|India Aspiration Fund||Varies from applicant to applicant||As per the loan amount and financial profile of the loan applicant||The loan amount depends on number of factors as the complete fund size of India Aspiration goes up to Rs.2000 crore||India Aspiration Fund focuses on promoting equity and equity linked investments in the MSME sectors|
|Assistance to NBFCs||The company should be registered with RBI and should be in business for 5 years||The loan repayment period starts from 2 to 5 and half years||The loan amount depends on the need based assistance of the companies||NBFCs and the loan companies that are registered with the RBI help in promoting the financial assistance to the MSME sector|
|Refinance Scheme||The entity should be in business operations for at least 3 years with earned profit of 2 years. The entity should also have strong profit or loss balance sheet for the last 3 years||Up to 5 years.||As per the loan amount and financial profile of the loan applicant||This loan scheme helps in supporting the micro and the small enterprises by providing smooth flow of cash credit to the MSME Sector|
|Assistance to Small Finance Banks (SFBs)||The entity should have a license sanctioned by the RBI to carry out small business operations. The entity should also have profits earned for the last 2-3 years||As per the financial institution’s guidelines||As per the loan amount and financial profile of the loan applicant||Assistance to Small Finance Banks helps in strengthening the small finance banks by providing the financial support|
Note: The mentioned interest rates, eligibility criteria, fees & charges are subject to change and depend on the sole discretion of SIDBI, RBI and Govt. of India. GST and service tax shall be levied extra on the applicable fee & charges on each loan from SIDBI.
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Additional Loan Products from SIDBI
SIDBI’s Venture Capital
This loan scheme covers some major initiatives which take care of start-up funding. This includes Start-ups Life cycle along with SIDBI’s interventions, Funds of Funds for Start-ups, Aspire Fund and India Aspiration Fund.
- Start-ups Lifecycle along with SIDBI’s interventions: There are new start-ups and ventures in the field of business that require the right funding from time to time. This initiative helps in providing the funds with the help of banks, NBFCs and SFBs
- Funds of Funds for Start-ups: The Government of India started this initiative to support various Alternate Investment Funds (AIFs) with the idea that it will bring some contribution to the start-up businesses. It aims to support the growth and development of the enterprises which are innovation driven
- Aspire Fund: Aspire fund focuses on providing financial backing to start-ups who are in the initial stages of setting up manufacturing and services
- India Aspiration Fund: With the support of RBI, India Aspiration Fund was set up in order to promote equity and equity based investments in start-ups and the MSME sector
SIDBI’s Indirect Finance
Under Indirect Finance, there are schemes where financial assistance is provided to banks, NBFCs and SFBs:
- Assistance through Banks, NBFCs, and SFBs: Indirect Finance is provided to Banks, NBFCs, SFBs and MSMEs
- Assistance to NBFCs: NBFCs which include the loan companies as well that are registered with RBI help in providing financial assistance to enterprises in the MSME sector
- Refinance Schemes: Assistance is provided to banks that are financially stable through the refinance schemes
- Assistance to Small Finance Banks (SFBs): In order to strengthen the SFBs equity and resource base, this scheme was introduced. This scheme focuses on providing refinance support to SFBs
There are 3 main schemes under Micro Lending namely Micro Lending Development Department, Responsible Finance Initiatives and Beyond Microfinance.
- Micro-Lending Development: The mission of Micro-Lending Development is to create an institution and provide micro financial services to the people who are economically weak, including women
- Responsible Finance Initiatives: In the light to promote cooperation and the right lending practices in the financial sector, this loan scheme comes as a big support to the banks and other financial institutions in the country
- Beyond Microfinance: This loan scheme helps the entrepreneurs to graduate from micro finance to a higher ticket size at an affordable rate
Steps to apply for a business loan from SIDBI
The application process of SIDBI is divided into a few steps that are mentioned in detail. Here is how you can apply for a business loan from SIDBI –
Visit www.udyamimitra.in. Here all the government based loan schemes are explained in detail.
Go to the Login section and select the tab of ‘Applicant’ under that.
Under the Applicant tab, click on ‘New User’
After clicking on New User, the first two options will appear asking for the expected loan amount and the scheme you wish to apply under. There is also an option of ‘Assess your scheme suitability’ so one can check the loan schemes under which they are eligible for.
After filling the two fields, the loan application form will expand asking for some mandatory information including personal and business related details.
After filling the application, click on Register. An account activation mail will be sent to your email containing the username and password. Login the portal with new credentials and a new form will appear asking information about your business activities.
Once all the details have been filled, you can validate the page and apply for the loan scheme which is applicable according to your financial profile.
SIDBI Tower, 15, Ashok Marg, Lucknow – 226001, Uttar Pradesh
Phone Number: 0522-2288546 ,0522-2288547, 0522-2288548, 0522-2288549 , 0522-4259700
Fax Number: 0522-2288459
SIDBI Mumbai Office
C-11, G-Block, Bandra-Kurla Complex, Bandra East,
Phone Number: 022-67531100
Fax Number: 022-67221528
SIDBI New Delhi Office
Atma Ram House, 1 Tolstoy Marg, New Delhi- 110001
Phone Number: 011- 23448300
Fax Number: 23682462
FAQs on SIDBI
Ques. What is SIDBI?
Ans: Small Industries Development Bank of India (SIDBI) helps in the promotion, development and finance of MSME sector in India. SIDBI loan provides financial assistance to MSMEs through their various loan schemes.
Ques. Is SIDBI a Nationalized bank?
Ans: No, SIDBI is not a nationalized bank however it is termed as development bank being a wholly-owned subsidiary of IDBI (Industrial Development Bank of India).
Ques. What is the maximum loan amount offered under SIDBI loan?
Ans. The maximum loan offered under SIDBI loan is up to Rs. 2 crore.
Ques. What is the maximum repayment tenure of SIDBI loan?
Ans. The maximum repayment tenure of SIDBI loan goes up to 10 years.
Ques. Who owns SIDBI?
Ans: SIDBI was previously owned by IDBI (Industrial Development Bank of India) but now it’s a completely independent body.
Ques. What is the purpose of SIDBI?
Ans: The primary purpose of SIDBI is to administer Small Industries Development Fund and National Equity Fund which were previously administered by IDBI.
Numerous new business schemes have been introduced in the past few years. One of the key focuses was to maintain an economic balance between the financial lenders and the customers. With SIDBI, one can easily understand the different schemes that it offers and apply instantly. SIDBI remains a one-stop platform for all the financial business solutions that you might be looking for.
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