SIDBI

SIDBI or Small Industries and Development Bank of India mainly focuses on the development of the micro, small and medium enterprises (MSME). The primary objective of SIDBI is to strengthen the MSME sector by providing them financial assistance. The bank assists MSME to get funds for the development, commercialization and marketing of their innovative technologies and products. SIDBI offers customized financial products with different schemes and services to meet the demands of various business projects.

Objective of SIDBI (Small Industries Developmental Bank of India)

SIDBI majorly follows four major objectives which are development, promotion, coordination and financing. Some of its functions are:

SIDBI extends financial support to Supplemental Security Income (SSIs), MSMEs and other service sectors.
It provides indirect finance through banks, NBFCs, SFCs and other financing institutions.
SIDBI aims to create equilibrium in the financial sector by strengthening credit flows and promoting skill development.

Products Covered Under SIDBI

SIDBI covers mainly 5 products, that includes:

Direct Loans– Under Direct Loans, there are five main loan categories which are : 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) and SIDBI Trader Finance Scheme (STFS)

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 service sector. Enterprises which already exist and who wish to expand their operations or upgrade their technologies are also covered under this loan scheme.

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.

Loans under Partnership with OEM (Original Equipment Manufacturer):This loan scheme is helpful for MSMEs that can purchase machines from OEMs.

Working Capital (Cash Credit):Working Capital is available for MSME units. Working Capital 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.

Venture Capital – This loan scheme covers some major initiatives which take care of start-up funding. This includes Start-ups Lifecycle along with SIDBI’s interventions, Funds of Funds for Start-ups, Aspire Fund, 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 with 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.

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 (SFB):In order to strengthen the SFBs equity and resource base, this scheme was introduced. This scheme focuses on providing refinance support to SFBs.

Micro-Lending– There are three main schemes under Micro Lending namely Micro Lending Development Department, Responsible Finance Initiatives and Beyond Microfinance.

Micro-Lending Development Department (MLDD):The mission of MLDD 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.

Some Financial Parameters of SIDBI loan schemes are mentioned below:

Loan Scheme	Eligibility Criteria	Loan 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 in financial sector can apply for SEF.	Up to 72 months.	Minimum loan amount is Rs.100 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 are in the financial sector for at least 3 years can apply for this loan scheme.	Up to 60 months.	Minimum loan amount is Rs.100 lakh. 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 fund size of India Aspiration fund 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.

Step By Step Guide to apply for 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 loan from SIDBI –

STEP 1:

Visit www.udyamimitra.in. Here all the government based loan schemes are explained in detail.