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Small Industries and Development Bank of India (SIDBI) is a regulatory body for licensing and regulation of MSMEs. SIDBI’s primary objective is to help Banks and other lending institutions in assisting MSMEs and SSIs to avail funds for business expansion purposes and to meet working capital requirements.
Further, shall discuss the SIDBI’s Features & Top 17 Direct Finance Schemes offered for MSMEs that include Term Loan, Secured Business Loan, EXPRESS 2.0, SAATH, ARJANA, STEP, Ubharte Sitaare Programme, STHAPAN, ARISE, TULIP, STAR, SPEED PLUS, SPEED, CASH Credit, Loans with OEMs, SMILE, and PRATHAM.
SIDBI – Highlights
- SIDBI offers refinance support to Small Scale Industries (SSIs) and Micro Small and Medium Enterprises (MSMEs)
- Funding support to the 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
- Offers assistance to handle exports
- Bank loans offered to women entrepreneurs and underprivileged groups of people
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SIDBI’s Top 17 Direct Loan Schemes for MSMEs
1) General Purpose – Term Loan
The General Purpose Term Loan, as the name states, is a term loan with the objective to meet the working capital requirements of MSMEs.
Purpose:
- Setting up of new MSME units
- Expansion, modernization, diversification, quality certification, and technology up-gradation of existing units in the MSME sector
- Procurement of additional machinery or equipment
- For undertaking various marketing-related activities
| General Purpose Term Loan | |
| Nature of Loan | Term loan and other forms, such as Working Capital Term Loans, etc. |
| Loan Amount | Minimum Rs. 10 lakh |
| Loan Tenure | Maximum 8-10 years for Term loan (including moratorium up to 18 months) |
| Upfront Fee (Nonrefundable) | 1% of the term loan sanctioned |
|
Minimum Promoter’s Contribution |
· New Projects- 33%
· Existing well-performing units- lower contribution [up to 25%] could be accepted |
| Debt Equity Ratio (DER) | Not exceeding 3:1 |
|
Asset Coverage Ratio (ACR) |
Minimum overall asset coverage of 1.3 for existing units and 1.4 for new entities, including FACR of 1.00 |
2) Secured Business Loans for MSMEs
Business loans are offered to MSMEs engaged in the manufacturing and services sectors. Under this scheme, financial assistance is offered for planned and unplanned business-related expenses. The loan amount depends upon the MSME’s collateral/security to be submitted and its repayment capacity, as per current operations.
Eligibility Criteria
- Existing MSMEs with net profit in 2 years out of last 3 years with cash profits in all the 3 years
- Borrower should not be a defaulter to any bank
- Other financial norms, as specified from time to time
Features of Secured Business Loan (SBL)
- Nature of Loan: Open-Term Loan
- Loan Amount: Up to Rs. 10 crores and Linked to gross cash accruals and collateral security value
- Eligible heads for financing: For any bonafide business expenditure
- Rate of Discount: Fixed interest rate linked to PLR as per credit rating
- Security: Up to 10 years, including the moratorium period
- Foreign Currency Assistance: Shall be availed under the scheme towards the creation of tangible assets subject to natural hedge & other terms & conditions
Comparison of Business Loan Interest Rates offered by Top Banks/NBFCs
| Bank/NBFCs | Interest Rate |
| Axis Bank | 10.75% p.a. onwards |
| Flexiloans | 1% per month onwards |
| HDB Financial Services Ltd. | 8% - 26% p.a. |
| HDFC Bank | 10.75% - 25% p.a. |
| IDFC First Bank | 10.50% p.a. onwards |
| Indifi | 1.50% per month onwards |
| Kotak Mahindra Bank | 16% - 26% p.a. |
| Lendingkart | 12% - 27% p.a. |
| Mcapital | 2% per month onwards |
| NeoGrowth Finance | 15% - 40% p.a. |
| Tata Capital | 12% p.a. onwards |
| UGRO Capital | 9% - 36% p.a. |
| Bajaj Finserv | 10% to 26% |
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3) Expeditious Process to Deliver Rapid Loan through Automated Evaluation and Swift Sanction (Express 2.0)
| SIDBI EXPRESS 2.0 | |
| Objective | Term loan via automated platform to “New to SIDBI” customers in the services and manufacturing sectors for the purchase of machines/equipment. |
| Target Group | MSME units in operation for at least 3 years |
| Interest Rate | Linked with MCLR |
| Loan Amount | Up to Rs. 1 crore |
| Repayment Tenure | Up to 60 months |
| Eligibility Criteria | · Mandatory Udyam registration
· Mandatory GST registration · CIBIL / CMR/ due diligence checks, etc. |
| Financing | Up to 100% |
| Loan Process | Fully Automated |
4) SIDBI Assistance and Aid for Thematic Support to MSMEs promoted by SC/STs (SAATH)
Objective: To support MSMEs in both the manufacturing and service sectors that are promoted by SC/ST Entrepreneurs in form of term loan assistance for the establishment of new, Greenfield units or for expansion, modernization other capital expenditures of the existing unit, coupled with incentive structure.
| SIDBI SAATH | |
| Interest Rate | MCLR-based ROI as per internal rating |
| Target Group | MSMEs promoted by SC/ST entrepreneurs with emphasis on smaller units/ new units under manufacturing & service sector |
| Credit Guarantee | 50% of the credit guarantee fee to be borne by SIDBI |
| Loan Amount | Minimum – Rs. 25 lakh
Maximum – Rs. 300 lakh |
| Prepayment Fees | Nil |
| Eligibility Criteria | · MSMEs as per MSMED Act
· MSMEs promoted by SC/ST entrepreneurs with minimum 51% stake · Standard Scheme Norms apply (CIBIL / CMR, due diligence checks etc.) · Should not be in default to any bank or financial institutions |
5) A Special Dispensation for Nurturing Enterprises Run By Women Entrepreneurs (ARJANA)
Objective: To support MSMEs promoted by women entrepreneurs by way of term loan assistance for the establishment of new/greenfield units or for expansion, modernization other capital expenditure of the existing unit, coupled with an incentive structure.
| SIDBI ARJANA | |
| Interest Rate | MCLR-based ROI as per internal rating |
| Target Group | MSMEs promoted by women entrepreneurs with emphasis on smaller units/ new units under manufacturing & service sector |
| Credit Guarantee | 50% of the credit guarantee fee to be borne by SIDBI |
| Loan Amount | Minimum – Rs. 25 lakh
Maximum – Rs. 300 lakh |
| Prepayment Fees | Nil |
| Eligibility Criteria | · MSMEs as per MSMED Act
· MSMEs promoted by SC/ST entrepreneurs with minimum 51% stake · Standard Scheme Norms apply (CIBIL / CMR, due diligence checks etc.) · Should not be in default to any bank or financial institutions |
6) SIDBI’s Term Loan to enhance the production of MSMEs (STEP) Scheme
Purpose: To offer Medium/Short-Term Loans to eligible MSMEs for enhancing Net Working Capital and/or to execute urgent confirmed orders.
| STEP Scheme from SIDBI | |
| Nature of Loan | Term loan and Working Capital Loan |
| Interest Rate | MCLR-based Interest rate as per internal rating |
| Target Group | Micro, Small, and Medium Enterprises |
| Loan Amount | · Up to Rs. 3 crore for Existing Customers
· Up to Rs. 2 crores for New Customers |
| Loan Tenure | Up to 3 years, including Moratorium up to 6 months |
| Nature of Funding | Both in rupee and foreign currency |
Eligibility Criteria
- Existing MSMEs, as per MSMED Act 2006 are eligible
- Minimum 3 years’ business operations of the unit required and 2 years for SIDBI’s existing customers
- Working Capital Term Loan shall be offered to only those enterprises not availing working capital facility or overdraft facility from any bank or financial institution
- Business should be in profit during past 2 years and 1 year for existing customers
- Standard Scheme Norms apply (CIBIL / CMR, due diligence checks, etc.)
- Business should not be in any past default to any lender
7) SIDBI Assistance to Export Oriented MSMEs under UBHARTE SITAARE PROGRAMME
Purpose: Term loans to export-oriented MSMEs for business expansion, diversification, modernisation, technology/ capacity upgradation, product R&D, etc. through investment in land and building, equipment/machinery, etc.
Target Group:
- Future export leaders with high potential
- Units with unique products, technology, or processes
- High export potential sectors, including IT & ITes, Aerospace & Defence, Automobiles, Chemicals, Food Processing, Pharmaceuticals, and Textiles. Precision Engineering, Textiles, allied sectors, etc.
| SIDBI’s UBHARTE SITAARE PROGRAMME | |
| Interest Rate | Based on the MCLR of the Bank/ Repo rate, with applicable spreads, as per internal rating |
|
Loan Amount |
· Need-based financial assistance, subject to a maximum of 80% of the project cost
· Joint financing with Export/Import (EXIM) Bank available |
| Loan Facility | Term Loan (TL)/ Foreign Currency Term Loan (FCTL) available |
| Interest Incentive | Up to 25 BPS based on the performance/milestone |
| Repayment Tenure | Up to 6 years, extendable up to 10 years |
| Promoters’ contribution | 20% (30% for greenfield units) |
| Moratorium | Up to 2 years |
Eligibility Criteria
- New units: Promoters having sufficient experience in the proposed line of business and major projected revenue from exports. For units co-funded by technocrats from premier institutions like NIT, IIM, IIT, IISc, etc. adequate experience in the proposed line of business shall not be insisted upon
- Existing units: Essentially strong export-oriented small and SMEs with reasonable financials
Note: Standard Norms apply (CIBIL / CMR, due diligence checks, etc.)
8) SIDBI Thematic Assistance for Purchase of Capital Assets in New Enterprises (STHAPAN)
Purpose: Financial assistance to Greenfield Units for setting up of New units that include:
- Purchase of land, equipment, plant & MFA, etc.
- Construction of factory buildings
| SIDBI’s STHAPAN | |
|
Target Group |
MSMEs setting up new units in identified sectors under the Production-linked Incentive Scheme, as per the list identified by Govt. of India, high growth/sunrise sectors, and other important sectors |
| Interest Rate | Repo Rate (6.25%) + 2.20% to 3.50% (floating) for the first year with reset applicable thereafter (as per internal rating) |
|
Loan Amount |
Term Loan up to Rs. 20 crores, subject to a maximum of 75% of the project cost.
Till October 31, 2022 (or) utilisation of the funds as allocated/decided from time to time, whichever is earlier |
| Repayment Tenure | Up to 7 years |
| Moratorium | Up to 2 years |
Eligibility Criteria
- New Entities or Greenfield Units are eligible
- Minimum 5 years of business experience for promoters is required
- Promoters Contribution – Minimum 25%
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9) Assistance to Re-Energize Capital Investments by SMEs (ARISE)
Purpose: Financial assistance shall be offered to existing / brownfield entities for undertaking business expansion/modernization/capital expenditure in the same line of business.
| SIDBI’s ARISE | |
| Target Group | MSMEs engaged in high growth and priority sectors, including sunrise sectors |
| Interest Rate | Repo Rate (6.25%) + 1.70 % to 3.00% (floating) for first year with reset applicable thereafter (as per internal rating) |
| Loan Facility | Term Loan/Foreign Currency Term Loan (FCTL) available |
|
Loan Amount |
· Term Loan up to Rs. 7 crores, subject to a maximum of 80% of the project cost
· Till July 31, 2022 (or) utilization of the corpus as allocated/decided from time to time, whichever is earlier |
| Loan Financing | 100% financing for loans up to Rs. 3 crores, based on FD up to 25% (interest-bearing) |
| Repayment Tenure | Up to 7 years |
| Moratorium | Up to 2 years |
10) SIDBI Term-Loan assistance for Rooftop Solar Photovoltaic (PV) Plants (STAR)
Purpose:
- Assisting MSMEs to decrease their Power bill
- Across the segment coverage with 25 KW to 500 KW plants (Suggestive)
| SIDBI’s STAR | |
| Interest Rate | MCLR-based interest rate as per internal rating |
| Loan Amount | Rs. 10 lakh – Rs. 3.5 crore |
|
Coverage |
· Installation Cost
· Solar Panels / Equipment, including all accessories from established aggregators, manufacturers, suppliers, etc. |
| Loan Financing | 100% |
| Repayment Tenure | Up to 5 years, including Moratorium of 6 – 12 months |
| FD Percentage | 15% to 25% of Loan (interest bearing) |
| Credit Guarantee Coverage | Available |
| Promoter’s Contribution | Nil |
Note: Ground mount solar plants are also allowed subject to unhindered availability of sunlight during tenure of the loan.
Eligibility Criteria
- Business Tenure: For new customers is 4 years and for existing customers is 2 years
- Cash profits generated in the last two years
- Maximum loan up to 25% of Net Sales
- Good repayment history
- For New Customers: Minimum IACR of 0.50%, if no CGTMSE cover is provided
- Proposed Solar rooftop capacity not to exceed the connected load
- Only On-site projects are eligible
- Stand-alone and Grid connected, both covered
- The proposed capacity of the solar roof-top should not exceed the connected load
11) SIDBI – Loan for Purchase of Equipment for Enterprise’s Development Plus (SPEED PLUS)
| SIDBI’s SPEED PLUS | |
| Finance | Up to 100% for high-end machinery |
| Interest Rate | MCLR-based interest rate as per internal rating |
|
Loan Amount |
· Up to 100% of the machinery cost subject to a maximum of Rs. 2 crores for New to SIDBI customers (Based on 20% – 30% FD)
· Up to Rs. 3 crores for existing customers of SIDBI (Based on 15% – 30% FD) |
| Repayment Tenure | Maximum 7 years, including a Moratorium of 6-12 months |
| Collateral | No immovable property required |
Eligibility Criteria
- MSMEs with minimum of 5 years of business experience and the last 3 years with stable sales and cash profits
- Minimum net sales of Rs. 5 crores and no operating loss in the immediate last 2 years
Eligible Expenditure:
- Proposed machinery should relate to the same line of business
- Machinery purchased from identified Original Equipment Manufacturers (OEMs) manufacturing high-end-machines or from authorized dealers / Indian subsidiaries of such foreign OEMs, which have a good brand reputation and with whom SIDBI has entered into a Memorandum of Understanding (MoU)
Note: 2nd hand and refurbished machines are not eligible.
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12) SIDBI – Loan for Purchase of Equipment for Enterprise’s Development (SPEED)
| SIDBI’s SPEED | |
| Interest Rate | MCLR based interest rate as per internal rating |
|
Loan Amount |
· Up to 100% of the machinery cost subject to a maximum of Rs. 1 crore for New to Bank (NTB) customers and up to Rs. 2 crores for existing customers of SIDBI
· SIDBI reserves the right to sanction a lower amount depending upon the assessment of repayment capacity |
| Loan Financing | Up to 100% |
| Repayment Tenure | 2 – 5 years, including a moratorium of 3-6 months |
Eligibility Criteria
MSMEs with minimum 3 years of operations and stable sales and cash profits in the last 2 years.
Eligible Expenditure:
- For New to Bank (NTB) customers: Machinery purchased from the OEMs with whom SIDBI has a Memorandum of Understanding (MoU).
- Proposed machinery should relate to the same line of business
- 2nd hand/ refurbished machines are not eligible
13) Working Capital (Cash Credit)
| SIDBI’s Working Capital (Cash Credit) – Financial Parameters | |
| Parameters | Eligibility Norms |
| Total Outside Liabilities / Tangible Net Worth (TOL / TNW) | Not to exceed 4:1 |
| Current Ratio | 1.25 |
| Interest Coverage | Minimum 1.5 times |
| Overall Asset Coverage | 1.3 for existing units and 1.4 for new projects |
| Internal Rating | As per the existing Bank’s Norms |
Eligibility Criteria
- MSMEs who have outstanding Term Loans from SIDBI or propose to avail of both Term Loans and Working Capital from SIDBI
- MSMEs have the option to choose a banking platform from 2-3 banks
SIDBI assistance shall be considered to any of the following entities:
- New entities, where Term Loan is considered by SIDBI
- Existing customers who are solely banking with SIDBI, including enhancement
- SIDBI’s existing customers who are also banking with other banks
- Existing performing units that do not have the working capital facility with any other banks
- As a part of a Term Loan takeover, the takeover of working capital accounts shall be considered subject to compliance of takeover guidelines
14) TOP Up Loan for Immediate Purposes (TULIP)
Top up loan from SIDBI can be availed for the purchase of machinery and equipment.
| TOP Up Loan – Highlights | |
| Interest Rate | MCLR-based interest rate as per internal rating |
| Loan Amount | 30% of existing exposure or 20% of net sales subject to Max Rs. 2 Crore |
| Loan Tenure | Max. 5 years (including moratorium of up to 6 months) |
| Collateral | Not required, except SIDBI FD |
| Finance | Up to 100% finance based on 10% FD & extension of charges |
| Loan Sanctioning Tenure | 7 days |
Eligibility Criteria
- Associated with SIDBI for at least 1 year with a good track record
- Growth in the same line of business at the same location
- Cash profit in the last financial year
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15) Loans under Partnership with OEM
| Loans under Partnership with OEM | |
| Purpose | For the purchase of machines from OEMs |
| Interest Rate | As per SMILE |
| Loan Amount | Up to Rs. 1 crore, may exceed |
| Repayment Tenure | Up to 5 years, including Moratorium |
| Eligibility Criteria | At least 3 years of having the decent financial position |
| Eligible Expenditure | Investment in Plant & Machinery purchased from respective OEMs |
| CGTMSE Coverage | Available |
16) SMILE
| SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE) | |
| Purpose | Covering new enterprises in the services and manufacturing sectors |
| Interest Rate | As per business requirements |
| Loan Amount | Min. Rs. 10 lakhs for Equipment Finance & Rs. 25 lakhs for others |
| Repayment Tenure | Up to 10 years, including 36 months of Moratorium |
| Minimum Promoter Contribution | 15% subject to a Maximum Debt Equity Ratio (DER) of 3:1 |
| CGTMSE Coverage | Cases involving Term Loan up to Rs. 2 crores shall be covered |
17) PRATHAM
| Priority Assistance to MSMEs Based On Hybrid or Alternate-Security Model (PRATHAM) | |
| Financing | Up to 100% |
| Interest Rate | MCLR based interest rate as per internal rating |
| Loan Amount | Up to 100% of the total project cost subject to maximum of Rs. 300 lakh (based on 30% – 40% FD). SIDBI reserves the right to sanction lower amount depending upon assessment of repayment capacity. |
| Repayment Tenure | Up to 5 years, including Moratorium of 6-12 months |
| Eligible Expenditure | · Plant & Machinery
· Ancillary equipment’s/MFAs · Installation/transportation cost may be included. · Second hand/refurnished machines are also permitted subject to standard guidelines. · Machinery which is not covered under SPEED/SPEED Plus |
| Eligibility Criteria | · MSMEs having at least 3 years of operation with net profit in previous 3 years
· Units having cash profit for past 3 years would also be eligible |
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SIDBI’s Subsidiaries and Associates
- SIDBI Venture Capital Limited (SVCL) (1999)
- Micro Units Development & Refinance Agency (MUDRA) (2015)
- Credit Guarantee Fund Trust for MSEs (CGTMSE) branded as UDAAN (2000)
- ONLINE PSB LOANS Ltd.
- Acuité Ratings & Research Limited (Acuité) (erstwhile SMERA) (2005)
- India SME Asset Reconstruction Company Ltd (ISARC) (2008)
- Receivables Exchange of India Limited (RXIL) (2016)
Customer Care
Toll Free number – 1800-226-753
Timing: 10:30 AM – 6:00 PM
SIDBI’s Head Office Address
SIDBI Tower, 15, Ashok Marg, Lucknow – 226001, Uttar Pradesh
Phone Number: 0522-2288546, 0522-2288547, 0522-2288548, 0522-2288549, 0522-4259700
Mumbai Office
SIDBI, SWAVALAMBAN BHAVAN, C-11, G-Block,
Bandra-Kurla Complex, Bandra East, Mumbai 400051
Phone Number: 022-67531100
New Delhi Office
Atma Ram House, 1 Tolstoy Marg, New Delhi- 110001.
Phone Number : 011- 23448300
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