SIDBI - Schemes, Functions, Objectives & Steps to Apply for Loan

Table of Contents :

Objective of SIDBI
Products offered by SIDBI
Financial Parameters of SIDBI loan schemes
Step By Step Guide to apply for loan from SIDBI
SIDBI Headquarters
FAQs

Small Industries and Development Bank of India (SIDBI) mainly focuses on the financing, promotion and development of the Micro, Small and Medium Enterprises (MSMEs). Established in 1990, 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 services to meet the demands of various business projects.

SIDBI’s Objectives

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

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

Products offered by SIDBI

SIDBI covers mainly 6 products under Direct Loans that are discussed below:

Direct Loans

Under Direct Loans, there are 6 main loan schemes, 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), SIDBI Trader Finance Scheme (STFS) and Loan for Purchase of Equipment for Enterprise’s Development (SPEED).

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. 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. 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. The minimum loan amount offered is Rs. 10 lakh and maximum up to Rs. 1 crore. However, the repayment period shall depend on the cash flow and size of business
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. Borrowers can avail this loan at an interest rate of 9.25% to 10% per annum

SIDBI’s 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 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 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

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

Micro-Lending

There are three 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

Some Financial Parameters of SIDBI Loan Schemes

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.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 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.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

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.