Compare & Choose from the Best Business Loan Offers 
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 in assisting MSMEs and SSIs to get funds for business expansion purposes and to meet working capital requirements.
Further, shall discuss the Top 15 Direct loans offered by SIDBI that include Term Loan, Secured Business Loan, SANGAM, STEP, Ubharte Sitaare Programme, STHAPAN, ARISE, TULIP, STAR, SPEED PLUS, SPEED, CASH Credit, Loans with OEMs, SMILE and SMILE Equipment Finance.
Features of SIDBI
- SIDBI offers refinance support to Small Scale Industries (SSIs) and 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
Top 12 Direct Loan Schemes for MSMEs – June 2022
1) General Purpose Term Loan
The General Purpose Term Loans, as the name states, is a term loan with an 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 Loan, 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 |
Note: With effect from 8th June, RBI Repo Rate stands at 7.90%.
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 and its repayment capacity as per current operations.
Eligibility Criteria
- Existing MSMEs with net profit in 2 years out of last three years with cash profits in all the three 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 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 from Top Banks/NBFCs – 2022
| Bank/NBFCs | Interest Rate | |
| HDFC Bank | 10.00% – 22.50% p.a. | Apply Now |
| FlexiLoans | 1% per month onwards | Apply Now |
| ZipLoan | 1% – 1.5% per month (Flat ROI) | Apply Now |
| Axis Bank | 14.25% – 18.50% p.a. | Apply Now |
| IDFC First Bank | 14.50% onwards | Apply Now |
| Kotak Mahindra Bank | 16% – 19.99% | Apply Now |
| Fullerton Finance | 17% – 21% | Apply Now |
| Bajaj Finserv | 17% p.a. onwards | Apply Now |
| RBL Bank | 17.50% – 25% p.a. | Apply Now |
| ICICI Bank | 18% onwards | Apply Now |
| Indifi Finance | 1.5% per month onwards | Apply Now |
| Lendingkart Finance | 1.5% – 2% per month | Apply Now |
| Tata Capital Finance | 19% p.a. onwards | Apply Now |
| NeoGrowth Finance | 19% – 24% p.a. | Apply Now |
| Hero FinCorp | Up to 26% p.a. | Apply Now |
3) SIDBI and Google Partnership for Assistance to Micro Enterprises (SANGAM)
SIDBI in partnership with Google offers term loans and working capital loans to micro-enterprises of the loan amount up to Rs. 1 crore at an interest rate of as low as 6.40% p.a. for women borrowers and 6.90% p.a. for other business entities.
| SANGAM from SIDBI | |
| Purpose | Term loans to micro-enterprises for capital expenditure or to meet working capital requirements |
| Nature of Loan | Term Loan & Working Capital Loan |
| Interest rate | 6.90% p.a. (6.40% p.a. for women-run or owned enterprises)
|
| Loan Amount | Term Loan up to Rs. 1 Crore, subject to a maximum 40% of the Net Sales for manufacturing units and 75% of job work income, gross receipts for job work, service sector enterprises |
| Finance | Up to 100% |
| Processing Fee | Nil |
| Repayment Tenure | Up to 5 years (3 years for WCTL) |
| CGTMSE Coverage | Available |
Note: Preference to women-run or owned enterprises and entrepreneurs from smaller cities (beyond Metros)
Eligibility Criteria
- Minimum business experience of at least 2 years
- Business in profit for last 2 years
- Cash profit during last 1 years
- Good credit score
- Enterprises not availing any working capital loan or Overdraft from any bank or financial institution
- Borrower with no past default or delinquency with any bank
Apply for Business Loan @ 16% p.a. onwards Apply Now
4) 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
5) 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, Textiles. Precision Engineering, Textiles, and allied sectors, etc.
| SIDBI’s UBHARTE SITAARE PROGRAMME | |
| Interest Rate | Based on 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:
- 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.)
6) 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 Production-linked Incentive Scheme, as per the list identified by Govt. of India, high growth/sunrise sectors, and other important sectors |
| Interest Rate | 6.90% – 8.20% p.a. for 1st year with reset applicable thereafter (as per internal rating) |
|
Loan Amount | Term Loan up to Rs. 20 crore, 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:
- New Entities or Greenfield Units are eligible
- Minimum 5 years of business experience for promoters is required
- Promoters Contribution – Minimum 25%
7) 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 | 6.40% – 7.70% p.a. for 1st 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 crore, 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 crore, based on FD up to 25% (interest-bearing) |
| Repayment Tenure | Up to 7 years |
| Moratorium | Up to 2 years |
8) 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 | 10.00% – 11.10% p.a. |
| Loan Amount | Rs. 10 lakh – Rs. 2.5 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 3 – 6 months |
| Credit Guarantee Coverage | Available |
| Promoter’s Contribution | Nil |
Eligibility:
- 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 connected load
- Only On-site projects are eligible
- Stand alone and Grid connected, both covered
- Proposed capacity of solar roof-top should not exceed connected load
9) SIDBI – Loan for Purchase of Equipment for Enterprise’s Development Plus (SPEED PLUS)
| SIDBI’s SPEED PLUS | |
| Interest Rate | 9.70% – 11.40% p.a. |
|
Loan Amount | · Up to 100% of the machinery cost subject to maximum of Rs. 2 crore for New to SIDBI customers (Based on 20% – 30% FD) · Up to Rs. 3 crore for existing customers of SIDBI (Based on 15% – 30% FD) |
| Repayment Tenure | 2 – 5 years, including Moratorium of 3-6 months |
Eligibility:
- MSMEs with minimum 5 years of business experience and last 3 years with stable sales and cash profits
- Minimum net sales of Rs. 5 crore 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 authorised dealers / Indian subsidiaries of such foreign OEMs, which have the good brand reputation and with whom SIDBI has entered into a Memorandum of Understanding (MoU)
Note: 2nd hand and refurbished machines are not eligible.
10) SIDBI – Loan for Purchase of Equipment for Enterprise’s Development (SPEED)
| SIDBI’s SPEED | |
| Interest Rate | 10.15% – 10.90% p.a. |
|
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:
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).
The current list of 8 OEMs is as under the following companies:
- Lokesh Machines Ltd.
- Jyoti CNC Automation Ltd.
- Milacron India Pvt. Ltd.
- ACE Designers Ltd.
- ACE Manufacturing Systems Ltd.
- Bharat Fritz Werner (BfW)
- HURCO India Pvt. Ltd.
- Batliboi Ltd.
For Existing Customer: Any OEM
Proposed machinery should relate to the same line of business
Note: 2nd hand and refurbished machines are not eligible.
11) 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:
- MSMEs who have outstanding Term Loans from SIDBI or propose to avail both Term Loan 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
12) 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 | 10.90% p.a. to 11.90% p.a. |
| 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 last financial year
13) 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 having decent financial position |
| Eligible Expenditure | Investment in Plant & Machinery purchased from respective OEMs |
| CGTMSE Coverage | Available |
14) 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 lakh for Equipment Finance & Rs. 25 lakh for others |
| Repayment Tenure | Up to 10 years, including 36 months of Moratorium |
| Minimum Promoter Contribution | 15% subject to Maximum Debt Equity Ratio (DER) of 3:1 |
| CGTMSE Coverage | Cases involving Term Loan up to Rs. 2 crore shall be covered |
15) SMILE Equipment Finance
| SMILE Equipment Finance | |
| Purpose | For the purchase of machinery |
| Interest Rate | As per SMILE |
| Loan Amount | Up to Rs. 10 lakh |
| Repayment Tenure | Up to 6 years, including Moratorium |
| Eligible Expenditure | Investment in Plant & Machinery/MFAs/Need-based civil construction, if any |
| Eligibility Criteria | At least 3 years of having decent financial position |
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)
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