Unsecured Loans for SMEs under Growth Capital and Equity Assistance Scheme

In the initial stages of an SME, providing collaterals to banks for availing loans becomes difficult for the institution. The low moratorium period of 365 days, makes it impossible for them to pay back the loan in time too. Furthermore, SMEs are sometimes in businesses that do not have tangible outputs namely viz. Marketing, Brand Building, Creation of Distribution Network, Technical Know-how, R&D, Software Purchase, etc. The unavailability of tangible assets makes it difficult for many lenders to sanction loans. To serve a solution to this problem, SIDBI has initiated the Growth Capital and Equity Assistance Scheme.

Overview:

Under the Growth Capital and Equity Assistance scheme, an SME can get collateral free and high moratorium period loans (unsecured loans).

Benefits:

How does an SME body benefit from this scheme?

An SME body can benefit from this scheme in the following ways:

This scheme offers collateral free loans for all growth-based activities with the following points to consider:

  1. The interest rate is higher (2%-3% depending on your CRISIL SME Rating) than that offered by other banks.
  2. These type of loans fall into a category called mezzanine financing, i.e., the lenders can ask for a share in your company in case you are a defaulter. 

Eligibility Criteria:

What is the eligibility criteria for this scheme?

An SME is eligible for this scheme if you fall under the following categories:

  • SIDBI’s existing customers (meeting internal rating criteria)
  • Units with past 3 years of profitability and 2 years of satisfactory banking credit track record (meeting internal credit rating criteria) 

Application

How can an SME body apply for this scheme?

An SME body can apply for this scheme by following the below listed instructions:

  • Entrepreneur/Entity can approach SIDBI branch for seeking financial assistance and share their profile with SIDBI.
  • SIDBI issues application to the entity if prima facie found support-worthy after scrutiny of profiles on the basis of eligibility criteria.
  • SIDBI may also depending on the quantum of loan required, engage a firm to carry out the Corporate Due Diligence on the entity (cost to be borne by the firm).
  • The entity submits a duly filled detailed application form to SIDBI along with all checklist documents. 

Documents Required

What are the documents required to apply for this scheme

  • The following list of documents are required at the time of application:
  • KYC form – address proof and Identity proof
  • Proof of the loan with SIDBI
  • Copy of CRISIL SME Ratings
  • Copy of last 3 years’ audited financial statements and bank statement for the past 2 years

To know more about this scheme, click here.

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