46 XX | Enlightener Series | B. Central Government Schemes

Disclaimer….before you read ahead!

The information contained herein is of a general nature and for information purposes only, with the intent of raising awareness around various resources, schemes etc. available for women entrepreneurs in India. It is not intended to address the circumstances of any particular individual or entity. It does not purport to be all-inclusive or necessarily contain all the information that may be relevant for the reader, and may be subject to updation, revision or amendment. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to remain accurate in the future. The reader, therefore, is required to exercise their discretion; and not act on such information without appropriate professional advice after a thorough examination of the particular situation.

Furthermore, we are not a lender and are not authorized by the Reserve Bank of India to act as one. By disseminating the information contained herein, we are not soliciting any borrower or customers for the company or organization mentioned herein nor do we intend to syndicate any capital for the reader of this email.

About the scheme…
SIDBI Make in India Soft Loan Fund for Micro, Small & Medium Enterprises (SMILE) Scheme was launched on August 18, 2015 under Small Industries Development Bank of India (SIDBI) by the then Finance Minister Arun Jaitley to give a boost to Government of India’s ‘Make in India’ campaign, with a focus on financing smaller Micro, Small & Medium Enterprises (MSMEs, defined as per MSMED Act 2006) in the country.

How is it being implemented?

Under SMILE Scheme, direct financial assistance, on relatively soft terms,

in the form of:

Quasi-equity or soft loan to meet the required debt-equity ratio for establishment of an MSME, and
Term loans for pursuing opportunities for growth for existing MSMEs

is given to MSMEs in:

25 identified Make in India sectors indicated below or other sectors, as may be added, in the Make In India Programme
- Click here to find 25 identified Make in India sectors
Deserving proposals from any other sector could also be assisted on merits

What’s on offer?
I. Product:

Quasi-equity or soft loans
- For all MSMEs – 10% of project cost subject to maximum of ₹20 Lakhs
- For MSMEs promoted and controlled (with stake of 51% or higher) by Scheduled Caste (SC) /Scheduled Tribe (ST)/Persons with Disabilities (PwD)/women – upto 15% of project cost subject to maximum of ₹30 Lakhs
- On expiry of 3 years from date of first disbursement, the outstanding soft loan together with any dues thereon, shall be converted into secured term loan and the entire loan shall carry applicable rate of interest as per internal rating of the borrower. For information around this, please contact SIDBI via means mentioned below
Term loans
- 75% of project cost for projects upto ₹1 Crore and 2/3rd’s for the rest; irrespective of cost of project and subject to adherence of the following as per the extant Loan Policy
  - Minimum Promoters Contribution – 15% of project cost for projects up to ₹1 Crore, 20% for the rest
  - Debt to Equity Ratio (DER) – maximum of 3:1 including soft loans above, if availed
  - For information around extant Loan Policy, please contact SIDBI via means mentioned below
- Minimum loan size of ₹25 Lakhs for existing enterprises and ₹50 Lakhs for new enterprises

II. Purpose:

Acquisition of fixed assets
Working capital requirements

III. Borrower Type

Individuals, Sole Proprietorship, Partnership, Limited Liability Partnership (LLP), Limited Liability Company (LLC), Private Limited Company, Public Limited Company
For information around this, please contact SIDBI via means mentioned below

IV. Security or Collateral or Guarantee or Insurance

Quasi-equity or soft loans
- Residual charge over entire assets
- Personal Guarantee of Promoter(s)
- In the event of default in payment of principal or interest on soft loan, the security for term loan will get extended to cover soft loan
Term loans
- First charge over all assets created under the project
- Personal guarantee of promoter(s)
- Cases involving term loan up to ₹2 Crores may be covered under Credit Guarantee Scheme of CGTMSE
- Asset Coverage Ratio (ACR) and Fixed Asset Coverage Ratio (FACR) norms would be applicable in terms of extant Loan Policy. FACR is likely to be atleast 1.40 times including the collateral security. For information around extant Loan Policy, please contact SIDBI via means mentioned below
For information around requirement of insurance, please contact SIDBI via means mentioned below

V. Interest Rate

As per credit rating, internal rating and linked to Prime Lending Rate (PLR)
However, scheme offers concession in interest rate for initial 3 years from the date of first disbursement to help enterprises minimize interest burden during its implementation and initial operational stage. For information around the same, please contact SIDBI via means mentioned below. Below is the indicative interest rates that may be charged:
- Quasi-equity or soft loans – fixed rate of 9.15% to 9.35% per annum
- Term loans – fixed rate of 9.45% to 9.95% per annum
- For MSMEs promoted and controlled (with stake of 51% or higher) by SC / ST / PwD / women, further interest concession of 0.05% may be offered. For information around the same, please contact SIDBI via means mentioned below
- Such concessional rate will be converted to normal interest rates applicable on expiry of 3 years in case the unit becomes ineligible for concessional funding under the Scheme or other events as defined in the loan agreement
On expiry of the said 3 years, borrower can opt for either fixed or floating rate of interest which shall be fixed at the time of sanction and will be a part of the loan agreement. For information around the same, please contact SIDBI via means mentioned below. An indicative range may be 11.70% – 12.70%. Furthermore, such interest rate will be applicable to entire outstanding term loan, including outstanding soft loan together with any dues thereon which shall be converted into secured term loan on expiry of the said 3 years

VI. Processing fee

0.5% plus applicable taxes

VII. Margin money requirement

25% of project cost for projects upto ₹1 Crore and 1/3rd’s for the rest. Of this, minimum promoter’s contribution should be 15% of project cost for projects upto ₹1 Crore and 20% for the rest

VIII. Tenure, Repayments & Pre-Closures

Generally up to 7 years including moratorium period of upto 1.5 years for term loans and upto 2 years for quasi-equity/soft loans
Longer repayment period of upto 10 years (including moratorium of 36 months) shall also be considered selectively on case to case basis
Other Conditions
- All payments made by borrower will be applied pro-rata towards dues for term loan and soft loan
- No reschedulement will be extended on soft component. In the event a reschedulement is agreed to by SIDBI for reasons beyond control of the borrower, terminal date for soft loan will not be extended
- Non-payment of installment of principal, interest and all other monies (except penal interest), pertaining to soft loan as well as term loan, on their respective due dates, shall carry penal interest rate of 2% per annum for the period of default
- All prepayment shall be applied first towards soft loan. No premium shall be levied, on prepayment of soft loan or term loan, under this Scheme
- The loans covered under this facility will not be eligible for any further interest relief under multilateral / bilateral lines of credit

IX. Turnaround Time

For information around the same, please contact SIDBI via means mentioned below

Interested? Read ahead to check your eligibility….

I. Are you running a Micro-enterprise or Small-enterprise or Medium-enterprise defined per MSMED Act, meaning, investment in plant and machinery or equipment of your enterprise does not exceed ₹50 Crores and turnover does not exceed ₹250 Crores? Please click here to find out!

II. Is yours a new enterprise in the manufacturing or services sector?

Is your existing enterprise undertaking expansion, to take advantage of new emerging opportunities, as also undertaking modernization, technology upgradation or other projects for growing business?

III. You are not looking to avail loan under SMILE Scheme for repayment of earlier loans?

Additional criteria if you are looking to avail concessions provided to SC/ ST/PwD/women as enumerated above:

IV. Is your business promoted and controlled (with stake of 51% or higher) by you?

If your answers to the questions above are an emphatic YES, you are all set to avail loans under the SMILE Scheme!

So…how big is this scheme and what has been done so far?

I. SMILE Scheme was launched with an allocated corpus of ₹10,000 Crores

II. Latest details don’t seem to be available in the public domain

So, now, how should you go about it?

IMPORTANT NOTE: You may have to clear the cookies in your browser to access the links below

I. For submitting application:

Register and apply online here
Visit SIDBI’s nearest office. Find one here

II. For information on application form and indicative list of documentation that would be required, please click here and download form after selecting SMILE on the right hand corner

III. For any queries,

Please contact SIDBI on toll free number 1800226753 from 10.30 am to 6.00 pm

Visit their nearest office. Find one here

Go on then…and do spread the word!

Sources: