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The Small Industries Development Bank of India, commonly known as SIDBI acts as the principal financial institution for the promotion and development of the MSME sector in India. Put simply, SIDBI aims to facilitate the credit flow to MSMEs and SSI’s through various SIDBI loan schemes to make them resilient, growth-driven and competitive. SIDBI offers different subsidies and MSME loans up to ₹25 crore to enable MSMEs meet their operational, growth and working capital needs.
SIDBI bank also oversees the functioning of other lending institutions that offers funds and financial support to MSMEs to meet their development needs.
To know more about SIDBI, visit the official website: sidbi.in
What is SIDBI and its key functions?
SIDBI’s full form is – Small Industries Development Bank of India.
As a financial institution aimed at providing financial assistance to MSMEs for growth, there are some key SIDBI functions that they carry out. Listed below are the top functions of SIDBI bank:
- Provide SIDBI direct loans and funds to MSME businesses
- Offer guidance, support and coordinate with commercial banks and NBFCs offering small business loans to MSMEs
- Assist MSMEs to upgrade and use relevant technology to stay competitive in business
- Promote small-scale industries worldwide and drive marketing activities for them
- Aid small businesses to develop to create new employment
Loan schemes for MSMEs offered by SIDBI – April 2023
One of the main purpose or role of SIDBi is to provide financial assistance to MSMEs in the form of business loans for their business. There are several loan subsidy schemes for MSMEs introduced by SIDBI, that offers MSME loans usually between ₹10 lakh – ₹25 crore.
While there are several loan schemes by Small Industries Development Bank of India, here’s a look at some of the most prominent ones:
1. SPEED loan scheme – SIDBI Loan for Purchase of Equipment for Enterprise’s Development
SPEED is another category of loans offered exclusively for meeting the need for MSMEs to purchase equipment for business. The right equipment can amplify production pace, quality and efficiency.
The SPEED loan by SIDBI provides equipment financing. It comes with low interest rates, has a one page application form and can be disbursed quickly. It also comes with a repayment term of up to 5 years. Borrowers can borrow loans amounting to the full value of the equipment under this SIDBI loan scheme of up to ₹ 2 crore (existing SIDBI customers)
2. SPEED PLUS – SIDBI Loan for Purchase of Equipment for Enterprise’s Development PLUS
Under this loan scheme, MSMEs can get 100% equipment financing from SIDBI bank without any collateral. It has a repayment tenure of up to 7 years (including moratorium) and can be availed by both new and existing MSME customers.
Banks and other NBFCs also offer equipment or machinery loans to buy equipment for business.
|SPEED loan scheme||SPEED PLUS from SIDBI|
|Loan amount||· 100% equipment financing available
· Up to ₹1 crore for new customers
· Up to ₹2 crore for existing customers
|· 100% equipment financing for high-end machinery
· Up to ₹2 crore for new customers (20-30% FD)
· Up to ₹3 crore for existing customers (15-30% FD)
|Loan interest rate||MCLR based as per internal rating||MCLR based as per internal rating|
|Loan tenure||2 – 5 years (including 6 months of moratorium period)||Max. 7 years (including 6-12 months of moratorium period)|
|Eligibility||· 3+ years business vintage and
· 2 years profit making
|· 5+ years business vintage and
· 3 years profit making
· ₹5 crore min net sales and no loss in last 2 years
|Others||Only new equipment purchase related to the same line of business||· No collateral required
· Machinery to be purchased from recognised OEM/authorised dealer
· New equipment only related to same line of business
3. EXPRESS 2.0 – Expeditious Process to deliver Rapil loan through Automated Evaluation and Swift Sanction
Express literally means fast or quick and the objective of the SIDBI Express 2.0 loan scheme is to quickly sanction term loans to new customers for purchase of machinery through automated platforms.
Key features of the Express 2.0 loan scheme:
- Loan amount – Up to ₹1 crore (₹100 lakh), up to 100% financing available
- Loan tenure – Up to 60 months
- Eligibility – Service/Manufacturing sector MSMEs, Udyam registration and GST registration required, basic credit score check, business vintage at least 3 years
- Interest rate – MCLR linked attractive ROI, with low processing fee
- Automated process with simple loan application
- Quick loan sanction and disbursal
4. SAATH – SIDBI Assistance and Aid for Thematic Support to MSMEs promoted by SC/STs
SAATH by SIDBI is essentially a term loan that aims to offer financial support to MSMEs by SC/ST entrepreneurs. MSMEs in manufacturing and service sectors can use this loan to establishing a new greenfield unit or improve their existing business through modernisation or expansion. Loans can be borrowed between ₹25 lakh and ₹3 crore.
Note: The government also has the Stand-Up India scheme for SC/ST borrowers for setting up greenfield projects.
Some of the primary features of the Saath scheme are:
- Borrower must have a positive repayment track record with SIDBI
- 50% of the credit guarantee fee to be borne by SIDBI
- Loan amount – ₹25 lakh – ₹3 crore
- Interest rate – MCLR based RoI as per internal rating
- Eligibility – MSMEs promoted by SC/STs with preference to small/new units in service and manufacturing sectors
- Quick sanction and disbursement, with low processing fees, and no repayment charges
5. ARJANA – A Special Dispensation for Nurturing Enterprises run by Women Entrepreneurs
The Arjana loan scheme was initiated to support service and manufacturing units by women entrepreneurs. These are also term loans of up to ₹3 crore for greenfield projects and expansion on existing businesses.
The key highlights of Arjana SIDBI loan scheme are:
- Loan amount – ₹25 lakh – ₹3 crore
- Loan interest rate – MCLR based RoI as per internal rating, low processing fees, no repayment charges
- Eligibility – Must be an MSME as defined per the MSMED Act, min 51% stake by women in the business, basic scheme norms apply w.r.t., CIBIL score, due diligence, should not be a defaulter with other banks etc.
- Must maintain satisfactory repayment track record with SIDBI
- 50% of the credit guarantee will be borne by SIDBI
- Fast sanction and disbursal
Note: There are other government loan schemes for women entrepreneurs that you can check if you are a women entrepreneur looking for a term loan for your business.
6. STEP loan scheme – SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme Guidelines
STEP is a form of working capital loan offered for a short or medium term to eligible MSMEs to execute urgent confirmed orders. Working capital is a recurring challenge for MSMEs. Without cash funds in hand daily business operations can get affected including inability to execute work orders. The STEP loan offers funds up to ₹3 crore to existing customers for seamlessly operating their daily working capital needs.
Some important points about the STEP loan scheme by SIDBI are:
- Loan amount – ₹3 crore (for existing customers) and ₹2 crore (for new customers)
- Interest rate – MCLR based RoI as per internal rating + availability of CGTMSE cover
- Loan tenure – Up to 3 years (including 6 months moratorium)
- Eligibility – Must be an MSME with 3 years in operations, should not be availing overdraft facility or working capital loans from other banks, standard norms w.r.t., credit score, non-defaulter
- Option to fund incremental working capital requirements
Working capital management is a key challenge for most businesses. Most banks as such offer special working capital loans for businesses to meet their WC needs. They also offer collateral-free business loans that can be used to meet daily operational needs or any other.
7. TULIP loan scheme – Top Up Loan for Immediate Purposes
SIDBI launched the TULIP scheme to assist MSMEs with instant top up funds. Considering the purpose of the loan, these loans are sanctioned within 7 days with only SIDBI FD required as collateral. Moreover, 100% finance is available with 10% FD and extension charges. The TULIP loan can be availed for buying machinery, construction work, working capital needs etc.
Some of the features of the TULIP scheme are:
- Loan amount – Up to ₹2 crore (i.e., 30% of existing exposure or 20% of net sales)
- Loan interest rate – MCLR based interest rate as per internal rating
- Loan tenure – Up to 5 years (including up to 6 months moratorium)
- Eligibility – Min 1 year customer of SIDBI with satisfactory track record, profit making entity in the last year, expansion in the same line of business and location
- Loan sanction is quick and can be sanctioned within 7 days
- Collateral is not required (except FD with SIDBI)
8. SMILE – SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises
SMILE is one of the most popular loan scheme for MSMEs that SIDBI offers. The loan scheme prioritises the services and manufacturing sectors and offers loans up to 10 years at attractive interest rates.
Loan amount can be up to ₹25 lakh though cover under the Credit Guarantee Scheme is provided for loans up to ₹2 crore.
9. SIDBI SME loan – SMILE Equipment Finance
MSME borrowers can also leverage the SMILE Equipment Finance (SME) scheme for funds for equipment. Loans of ₹10 lakh can be borrowed for 72 months (including moratorium).
|SMILE loan scheme||SMILE equipment loan|
|Loan amount||· ₹10 lakh for equipment finance
· Up to ₹25 lakh for others
|Starting from ₹10 lakh|
|Eligibility||Manufacturing & service based MSMEs (new and existing)||Profit-making business operational for 3 years|
|Loan term||Up to 10 years (36 months moratorium included)||Up to 6 years (including moratorium)|
Apart from these, there are several other products, finance and loan option schemes, and direct loan schemes offered to MSMEs by SIDBI.
How to apply for SIDBI loans?
It is natural for you to wonder how to apply for a loan from SIDBI bank. Here’s a quick step-by-step guide on the SIDBI loan scheme application process:
- Visit the SIDBI official website: sidbi.in
- Click on ‘Borrower’s Corner’ option on the top menu or on the page
- View tha page: sidbi.in/en/borrowers-corner
- Click on the first option, ‘Online Loan Application’ to be navigated to the registration page: onlineloanappl.sidbi.in/OnlineApplication/
- Select to ‘Register’ or ‘Login’ and fill in the details
- Identify the loan scheme you want to avail and the necessary details
- Complete the verification process, submit details and wait to hear back
Alternatively, you can click on the ‘Apply Now’ button against each loan on the homepage. This will take you to the online registration and login page from where the process remains the same.
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RAMP Scheme for MSMEs
MSME Innovative scheme