Are you an MSME? Are you still looking out for finance of machinery but not getting an attractive rate of interest? Good news, your search time seems to have ended as SIDBI if offering a lucrative rate of interest to your loans, exclusively for purchasing machinery.
— By Baishakhi Dutta
Small Industries Development Bank of India (SIDBI), the principal financial institution for the promotion, financing and development of the micro, small and medium enterprise (MSME) sector in India has been catering to the MSMEs with its various direct and indirect schemes for facilitating the flow of credit to this sector.
This time SIDBI has launched a new loan scheme for the purchase of equipment for enterprise development (SPEED) for machinery purchase from original equipment manufacturers (OEMs) on a competitive rate of interest to facilitate the flow of credit to the MSMEs.
So who all are eligible for the loan? Good news is that all MSMEs can avail of this benefit! However, the new borrower to SIDBI will get a loan of up to Rs. 1 crore. For existing borrowers, the loan amount will go up to Rs. 2 crores. A higher loan amount can also be considered subject to the bank’s guidelines.
To extend it for the service of all, SIDBI has enabled Greenfield projects also to leverage this opportunity. In fact, Greenfield projects are allowed to borrow the loan along with co-borrowers. Any entity who want to avail this scheme should be in existence for at least 3 years with stable sales and cash profits in the immediate past 2 years.
Know your OEMs
The scheme comes in with a bagful of offerings for the industry. The loan covers all the machines purchased from identified OEMs. For new to bank (NTB) MSMEs, machinery purchased from the OEMs with whom SIDBI has an MoU will be eligible for the loan. The present list of 8 OEMs is as under:
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
For existing customers, machinery from any OEM will be covered under the scheme. However, no second hand or refurbished machines are eligible for this scheme.
The loan also covers further plant expansion by MSMEs in the same line of business.
You might be wondering how this scheme will financially be beneficial for you? Here’s the answer to your query:
This scheme is ought to be beneficial for MSME members as 100 per cent finance is available quickly based on only 25 per cent of the fixed deposit.
The scheme has a low rate of interest which is from 9.25-10 per cent, as per internal rating.
The repayment period is of 2 to 5 years including moratorium of 3-6 months.
There’s still more! To cut short the duration of the application process, SIDBI has decided to offer a quick turnaround time by sanctioning loans within 3 days of submitting the required information and documents to the bank. Even more, the disbursement happens within 4 days of the sanction of the loan. Most importantly, you pay the money directly to the OEMs which means no meddle with brokers!
If you are an MSMEs with leased premises, all you have to do is give a right to access to the property to the bank. However, a private lease MSME is also covered (subject to conditions).
MSME – The real contributor
Being the major backbone of the Indian economy, it is been long that MSMEs are fighting the issue of financial opportunities to meet their needs and establish a strong foothold in the Indian electronics industry. So, if you are an MSME and have so long been planning to bring out some real change in your work floor as well as production capacity to match up with your competitors, well the time is finally here!