Msme Credit Facilitation Scheme

The NSIC under the Msme Credit Facilitation Scheme

has entered into a Memorandum of Understanding with several Nationalized and Private Sector Banks for credit support to MSMEs from banks without any cost to MSMEs. Moreover, the MSMEs can upgrade their competence in terms of business and technologies by getting rated through independent, renowned and professional rating agencies that are empanelled with NSIC. These empanelled rating agencies include CRISIL, ONICRA, SMERA-D and B, CARE, India Ratings, BRICKWORK and ICRA. The MSE's that are rated under the NSIC-Performance and Credit Rating Scheme not only has the liberty to get ratings from the above-mentioned agencies of its choice but it also invariably elevates their creditability in business and helps them in obtaining their appropriate credit from the banks at the liberal rates of interest. All documents required in the completion and submission of a credit proposal to the bank are undertaken by NSIC, therefore saves cost and time to the MSMEs.

Features of Credit Facilitation Scheme

The major highlights of the scheme are given below.

Facilitates credit to the MSMEs by having an integrated mix of various public and private sector banks.
It provides an option for MSMEs to apply for a new bank or switchover of an account to a different bank.
It assists the MSMEs to complete documentation and in submitting it to the bank.
It helps the MSMEs in getting a liberal rate of interests from the banks after a favourable rating is offered to units that are under the Performance and Credit rating scheme of the Ministry.
Under the Credit Facilitation Scheme, MSMEs can get access to finance from the banks that are based upon their leading policy and focussed attention is given to the credit proposals that are sponsored by NSIC.
To facilitate a high number of MSMEs who are desirous in availing the credit.
To provide handholding support to MSMEs.

Eligibility Criteria

The scheme applies to all Micro, Small and Medium Enterprises that are registered in India.

Documents Required

The documents that have to be submitted differs depending on the purpose of the loan. The general reports are

Identity Proof
Residential Proof
Business address proof
Asset and Liability Statement of promoters, directors, guarantors etc. with the recent income tax returns.
Rent agreement/ lease added if business premises rented/ leased.
Copy of SSI registraion certificate/ entrepreneur's Memorandum.
Profile of the unit includes the name and address of promoters, experience, nature of the activity, the address of all the offices/ plants, shareholding pattern, etc.
Balance Sheet with IT/ ST returns of the past three years.
The projected balance Sheet for the next two years.
Application duly filled in the prescribed format.
CMA data in the prescribed format.
The position of accounts with the existing bankers.
Project report for term loan requirements.
Estimates/ quotations/ sanctioned building plan etc.
Partnership Deed/ Trust Deed/ Rules and Bye-laws/ Memorandum and Articles of Association/ Certificate of Incorporation etc.
Clearance from Pollution Control Board/ Sanction from the Electricity Board and other statutory authorities.
The month-wise production and sales data for the current financial year, the value of stock in process, finished goods, debtors, creditors etc.

Application Procedure

To apply for the Credit Facilitation Scheme, the user has to visit the National

Small Industries Corporation Limited (NSIC) website and download the loan application form. Once downloading the application, the user has to enter all the details in the application form and submit the form to the concerned officer.

Types of Loans

The types of loans that are available for Micro, Small and Medium Enterprises are

Term loans for acquisition of fixed assets for setting up new units and for expansion, modernisation and diversification of existing units.
Working capital limits to meet the working capital requirements of the MSME units in the form of open cash credit, overdraft against book debts and bill discounting facility.
Non-fund based limits like guarantees, letter of credit, foreign bank guarantees, foreign letter of credit, etc.

Mode of Operation

As per the Bank Credit Facilitation Scheme, the MSMEs can get access to finance from banks that are based upon their lending policy and focused attention is given to the credit proposals that are sponsored by NSIC.

Availing Loans

In order to avail loans under the Bank Credit Facilitation, the MSME unit can approach any NSIC branch officer and submit their request for loan requirement from any of the banks that are under the tie-up agreement. The formal sitting at the branch provides hand-holding support to the MSME unit by assisting them in completing all documentation that is mandatory for further submission to the bank. These documents are to be provided by the MSME unit based on the checklist of the banks. The loan applicants have to open an operative account that is

KYC complaint with proper introduction, address proof, ID proof and photo as mentioned by the banks.

Repayment of Loans

The repayment period differs depending on the income generated from the unit and generally ranges from 5-7 years. Exceptions can be made up to 11 years. The working of capital finance limits usually are valid for one year and is refundable on demand. The specific, self-liquidating loans are linked to the natural tenor of the transactions.

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Frequently Asked Questions

Common questions about MSME Credit Facilitation Scheme for Small Businesses.

The MSME Credit Facilitation Scheme is an initiative by NSIC (National Small Industries Corporation) that facilitates credit support to Micro, Small and Medium Enterprises (MSMEs) from banks without any cost. It involves collaboration with several nationalized and private sector banks through a Memorandum of Understanding.

The scheme assists MSMEs in completing the necessary documentation and submitting the credit proposal to the banks. This saves time and cost for the MSMEs. Additionally, MSMEs can get their competence rated by empaneled rating agencies, which enhances their creditability and helps them secure loans at favorable interest rates.

The rating agencies empaneled with NSIC under this scheme include CRISIL, ONICRA, SMERA-D and B, CARE, India Ratings, BRICKWORK, and ICRA. MSMEs have the liberty to choose any of these renowned and professional agencies for getting their performance and credit rated.

The scheme is applicable to all Micro, Small and Medium Enterprises that are registered in India.

The scheme facilitates term loans for acquisition of fixed assets, working capital limits to meet operational requirements, and non-fund based limits like guarantees and letters of credit for MSMEs.

To apply, the MSME unit can approach any NSIC branch office and submit their loan requirement. The branch officer will provide hand-holding support in completing the necessary documentation for submission to the bank.

Some key features include an integrated mix of public and private sector banks, option to switch banks, assistance in documentation, liberal interest rates after favorable rating, access to finance based on bank's lending policy, and handholding support for MSMEs.

Common documents required include identity proof, residential proof, business address proof, asset and liability statement, rent agreement (if applicable), SSI registration certificate, balance sheets, IT returns, project report for term loans, and statutory clearances.

The repayment period generally ranges from 5-7 years, with exceptions up to 11 years for some cases. Working capital finance limits are usually valid for one year and refundable on demand. Specific self-liquidating loans are linked to the tenor of the transactions.

Getting rated under this scheme not only enhances the MSME's creditability in business but also helps them in obtaining appropriate credit from banks at liberal rates of interest.