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SBI SMILE Scheme – Interest Free Loan

The SBI Interest Free Loan as Equity scheme or SBI SMILE envisages grant of interest free loan as equity repayable over a long period to eligible professional and technically qualified entrepreneurs setting up new MSME businesses. State Bank of India is India’s largest public sector banking and financial services company with over 14000 branches, including 191 foreign offices spread across 36 countries. State Bank of India is a pioneer in SME financing in India. As a bank, it has been playing a critical role in the overall growth and development of the SME sector. The Bank has developed a wide array of products and services in order to cater to the evolving needs of the SME sector. It has over 1.3 million SME loan accounts with total exposure of Rs 1.63 lakh crore as on March 2012. Under Micro and Small Enterprises segment, the Bank has extended credit facilities to the tune of Rs 78,170 Cr as on December 2011 which contributed 52% of its total SME advances.

Eligibility Criteria

To be eligible for the SBI interest free loan or SMILE scheme, the following conditions must be satisfied:

  • Entrepreneurs must be setting up a new business.
  • The entrepreneur must have a professional qualification or technically qualified person like doctor, engineer, management graduate, etc.,
  • The scheme provides equity assistance only to those entrepreneurs genuinely not able to meet the necessary margin requirements from their own resources.
  • The business being setup must be a MSME business.
  • The total cost of the project must be more than Rs.10 lakhs.

Amount of Assistance

Under the scheme, assistance is provided as the difference between the applicable margin and the capital contributed by the entrepreneur. Equity assistance of upto Rs.10 lakhs for MSME industries and Rs.5 lakhs for professionals and self-employed persons can be granted subject to a minimum of Rs.1 lakh for industries and Rs.50 thousands for professionals.

The entrepreneur is required to contribute a minimum of 15% of the margin required and the capital contribution of the entrepreneur should not be less than 50% of the margin.


Funds lent under the SBI SMILE scheme will not have any interest. The loan can be repaid over a period of 3 years after an initial moratorium period of 5 to 7 years (during which other term loan are repaid). Application loan under the SBI SMILE scheme can be made to the nearest State Bank of India branch.

Download SBI SMILE Scheme Application Form