SIDBI 4E Scheme

SIDBI has launched the 4E scheme (End to End Energy Efficiency) to promote energy efficiency investments in MSME’s. Under the SIDBI 4E scheme, MSME’s can get loan for their investments towards implementing energy efficiency measures, new technology upgradation in types of machinery which conserves energy, investment towards roof top solar. The eligible MSMEs will be assisted with technical consultancy and financial facilitation at a better rate of interest. In this article, we will look at SIDBI 4E Scheme in detail.

Know more  about the SIDBI Make in India Loan for Enterprises (SMILE) 

SIDBI 4E Scheme-End to End Energy Efficiency

As per this scheme, a mandatory Detailed Energy Audit (DEA) is undertaken by a qualified Energy Auditor and Consultant empanelled with India SME Services Technology Limited (ISTSL) a Joint Venture of SIDBI at a highly subsidised rate.

• A Detailed Project Report (DPR) is developed which again evaluated by the qualified Technical Team at SIDBI before furnishing them to the respective MSME Units.
• A provision of financing options ranging between ten lakhs to 1.5 Crores at a highly subsidised rate of interest is made available to the MSMEs to implement the suggested Energy Conservation Measures (ECM).
• All possible implementation Support, Monitoring and Verification support, will be provided to the MSMEs at no extra cost.

Purpose of SIDBI 4E Scheme

• For implementing the Energy Efficiency measures on an end to end basis.
• For meeting the part cost of capital expenditure including for the purchase of equipment, machinery, civil works, installation and commissioning.
• For enacting the Energy Efficiency measures as recommended in the project report any other related expenditure required by the MSME unit, provided it is not more than 50% of Project Cost
• Financing for second-hand machinery or equipment; purchase of land and construction of the building (except minor civil works) will not be taken up under the scheme

Benefits of SIDBI 4E Scheme

The benefits of SIDBI 4E Scheme is given here:

• The 4E programme helps MSMEs improve the bottom line through energy savings (10 to 25%), by getting the services of Technical Consultants at a reasonable cost with assurance on the quality of services and savings.
• A back-to-back financing product support is granted with the help of the World Bank to offer loans to Energy Efficiency projects to MSME. The term loans are granted at concessional interest rates and on the softer term.
• Normal Detailed Energy Audit, Implementation supports and M&V charges range from Rs. 1.5 Lakhs to 2.5 Lakhs. ISTSL also offers all services at very high concessional rates for all the services.
• Rs. 30,000 plus applicable taxes for micro and small category units (i.e. Rs. 35,400/- inclusive of taxes. Considering GST at 18%)
• Rs. 45,000  plus applicable taxes for medium category units (i.e. Rs.53,100/- inclusive of taxes. Considering GST at 18%)
• Areas covered under the detailed energy audit are all the energy consuming equipment. Recommendations will be based on the retrofits in the existing system, new equipment installation and Technology up gradation.
• ISTSL grants its consultancy services for the implementation of all Energy Conservation Measures described in the Detailed Project Report after the Energy Audit conducted by ISTSL for three months from the date of Energy Audit.
• lISTSL also provides its consultancy services in the field of resource efficiency, water audit and renewable energy like solar power generation and solar thermal energy.
• ISTSL ensures the quality and performance of the review entirely.
• SIDBI can consider financing for the projects under its existing schemes.
• The empanelled energy audit firm will do the energy audit.

Eligibility Criteria

The eligibility criteria to obtain the SIDBI 4E Scheme is explained in detail:

• The Eligible borrowers for SIDBI 4E scheme are Micro, Small or Medium Enterprises (MSME) in the Manufacturing or Service Sector.
• Applicant unit should be in operation for three years. The applicant should have earned cash profits in the last two years of operation.
• To avail Loan under SIDBI 4E scheme, the Plant has to submit Detailed Energy Audit (DEA) & Detailed Project Report (DPR).

Credit Rating, Energy Audit

The MSME unit should have undergone the process of detailed energy audit through a technical agency, consultants having BEE certified energy auditors. EEC, SIDBI should vet the DPR (Detailed Project Report) developed by the technical agency/consultant. The unit should not have availed the Performance Linked Grant under the WB-GEF Projects for the proposed EE Projects. The MSME unit should be in compliance with the Environment and Social Management Framework.

Terms of Assistance

The terms of assistance under the SIDBI 4E Scheme is detailed below:

Amount

• Upto 90% of the Project cost.
• Minimum loan amount of Rs.10 lakhs and Maximum loan amount not to exceed Rs.150 lakhs per eligible borrower under the 4E scheme
• The eligible loan amounts should not exceed one-fifth of the total turnover of the applicant MSME unit.

Upfront Fee

• 0.50% of the loan amount

Rate Of Interest

• 2.05% to 3.85% below the normal lending rate as per the credit rating (both fixed and floating options shall be available).
• Present rate 8.1% to 9.9%, SIDBI PLR-11.95%

Pre-payment Charges

• As per applicable Direct Credit Scheme Norms

Repayment Period

• 36 months including the initial moratorium period of upto six months for loans upto Rs.100 lakh and sixty months for loans beyond Rs.100 lakh

Security Details

• Hypothecation of assets created under the projects including those belonging to the enterprise and not been charged to any other lenders.
• Collateral Security, wherever necessary for adequate asset coverage. CGTMSE Cover may be taken, if necessary.
• Personal guarantee of the Promoter(s)

Documents required

Documents required for SIDBI 4E Scheme is listed as follows:

• Application form in prescribed format
• Filled in questionnaires
• Advance money from the enterprises as per the guidelines
• DIC / SSI / MSME registration certificate
• Udyog Aadhaar certificate
• GST Documents

SIDBI 4E Scheme Application Procedure

The application procedure for SIDBI 4E Scheme is explained in detail below:

After the Detailed Energy Audit (DEA), the prospective borrower will furnish the Detailed Project Report (DPR) to SIDBI for its evaluating by EEC.

The Borrower will have to submit an application to SIDBI BOs along-with a copy of the DPR vetted by EEC.

The application form for SIDBI 4E Scheme is enclosed here:

Eligible amount of capital subsidy under TEQUP, CLCSS will also be sanctioned along with the loan as per prevalent guidelines.

Disbursement of the loan will be made after compliance of terms and conditions of the sanction stipulated in the LOI and the documentation as per the extant guidelines.