SIDBI General Purpose Term Loan

SIDBI General Purpose Term Loan

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SIDBI General Purpose Term Loan

Small Industries and Development Bank of India (SIDBI) mainly focuses on the development of the micro, small and medium enterprises (MSME). The primary objective of SIDBI is to strengthen the MSME sector by providing them with financial assistance. Under SIDBI, General Purpose Term Loan scheme was launched to support the financial need of MSME for various purposes. In this article, we look at the SIDBI General Purpose Term Loan in detail.

Purpose of Loan

The purpose of the loan is given below:

Working capital Loan

Working capital loan to meet the working capital requirements of the MSME manufacturing and service units against the cost of raw material, components, spares, stores, processing of raw materials, marketing of finished products, etc.

Term Loan

Term loans for acquisition of fixed assets for setting up new units and for expansion, modernisation and diversification of existing units.

Eligibility Criteria

The eligibility criteria to obtain the SIDBI General Purpose Term Loan is mentioned below:

  • The eligible borrowers for SIDBI General Purpose Term Loan are Micro, Small or Medium Enterprises (MSME) in the manufacturing or service sector.

Note: The MSME units which have already availed loans from the banks related to working capital assistance are not eligible to participate under SIDBI General Purpose Term Loan.

Quantum of Loan

The maximum quantum of assistance under the general purpose term loan scheme will be Rs.10 lakhs for setting up new unit/enterprise or expansion or modernization of existing unit.

Nature of Assistance

The nature of assistance will be term loan and other forms of assistance such as Working Capital Term Loan, etc.

Minimum Promoter’s Contribution

The minimum promoter contribution to the new and existing projects are given below:

New Projects: The promoter contribution for new projects will be at the rate of 33% of the value of the total project cost.

Existing Projects: The promoter contribution for existing projects will be at the rate of 25% of the value of the total project cost.

Debt Equity Ratio

The debt-equity ratio fixed for the borrowers will be 3:1, including assistance under the scheme.

Repayment of loan  

The maximum repayment period for the term loan is 8 to 10 years, including a moratorium of 18 months for principal repayment, and the repayment can be done in equated monthly instalments.

Upfront Fee

The eligible MSME sectors need to pay 1.0% of the loan amount as an upfront fee for the SIDBI general purpose term loan.

Asset Coverage Ratio (ACR)

The minimum asset coverage ratio of 1:3 will be for existing units and the ratio of 1:4 for new entities including Facilities and Administrative Cost Recoveries (FACR).

Documents Required

The documents required for SIDBI general purpose term loan scheme is explained in detail below:

  • Proof of Identity: Passport, Driving License, Voter’s ID Card, PAN Card and Signature identification from present bankers of the proprietor, partner or director
  • Proof of residence: Recent telephone bills, property tax receipt, electricity bill, Voter’s ID Card of Proprietor, partner of Director (if a company)
  • Proof of business Address: As per SIDBI’s KYC application form for Non-Individuals
  • MOA (Memorandum and articles of association) of the firm and Partnership Deed of partners etc
  • Biodata of promoters / Guarantors (as per the enclosed format I)
  • Net Worth Statement of promoters and guarantors along with latest income tax returns (as per attached format II).
  • Rent Agreement  and clearance from the pollution control board if applicable
  • Udyog Aadhar memorandum (UAM) registration
  • Projected balance sheets of the next two years if the working capital limits and for the period of the loan in terms of the term loan
  • Photocopies of lease deeds and title deeds of all the properties being offered as primary and collateral securities
  • Bank Account details in case of any existing outstanding loans or limits
  • Certificate of incorporation from the ROC to verify whether majority stakeholding in the company is in the hands of the person who belongs to SC, ST and woman category 
  • Profile of the unit
  • Last 3 years balance sheet of the Associate and Group Companies.
  • Detailed Project Report
  • Manufacturing process details

SIDBI General Purpose Term Loan – Online Application

The application procedure for SIDBI General Purpose Term Loan scheme is explained in detail below:

Step 1: The eligible MSME enterprise needs to approach the SIDBI official website for applying for a loan.

Step 2: Click on “Borrower’s Corner” link, which is present on the home page of the portal.

SIDBI General Purpose Term Loan - Image 1
SIDBI General Purpose Term Loan – Image 1

Step 3: On the next page, select the option “Online loan application” tab under borrower’s corner.

SIDBI General Purpose Term Loan - Image 2
SIDBI General Purpose Term Loan – Image 2

Step 4: In case of an existing user, the user can log in directly into the portal with the login details such as mail id and password and click on the “Login” button.

SIDBI General Purpose Term Loan - Image 3
SIDBI General Purpose Term Loan – Image 3

Step 5: In case of the new user, the user needs to create new user registration with the necessary details such as enterprise name, phone number, password, email id, proposed loan requirement details and after filling the details click on “Register” button.

SIDBI General Purpose Term Loan - Image 4
SIDBI General Purpose Term Loan – Image 4

Step 6: Once all the details have been filled, you can validate the page and apply for the loan scheme, which is applicable according to your financial profile.

Note: If the application is approved after verification of details, the SIDBI will sanction the loan and amount will be credited to the beneficiary’s accounts.

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