SIDBI Loan for Marketing MSME Products

SIDBI provides loan for marketing MSME products or to MSME units to undertake various activities necessary to increase their sales in the domestic and export market. Under the scheme, financing is also provided to corporate entities to enable them to provide support services and/or infrastructural facilities to MSME units to improve marketing capabilities. SIDBI or Small Industries Development Bank of India is the principal financial institution for the promotion, financing and development of industry in the small scale sector.

Purpose of Loan

The SIDBI loan for marketing MSME products is granted to eligible borrowers for undertaking various marketing activities such as:

Marketing research
Research and development of product upgradation and standardisation
Preparation of strategic marketing plans
Advertising, branding, catalogue preparation, production of audio-visual aids, etc.,
Participation in trade fairs and exhibition
Undertaking sales promotion tours
Establishing distribution networks
Establishing showrooms or retail outlets or warehousing facilities
Training of personnel in marketing activities

Under the scheme, financing for the following type of infrastructure setup is also permitted:

Setting up of new commercial complexes, showrooms or renovation of existing commercial complex or showrooms for marketing small scale, cottage and village industry products.
Development of infrastructure for setting up of permanent exhibition centres, industrial parks like garment and software parks, marketing emporia, design and fashion forecasting studios, auction houses, container depots and container freight stations and trade centres.

Any such development of infrastructure must largely benefit the small scale cottage and village industries.

Eligibility

Existing MSME businesses in the small scale sector with a good track record and sound financial position are eligible for assistance. New MSME units can also be considered on a selective basis. Further, specialised organisations incorporated as companies and providing marketing assistance infrastructure and support service to industrial concerns in the small scale sector are also eligible.

Amount of Loan

Loan of upto Rs.5 crores can be provided for projects that help with the marketing of SSI products. A maximum repayment of eight years including a moratorium period of upto one year for starting the repayment of principal amounts is provided. The promoters must invest a minimum of one third of the project cost and the maximum debt to equity ratio permitted is 2:1. Collateral of 100% security in case of own premises and 150% for leased premises must be provided. In addition, personal guarantee of all promoter directors, shareholders having more than 5% share in equity and co-applicants is necessary.