Union SME PLUS Scheme

Union SME PLUS Scheme

Union SME PLUS Scheme

The Union Bank of India has launched the SME plus scheme. It is a credit product tailored to meet the temporary short term working capital and contingent term loan requirements of Micro, Small and Medium Enterprises (MSME) sectors. In this article, we will look at the Union SME PLUS Scheme in detail.

Purpose of Union SME PLUS Scheme

Standby Ad-hoc, working capital loan, is granted to meet genuine and immediate urgent credit need (Pre-approved additional working capital funds) of temporary/contingent nature and Pre-approved stand by term loan to fund periodic capital expenditure for an existing business.

Eligibility For SME PLUS Scheme

Under the Union SME plus scheme, standby credit is made available to MSME borrowers availing Working Capital limit of Rs.0.25 Crore and above exclusively with Union Bank of India, having satisfactory dealing of minimum two years under credit facilities availed from the Union Bank, complied with all sanction terms and maintaining a regular account with no overdue.

Quantum of Finance

Standby Ad hoc WC / Standby Term Loan: For both facilities put together maximum quantum of finance is Rs. 2.50crores with a cap of 25% of regular WC (FB & NFB) sanctioned limits.

Further, the Term Loan for intangible assets will not exceed 20% of the eligible limit under the SME PLUS Scheme subject to maximum Rs.0.50 Crores.

Margin Requirement

The margin requirement for availing finance under the SME PLUS Scheme is 25%, and the term loan is 25%

Rate of Interest

The interest rate will be the applicable rate for Term Loan and 1% above the applicable rate of interest for fund based working capital limit. In case the account is eligible for SME Plus Gold Card applicable rate of interest for fund based working capital will be charged.

  • Standby Ad-hoc FB Working Capital: 1% over applicable rate as per credit rating
  • Standby Ad-hoc NFB Working Capital: As applicable
  • Stand-by Term Loan: Applicable rate as per Credit Rating

Repayment period

The term loan under union SME plus scheme is to be repaid within maximum 60 months inclusive of moratorium period not exceeding of six months, and FB working capital will be a running account facility to be adjusted within three months from the disbursement of ad-hoc.

Working Capital  

Limit outstanding, disbursed should be an ad-hoc facility and adjusted within a maximum period of three months. (A running account facility)

Term Loan

Term Loan repayment to be maximum 60 months inclusive of moratorium period not exceeding six months in monthly/quarterly instalments as per the assessment. Interest is to be paid as and when due.

Eligible Criteria

The eligible borrowers to obtain financial assistance under the Union SME PLUS Scheme is explained in detail below:

  • All MSME Units engaged in manufacturing activity or service activity other than trading units not covered under Union Trade Scheme irrespective of the constitution will be eligible under the scheme for working capital and term loans.
  • The credit rating of the borrower should be CR-1/UBI-1 to CR-4/UBI-4 to be considered.
  • Satisfactory dealing of a minimum of two years under credit facilities availed from Union Bank of India
  • All sanction terms complied with an account should be regular with no overdue in the account
  • A borrower with Existing Working Capital limit of Rs.0.25Crore and above
  • The borrower should be exclusively banking with Union bank (except retail loans)
  • The borrower having existing units only to be financed and new projects to be excluded

Purpose of the advance:-

The purpose of the Union SME PLUS Scheme is explained in detail below:

Standby Ad-hoc Working Capital

  • To meet genuine and immediate urgent credit need (Pre-approved additional Working capital funds) of temporary /contingent nature
  • To tide over the liquidity crunch
  • Bunching of orders/unforeseen seasonal demand
  • Delay in shipment /realizations of receivables
  • A sudden increase in the cost of raw materials
  • Mismatch in cash flows

Standby Term Loan

  • Pre-approved stand-by Loan to fund periodic capital expenditure for existing business s
  • Purchase of tangible fixed assets like Machinery, equipment, Tools, Fixtures and Consumables
  • Improvement in Factory layout and design
  • Expansion and Modernization of Unit
  • Investment in intangibles like software, acquisition of ISO & other similar certification, visiting abroad for acquiring technology, finalizing business deals, participation in exhibition/fairs for market promotions and R&D activities of the units with overall business development objective.

Documents Required

The documents required for applying the Union SME PLUS Scheme is explained in detail below:

  • Proof of identity — Voter’s card, Passport, driving licence, PAN card and signature identification from present bankers of the proprietor, partner or Director (if a company)
  • Proof of residence – Recent telephone bills, electricity bill, property tax receipt, passport, voter’s ID card of the proprietor, partner or Director (if a company)
  • Proof of business property
  • Proof of Minority
  • MSE registration
  • Last three years’ Balance Sheets of the units along with income tax sales tax returns (applicable for all cases from Rs. 2 lacs and above)
  • For cases below fund based limit of Rs. 25 lacs if audited balance sheets are not available, then unaudited balance sheets are also acceptable as per extant instructions of the bank.
  • For cases of Rs. 25 lacs and above, the audited balance sheets are necessary.
  • Projected balance sheets for the next two years if the working capital limits and the period of the loan in case of term loans (for all cases of Rs. 2 lacs and above)
  • Passport size photographs of the applicant
  • Application form
  • Credit information

Union SME PLUS Scheme Application Procedure

The application procedure for Union SME PLUS scheme is explained in detail below:

The eligible borrowers will have to submit an application in prescribed format along with the supporting documents.

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The application form will be forwarded to the respective Union Bank of India branch. After verification, the loan amount will be issued.

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Post by Renu Suresh

Renu is experience content writer specialised in compliances and company rules.