The ultimate objective of a Secured Business Loan (SBL) is to quickly provide credit to MSMEs in manufacturing as well as the service sector. This credit is given for both planned and unplanned business related expenditure on the strength of the collateral security and repayment capacity based on current operations.
In order to be eligible for this special loan, Existing MSME units must produce proof of net profits in 2 out of last 3 years. They must also produce cash profits in past 3 years.
The borrower must not be a defaulter to any Bank or Financial Institution in India.
There are some other financial norms as specified from time to time which must be followed in order to get this loan.
Nature of assistance:
This is an open term loan.
Quantum of assistance:
This loan is linked to your gross cash accruals and the pledged collateral security value.
You can get maximum assistance in the loan amount up to 10 crore rupees.
Eligible heads for financing:
This loan can be given for any bona-fide business expenditure.
Rate of Discount:
The fixed Interest rate linked to PLR as per the credit rating.
The security is up to 10 years including moratorium.
Foreign Currency Assistance:
Foreign currency assistance can be availed under the scheme towards creation of tangible assets subject to natural hedge & other terms & conditions.
The objective of PRATHAM is to cover cases of machinery finance which can't be covered under SPEED / SPEED Plus. Hence a new product variant has been designed that is known as PRATHAM. The full form of PRATHAM is Priority Assistance to MSMEs based on Hybrid or Alternate-security Model.
Cases which do not fit into SPEED/SPEED PLUS norms will be covered under PRATHAM.
Customers that seek a term loan for machinery finance. Full projects involving land and building are not covered under PRATHAM.
Greenfield cases shall not be covered.
Brownfield cases shall be covered, provided the borrower satisfies the criteria of SMART (earlier CART) eligibility, i.e.
Being in operations for three years.
Having recorded net profits during last three financial years. Relaxations permitted under SMART(earlier CART) shall be available under PRATHAM also.
Purpose of assistance:
Plant & Machinery
Installation/transportation cost might be included.
Second hand/refurnished machines, Machinery procured from domestic or foreign suppliers are permitted subject to standard applicable guidelines.
MoU with supplier/dealer is not mandatory. Standard due diligence of machinery supplier may be done as per guidelines.
The loan amount will be up to 100% of total project cost subject to maximum amount of 3 crore.
Overall exposure under the product will be 3 crores.
Max. 5 years including moratorium of up to 6 months.
Ballooning of principal instalments or EMI is not permitted. Instalments should be equated.
The objective of RLS is to provide medium term to long term finance for capex/ working capital to existing well performing traders.
Purpose of assistance:
For capex, such as acquisition of business premises, go-down, shop, office premises, repair, furnishing, renovation of existing business premises and/or purchase of furniture & fixtures, equipments, tools, computers, UPS, DG set, etc.
For working capital/ additional working capital (in case the borrower is already having working capital/overdraft facility with some other Bank/FI).
Export trade shall not be covered under RLS.
However, assistance will exclude expenditures for speculative purposes like investing in stock markets, non-business related commodity trading, commercial real estate activity etc.
Wholesale Traders & distributors engaged in trading of goods & services will be covered under security model since wholesale traders are not covered under CGTMSE cover.
MSE Retail Traders and Dealers
In case of MSE Retail Traders and Dealers, they should be dealing with products of at least one large reputed supplier like Kajaria, Ultratech, Hindustan Lever, etc. A large reputed supplier would mean a company having a turnover of around Rs.1000 crore or more.
Large Commercial real estate-based models viz. supermarkets, malls, departmental stores, retail chains, etc. are not covered under RLS.
Minimum vintage - 3 years operations
Cash profits - Past three years
Sales - A downward fluctuation in sales (not more than 10-15%, as per last audited balance sheet) is acceptable provided there are cash profits in the balance sheet.
CMR - As per handbook.
CIBIL TU score - Weighted average Min 700.
Registrations - GST, Shops and Establishment Acts, other locals acts, as applicable.
Nature & Quantum of assistance:
Minimum Loan size : Rs.10 lakh
Maximum Loan size:
Retails traders and dealers: 50 lakh
Wholesale traders : 100 lakh
Up to 100% finance shall be available from SIDBI.
Where the assistance is proposed towards working capital component the loan amount shall not exceed 20% of the sales turnover based on the last FY audited balance sheet/CA certified Balance Sheet/GST returns.
List of top 20% of the products with contribution to revenue in previous 3 years may be obtained during discussions on the proposal to analyse the trend.
In cases where additional WC is required for borrower already availing WC facility from other banks etc., latest CMA data and bank's sanction/renewal letter to obtained prior to working out WC requirements as per Nayak Committee/2nd Method.
Prepayment charges are 2% of principal outstanding.
36 to 60 months including moratorium of up to 3 months.
Flexible repayment schedules may be proposed to take care of seasonal peaks / troughs in turnover.
The target group for STAR is MSME i.e. both New to Bank and Existing Customers of SIDBI who are willing to acquire Solar PV Roof Top plants on its premises.
For Existing Customers:
Existing units with at least 2 years operations.
Having cash profits in past two FYs.
Should have satisfactory repayment track record of past two years as per RiMV guidelines. If their period of association with SIDBI is less than two years, they should have satisfactory repayment track record during this reduced period.
There should not be any audit observation where compliance is pending from customer.
For New to Bank Customers(New to SIDBI):
Existing units with at least 4 years operations.
Having cash profits in past two FYs.
Should have satisfactory repayment track record with lenders.
CIBIL Credit Vision Score:
Directors/Partners/Proprietor should be minimum 600
Weighted average CIBIL score should be minimum 700
The unit/its directors/partners/proprietor should not be in default with any Bank/FI/NBFCs (to be verified through CIBIL checks).
The loan amount will be based on 100% of the cost of equipment subject to:
Maximum 25% of the Net Sales as per last ABS/GST returns.
Minimum loan amount 10 lakh.
Maximum loan cap of Rs.2.5 crore.
SIDBI reserves the right to sanction lower amount depending upon assessment of repayment capacity.
Overall Exposure under the product:
The overall exposure will be 2.50 crore per customer. If there is any expenditure beyond this then it would have to be borne upfront by the borrower.
Nil. In case the promoter has already paid some advance to equipment supplier, it can be refunded.
Maximum 5 years including moratorium of 3-6 months.