The Small Industrial Development Bank of India (SIDBI) has launched the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme to facilitate credit flow to the Ministry of Micro, Small, and Medium Enterprises (MSMEs) for meeting their working capital requirements. This scheme provides medium/short-term financial assistance in the form of term loans to eligible MSMEs for augmenting Net Working Capital (NWC) and executing urgent confirmed orders. This article delves into the details of the STEP Scheme and its features.
Objective of the STEP Scheme
The primary objective of the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme is to offer financial support to both new and existing MSME units. The scheme aims to:
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Provide medium/short-term financial assistance for augmenting NWC.
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Assist in executing urgent, confirmed orders.
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Address incremental working capital requirements after confirming that regular working capital limits have not been enhanced by existing lenders.
Key Features of the STEP Scheme
The STEP Scheme is designed to offer quick, flexible, and accessible financial assistance to MSMEs. Here are the key features of the scheme:
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Quick Loan Disbursal: Loans are sanctioned within 2 days under this scheme.
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100% Financing: SIDBI provides up to 100% financing for both existing and new MSMEs.
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Purpose of Funding: The loan can be used for augmenting Net Working Capital (NWC) and for executing urgent confirmed orders.
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No Processing Fee: There are no processing fees for borrowers applying under the STEP scheme.
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Credit Guarantee: Borrowers can avail the benefits of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) cover.
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Simplified Documentation: The documentation process is streamlined to ensure ease of access for MSMEs.
Eligibility Criteria for the STEP Scheme
To qualify for the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme, the following eligibility criteria must be met:
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The applicant must be an existing MSME as per the Micro, Small, and Medium Enterprises Development Act, 2006.
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The MSME must have a minimum of 3 years of operations (2 years for existing SIDBI customers).
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The MSME should not be availing Western Coalfields Limited (WCL) or Overdraft account facility from any bank or financial institution.
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Micro enterprises should have shown operating profits in the past 2 years, or 1 year for existing SIDBI customers.
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The MSME should have no defaults or delinquencies with any bank or financial institution.
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The loan will be sanctioned based on standard scheme norms, including CIBIL/CMR checks and due diligence.
Quantum of Assistance
The financial assistance provided under the STEP Scheme is as follows:
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Up to Rs 300 lakh for existing SIDBI customers.
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Up to Rs 200 lakh for new customers.
Interest Rate
The interest rate on the loan will be based on SIDBI’s Marginal Cost of Funds Based Lending Rate (MCLR), adjusted for the internal rating of the applicant. This rate is determined as per the return on investment criteria set by SIDBI.
Repayment Period
The repayment terms of the loan under the STEP Scheme include:
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A maximum repayment period of up to 3 years, with a moratorium period of up to 6 months.
Documentation for STEP Scheme
SIDBI simplifies the application process with minimal documentation:
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A one-page application form.
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Standard KYC checks and due diligence procedures.
Application Procedure for the STEP Scheme
The application process for the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme is simple and can be done online. Here’s the procedure:
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Online Registration: Visit the SIDBI online application page and click on the Registration tab to register as a new user.
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Provide Enterprise Details: Enter basic information, including the enterprise name, phone number, email, and loan requirements.
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Login: After successful registration, a username and password will be provided. Use these credentials to log in.
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Fill the Application Form: Complete the simple one-page application form and checklist.
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Submit Documentation: After the necessary KYC checks and due diligence, SIDBI will process the loan.
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Loan Disbursement: Once the application is approved, the loan will be credited to the applicant’s account within 48 hours.
Conclusion
The SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme is an excellent opportunity for MSMEs to enhance their production capabilities and meet urgent working capital requirements. By offering quick processing, 100% financing, and simple documentation, the STEP Scheme ensures that MSMEs can access the financial support they need to expand their businesses. With favorable repayment terms and an easy application process, this scheme is a valuable resource for MSMEs aiming to grow and meet increasing market demands.