SIDBI has proved to be a great support system for all kinds of small businesses in India. This is because they create a series of equity and loan schemes for MSME sector to sanction their growth. In the following article, we will observe some famous SIDBI schemes like- SME IT loans, vendor development, marketing assistance, international finance, for women entrepreneurs and risk capitals as well. It is owing to these schemes only that SIDBI has gained such a good place in the market.
Marketing Assistance Scheme
The loan provided by SIDBI is usually not below Rs. 10 lakhs, if one wants to directly obtain it form SIDBI branch. The loan is mainly offered to MSEs so that they can do a proper marketing for their products. Also, the ratio of debt-equity is normally not more than 2:1.
SME IT Loans
In order to help the SMEs set-up, a good IT sector in their business, SIDBI,and well known IT Company Intel have come together and launched an extremely successful venture. This is supposed to help SMEs to have a smooth access to finance and technology to implement a better and revised technology. This is because one can get aloan for hardware, software, their installation,and services. Interest charged on the finance of 5 lakhs to 25 lakh is 11.5% p.a on a diminishing balance basis. This helps in technical growth of SMEs.
Vendor Development Scheme
This scheme proves to be a bliss for merchants of OEMs and other large corporates as well. This merchantis basically part of SMEs belonging to various sectors such as service or industrial sector. SIDBI extends its assistance to these OEM merchants and corporates so that they can expand and modernize their business. In order to make this scheme more successful and helpful, SIDBI has signed a MoU with large corporates of the country, PSUs,and other big MNCs so that a good SME vendor base can be made available.
Through Bill Discounting Scheme, timely payments to various units are assured. Under this scheme, various kind software finance is made available to purchasers and sellers of machinery, components,and parts which constitute an important part of construction and transportation sector of any business.
Refinance Through Banks and SFCs
This scheme of Refinance is made available via State Finance Corporations, various banks, for creating small but new scale units which would be helpful for SMEs to expand, modernize, and diversify their business. Service sector usually is comprised of various professional practices, tourism, hospitals or nursing homes, hotels, restaurants etc. SIDBI tends to offer long-term credit, State level Industrial development Institutions, for loans that are provided by MSMEs. But, there is a catch here- the total budget of the project which should come under Refinance Assistance with respect to service sector units should not exceed the amount of 20 crores. This is the reason as to why project cost limit is lower for SFCs.
There a number of schemes which are covered under this department:
- Pre-eminent credit
This scheme is anoffer to various SMEs in adifferent currency - which may be USD, Euro, or in rupees. The margin provided amounts to a minimum value of 10% and themaximum value of 25%. The period for credit is of 180-190 days. The rate of interest is very less- 0.75% charged half yearly.
- The foreign currency term plans
This assistance is basically given to SMEs so that they can set up new projects and expand their business in the marketplace. This can also be used to renew their technology schemes of the business. In fact, one can repay this amount back in about amaximum period of five years. The interest charged under this scheme is 4%.
- Post-shipment Credit
This credit is offered in foreign currency only for SME units or trading section so that they can source their SMEs. Finance is mainly given to those SMEs where sourcing requirements are up to Rs 1 crore. The rat rod interest charged for this scheme is also 0.75%. The credit also follows all the guidelines of RBI.
Marketing Fund for Women
SIDBI realized the role of women in every field. So, it provides aid to young, aspiring women entrepreneurs and organizations who are mainly involved in themarketing sector. This helps these women entrepreneurs to expand their reach, in every kind of market and enables them to fight every odd. Under this scheme, finance is provided to NGOs, co-operatives, etc who need financial support for services like trade, internet, advertising, marketing research etc.
Rishi Capitals to MSMEs
Under this, SIDBI has launched a scheme - "SIDBI foundation for Risk Capital for MSMEs". Various new products and mechanism are created under this project in order to provide risk capital to MSMEs for varied industry units. Also, apart from a direct financial help provided by SIDBI, different delivery routes like VC Funds, small banks etc also help to supply risk capital to MSMEs. This becomes important as no one can envision future risks and issue which might occur with any business, you can only focus on giving your best.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Before making any decisions do consult your Professional / tax advisor. For misrepresentation or interpretation of act or rules Author does not take any responsibility. Neither the author nor the firm accepts any liability for the loss or damage of any kind arising out of information in this document or for any action taken in reliance there on. The author is a Chartered Accountant and the Chief Gardener & Founder Director of Rajput Jain & Associates , a leading Tax & Investment Planning Advisory Service Provider.
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