How Does SIDBI Support Small Businesses?

Introduction

Micro, Small and Medium Enterprises (MSMEs), which contribute considerably to the national economy in terms of output, employment, and exports, make up SIDBI’s business domain. With a vast network of around 5.1 crore units, creating employment for about 11.7 crore people, manufacturing more than 6,000 products, contributing about 45 percent to manufacturing output and about 40 percent of exports in terms of value, and accounting for about 37 percent of GDP, the MSME sector is an important pillar of the Indian economy.

SIDBI’s business strategy aims to fill financial and non-financial gaps in the MSME eco-system. MSMEs receive financial assistance in the form of (a) indirect/refinance to banks/financial institutions for onward lending to MSMEs, and (b) direct finance in specialist areas such as risk capital, sustainable finance, receivable financing, service sector financing, and so on.

Financial Support of SIDBI to MSMEs

MSMEs receive financial assistance from SIDBI in the following ways:

Refinancing banks and financial institutions for onward lending to SMEs is one example of indirect finance. Direct financing through the service sector, receivable finance, risk capital, and long-term financing, for example.

SIDBI focuses on the “credit plus method,” in which it helps technological modernisation and upgradation, cluster development, enterprise development, talent upgrading, and marketing operations in addition to providing financial assistance.

Digital Prayas Launched by SIDBI

SIDBI, or the Small Industries Development Bank of India, has released an app called Digital Prayas. This organisation is dedicated to promoting, developing, and funding Micro, Small, and Medium-Sized Enterprises, or MSMEs. The goal of Digital Prayas SIDBI is to assist small business owners in increasing their operations.

How Can Digital Prayas Help Industries & Businesses

Individuals with limited financial resources are starting a variety of businesses in today’s society. The Digital Prayas app may assist businesses and sectors in a variety of ways.

Under a cooperation agreement, SIDBI has teamed with Microfinance Institutions (MFIs) to pilot direct lending to MFIs with the purpose of delivering loans up to Rs. 5 lakh to the targeted sector of micro-entrepreneurs and micro-enterprises.

The initiative, which is operated by financial and non-financial intermediaries, will assist such micro-entrepreneurs/micro-enterprises that seek to expand or diversify their firm.

The Digital Prayas SIDBI programme is for customers who are having trouble obtaining affordable financing and are paying interest rates of more than 20%.

It is intended that low-cost financing will assist borrowers in improving their living conditions, thereby increasing their chances of turning a profit for their enterprises.

Uses of Digital Prayas for small businesses in India

As a result of the pandemic, many SMEs have been forced to automate inventory management, accounting, and customer relations.

Many businesses are increasingly allowing their customers to make payments via digital methods.

As a result, a digital proof of transaction data, customer experience, and sales performance has been created. Using these strategies can help you in a variety of ways.

Products offered under SIDBI

1. SIDBI Micro, Small, and Medium Enterprises Soft Loan Fund (SMILE)

• The loan can be repaid over a period of up to ten years (inclusive of moratorium period of 36 months)

• There are attractive interest rates available

• The service and manufacturing industries will be prioritised

• Coverage under the Credit Guarantee Scheme may be available for loans of up to Rs.2 crore

2. Supplemental Loan for Immediate Needs (TULIP)

• Within seven days, the loan is approved.
• There is no need to furnish any collateral
• The interest rate varies between ten percent and eleven percent per annum
• The loan can be repaid over a period of up to 60 months (inclusive of a moratorium period of 6 months)

3. Loans made in collaboration with an OEM

• The highest loan amount that can be granted is Rs.1 crore
• MSMEs that have been in operation for at least three years are eligible for loans
• Financially solid MSMEs are also required
• The offered loan must be used for plant and machinery investment
• The loan can be repaid over a period of up to 60 months (inclusive of moratorium period)
• There are attractive interest rates available

4. SIDBI – Loan For Purchase of Equipment For Enterprise’s Development 

• Financing of up to 100 % is possible
• MSMEs that have been in operation for at least three years are eligible for loans. Financially solid MSMEs are also required
• The interest rate varies between 9.25 % and 10 % per annum  

5. SMILE Equipment Finance SMILE Equipment Finance SMILE Equipment Finance SMILE (SEF)

• The minimum loan amount available is Rs.10 lakh

• There are attractive interest rates available

• The loan can be repaid over a period of up to 72 months (inclusive of moratorium period)

• MSMEs that have been in operation for at least three years are eligible for loans

• Financially solid MSMEs are also required

6. SIDBI Rooftop Solar PV Plants Term Loan Assistance (STAR)

• MSMEs are given loans to assist them cut their power bills
• The loan amount might be anywhere from Rs.10 lakh to Rs.2.5 crore
• The interest rate ranges from 9.10 percent to 10.20 percent per annum
• The loan can be repaid over a period of up to 60 months (inclusive of a moratorium period that ranges between 3 months and 6 months)

7. SIDBI Assistance to MSMES for Recovery and Organic Growth During Covid19 Pandemic (AROG) 100% Funding

• There are competitive financing rates available
• It is just need to give a small amount of collateral
• There is no processing cost
• The interest rate ranges from 5.50 percent to 6.00 percent per annum
• A maximum loan amount of Rs.2 lakh is available

8. Working Capital Assistance in times of Corona Crisis to Revitalise Industries (TWARIT)

• The annual interest rate is 8.25%
• The loan can be repaid over a period of up to 48 months (inclusive of a moratorium period of 12 months)
• There is no penalty for paying in advance

Benefits of SIDBI

Custom made

SIDBI insurance and loans that are tailored to your company’s needs. If your requirement isn’t in the regular and normal range, the Small Industries Development Bank of India can help you get the money you need.

Dedicated Dimensions

Credit and loans are tailored to the size of the company. As a result, MSMEs can apply for a variety of loans that are tailored to their specific needs.

Interest Rates That Are Attractive

It has ties with a number of banks and financial institutions around the world and may be able to offer low interest rates. The World Bank and the Japan International Cooperation Agency have partnered with the SIDBI.

Capital Gains

Entrepreneurs could obtain appropriate financing for achieving their expansion goals without altering their ownership of a company.

Equity and Venture Capital are two types of financing.

It has a wholly owned subsidiary, SIDBI Venture Capital Limited, that provides growth capital in the form of equity through venture capital funds that focus on MSMEs.

Subsidies

SIDBI offers a variety of programmes with low interest rates and flexible terms. SIDBI has extensive experience and understanding of the various schemes and loans available, and might assist businesses in making the optimal option for their operations.

Transparency

Its operations and rate structure are open to the public. There are no additional fees.

Conclusion

SIDBI are made to Facilitate and strengthen loan flow to MSMEs, as well as alleviate financial and developmental gaps in the MSME ecosystem. Digital Prayas is a crucial app that allows low-income entrepreneurs to try their hand at entrepreneurship. The loans are processed quickly, making it a more appealing choice to consider. It allows people to experiment with their creative ideas and explore all of the business possibilities. This is a significant development in the financial sector, and it contributes to financial stability.