27 Jan 2020 | 5 min read
As per the recently concluded data, India is now home to almost 70 Lakh Micro & Small business units registered with the Micro, Small and Medium Enterprises Ministry. These units are a part of the entire MSME ecosystem where the Government of India incubates and provides financial assistance to small business entrepreneurs.
As on date, as suggested in a report by Crisil India, over ₹ 1,700 Crore has already been disbursed to these units through various channels and this particular segment accounts for 25% of the entire corporate lending that took place in our country till last year. The most important factor is the banks that are making it possible by providing excellent opportunities to their borrowers from time to time.
However, whenever this segment has faced any kind of financial crunch or lack of access to credit, there are some institutions who have come forward and provided their support. Here we will discuss in detail about these banks/institutions which provide financial schemes for small businesses:
YES Bank is amongst the top-five private sector banks in India and is primarily known as the corporate bank in its segment. YES Bank provides loans to small businesses in terms of various products like:
India’s largest private sector lender offers business loans to its customers under three generalised segment and the rate of interest charged for the same are considered to be low. The segments are as following:
SBI is the largest bank in the country in terms of bank customers and as a lender both. In terms of extending credit support to its customers, SBI offers a huge range of small business finance schemes. The list is as given below:
|Name of the Scheme||Nature of Business|
|Asset-Backed Loan||For all types of businesses|
|Asset-Backed Loan – Commercial||For Commercial Real Estate|
|Cotton Ginning Plus||For cotton cultivators and processors|
|Doctor Plus Scheme||For Doctors|
|Export Packing Credit||For Export operations/warehousing|
|E-Dealer Finance Scheme||For authorised dealers of Industry Majors|
|E-Vendor Finance Scheme||For vendors of reputed corporates|
|Fleet Finance||For new vehicle finance|
|Lease Rental Discounting||To meet borrower’s liquidity mismatch|
|Medical Equipment Finance||For purchase or funding ancillary equipment|
|PM Mudra Yojana||Working capital and term loan|
|SME E-Biz Loan||For registered sellers at e-commerce portals|
|Simplified Small Business Loan||For current & fixed asset build-up|
|Stand Up India Credit Scheme||Type of a composite loan|
|SME Smart score||For cash credit facility|
|SME Credit Card||For instant credit requirements|
|Warehouse Receipt Finance||For traders/owners in goods manufacturing|
|Finance to Food Processing Unit||To encourage units in Food processing|
|Loans for Business Correspondents||For all types of businesses|
|SBI OD Product||For overdraft facility through correspondents|
|SBI Exporter’s Gold Card Scheme||For export credit on best terms|
Explore More: Everything You Need to Know about SBI Mudra Loan
All these loans as provided above belong to micro and small units and are classified by the nature of business. Most of the banks offer a limited number of options when it comes to small businesses, and try and lure the borrowers for generic offerings. However, backed by the Government of India, the State Bank offers the loans according to the nature of business and defined the terms & conditions accordingly.
Bank of Baroda provides economic financing solutions for all types of corporations. Outside the regulatory definition of the SME units, there are several products on offer as given below:
Bank of Baroda SME Loan Pack
Under this credit facility, BOB extends financial support for both working capital & long-term requirements. The cumulative limit is approved by the bank which can be utilized as per need. The bank takes into account major points like the nature of the business, cash-flow projections, cyclical trends, and other peak time constraints.
SME Capex, Short Term, Medium Term Loan
The CAPEX loan is basically for the capital expenditure related to the business, like purchase of machinery, research & development, technology upgrade and others.
Short & Medium-term loans are to provide working capital support as well as to pay-off high-interest burden.
SIDBI was established as a subsidiary to the Industries Development Bank of India in the year 1990, since then the bank’s sole focus is on growth and development of small-scale industries in the country by extending the credit support to those in need. As compared to the State Bank of India, SIDBI also offers a wide range of customer-centric loans. The list is as given below:
SMILE (SIDBI Make in India Soft Loan Fund for MSMEs)
It is a credit facility offered to new enterprises in the field of manufacturing and services. It is a unique combination of both debt and equity, the loan provided under this scheme are in the form of soft loans towards equity and a term loan towards debt to keep a balance between the two for efficient running of a business. The most prominent feature of such loans is that the repayment period is up to 7 years.
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)There is another major body other than the banks which provide credit support to small business units and is specifically meant to serve this purpose. As stated below:
|Name of the Scheme||Nature of Facility|
|SMILE Equipment Finance||For small scale equipment finance|
|OEM Partnership loans||For registered dealers of Original Equipment Manufacturers|
|Working Capital Loans||For all types of small businesses|
|SIDBI (STFS)||Trader Finance Scheme|
|SPEED||SIDBI Loan for Purchase of Equipment for Enterprise’s Development|
|SPEED Plus||For the purchase of high-end machinery|
|RLS||Retail Loan Scheme for Trade Finance|
|TULIP||Top-Up Loan for Immediate Purposes|
|STAR||SIDBI Term-Loan Assistance for Rooftop Solar PV Plants|
Prime Minister Narendra Modi described this initiative last year while unveiling the 12-point action plan for the MSME sector. The initiative aims at automation of various processes to loan appraisal in such a way that one gets an eligibility letter, in-principle approval in less than 60 minutes and chooses the bank that one may prefer to ease access to credit to smaller and micro-enterprises.
The CGTMSE is the Government of India Initiative and is unique as it forms a consortium of various banks to provide credit facilities to small business units.
The consortium major banks from the country namely –
|SIDBI||State Bank of India||UCO BANK||Bank of India|
|Punjab National Bank||Indian Bank||IDBI Bank||Central Bank of India|
|Kotak Mahindra Bank||IndusInd Bank||IDFC First Bank||HDFC Bank|
|Union Bank||Canara Bank||Union Bank||ICICI Bank|
Post the in-principle approval, the time taken for business loan disbursement depends on the information and documentation provided on the platform and to the banks. Generally, post the in-principle approval, the loan is expected to be sanctioned/disbursed in 7-8 working days.Under this scheme, a finance of ₹ 1 Lakh to ₹ 1 Crore is provided to the SME units at an interest rate as low as 8% per annum. The rate provided for these schemes are one of the lowest in the market.
Apart from the above mentioned schemes, the government of India has launched psbloansin59minutes.com portal for applicants to get an instant business loan in just 59 minutes from the time of submission.