Is Small Industries Development Bank of India Helping Your Business?

Small Industries Development Bank of India, or SIDBI, is slowly but steadily expanding its reach in the MSME sector. The lending firm for Micro, Small and Medium Enterprises has a 14% share as of December 2023. This percentage is expected to increase to 25% via a rights issue by 2024, as per MD & CEO of SIDBI S. Ramann.

The graph below is a tell-tale of how SIDBI has risen in the refinancing and lending sector since its establishment in 1990. ⬇️

SIDBI has been evolving with one single focus in mind: to be an All India Financial Institution that utilises the credit-based approach to serve as the small businesses’ funding well. 💰

This article will cover the significant loan schemes like EXPRESS and SPEED in SIDBI’s portfolio and learn about its objectives.

What are the Objectives of SIDBI?

As is evident from the full form, SIDBI assists small businesses from the Micro, Small and Medium Enterprises (MSMEs) for smooth operational running without any financial hitches. With multiple loan schemes for different sections and needs, SIDBI is a financial aid platform from the Indian government.

As of March 2023, SIDBI’s portfolio was valued at ₹4 lakh crore. Set up by an Act of Parliament, SIDBI’s main objective was to promote, finance and develop the MSME sector. SIDBI is also responsible for overviewing and then coordinating the institutions involved in similar financing activities.  

In short, SIDBI is like a business fairy godmother, fulfilling its wishes for new machinery and power savings. 🧚

It’s a pity the firm's official website is not as magical as its motives. While researching SIDBI, I had to land on its website multiple times. This unfortunate requirement extended my deadline due to the site’s occasional failure to load the Home Page.

⬆️ This message graced my screen multiple times in the past couple of days. So SIDBI, here's Insider’s request to get your tech team working ASAP. 😉

SIDBI Loans: Types & Eligibility

Think of SIDBI as your one-stop shop for fueling your business aspirations. They have two main loan categories, each packed with options to match specific needs.

Direct Loan: Build Empire Brick by Brick ⚙️

Direct loan schemes are like a trusty toolbox, ready to equip your manufacturing or service business with the capital it craves. 🧰
From purchasing equipment to expanding operations, there's a loan here to help you build your empire. ️

Direct loans can be further divided into the following types:

EXPRESS: Swift Loans for Machines & Equipments

A term loan of up to ₹100 lakh, EXPRESS loan stands for Expeditious Process to deliver Rapid Loan through Automated Evaluation and Swift Sanction.  

Devoted to new SIDBI customers belonging to the manufacturing and service sectors. This loan is usually availed for the purchase of machines and other equipment.
A duration of 60 months is given to applicants for loan repayment.

Eligibility: Suitable for MSME units with experience of three years in operations. Documentation requirements such as Udyam registration and GST registration are mandatory. CIBIL / CMR/ due diligence checks, etc., are performed as the final step.

SPEED: Financial Aid for Rapid Development

A maximum loan of ₹50 crore SPEED stands for SIDBI – Loan for Purchase of Equipment for Enterprise’s Development. This loan caters to all MSME units wishing to purchase machinery, equipment, and Multi-Factor Authentication (MFAs).

7 years of repayment duration with a 12-month moratorium is fixed for the SPEED loan under SIDBI bank.

Eligibility: This loan is available for MSME units with at least 3 years in operations and cash profit for the previous three years.

ARISE: To Boost High-Growth Companies

ARISE stands for Assistance to Re-energise Capital Investments by SMEs (Small and Medium-sized Enterprises). The enterprises targeted via this loan type are high-growth companies belonging to the priority sectors such as the sunrise sector.

A loan amount of up to ₹5,000 lakh is financeable based on the project cost (80% of the cost is covered by the loan scheme). The tenure for the loan repayment is up to 7 years with 2 years of moratorium.

Eligibility: This loan category is devised for businesses with at least two years of operations and audited accounts. The applicant should also have cash profit for the last audited financial result.

STHAPAN: Kickstarting New Entries in the Market

SIDBI Thematic Assistance for Purchase of Capital Assets in New Enterprises, aka STHAPAN, is devised for new entities in the market. Loan amount starting from ₹20 crore is distributed to the units applying for STHAPAN.

MSMEs that are a part of the Production Linked Incentive Scheme devised by the central government are eligible for this loan. The loan repayment term is 7 years with 2 years of moratorium.

Eligibility: Loan of up to ₹20 crore is provided to the businesses whose promoters have a 3-year experience. For more than ₹20 crore as loan amount, the promoters should have 5 years of experience.

ARJANA: Enhancing Women Numbers in Business World

A Special Dispensation For Nurturing Enterprises Run By Women Entrepreneurs, AKA ARJANA, is a kind of term loan devised specifically for MSME units run by women entrepreneurs. New entities or expanding businesses from the manufacturing and service sectors are eligible for this loan scheme.

Term loan ranging between ₹25 lakh to ₹300 lakh is provided under the ARJANA scheme.

Eligibility: MSME units are run by women entrepreneurs with a minimum 51% stake and no bank default history.

SAATH: Giving Equal Footing to All

SIDBI Assistance and Aid for Thematic support to MSMEs promoted by SC/STs (SAATH) provides a term loan starting from ₹25 lakh to ₹300 lakh.

After devoting a scheme for the female gender, SIDBI takes the ambition one step forward by launching one for the SC/STs.

Eligibility: This term loan is devised for MSME units with SC/ST entrepreneurs with a minimum 51% stake. The unit should have no history of bank default.

STAR: Loan Specialised for Environmental Concerns

With a loan amount of ₹10 lakh to ₹350 Lakh, STAR, abbreviated for SIDBI Term-loan Assistance for Rooftop Solar PV Plants, supports businesses in reducing power costs.

Installation costs, solar panels, and equipment are covered under this loan scheme. 5 years of repayment tenure with 6 to 12 months for the moratorium is part of the scheme.

Eligibility: The MSME units with existing customers of 2 years and new customers for 3 years duration are eligible. 2-year cash profits with satisfactory repayment records are preferred in screening.

Green Loan: Leaving Eco-Footprint in the Business World 💚

Feeling eco-conscious? SIDBI applauds you! 👏
Green Loans are designed to give your green business ideas a healthy boost, whether it's investing in renewable energy or adopting sustainability.

Green Loan is further sub-categorised into the following schemes:

Green Finance Scheme: Capitalising Firms for a Green Planet

Providing financial assistance to the MSME units specialising in reducing greenhouse emissions, the Green Finance Scheme's main motive is to support anyone playing a role in advancing India's green economy.

Eligibility: The scheme supports all stages of the green value chain, from equipment providers (RESCOs, ESCOs, EPCs) and vendors to micro, small, and medium enterprises (MSMEs) on both the supply and demand sides.

Loans beginning from ₹20 crore to ₹50 crore are allocated to the MSME units accepted for this scheme. A repayment period is allowed for up to 10 years.

4E: Vitalising Energy-Efficient Firms

The 4E Financing Scheme offers funding for manufacturing and service sector units focusing on energy efficiency projects.

Eligibility: The business must be operational for at least a year, have a clean financial record, and complete a Detailed Energy Audit.

A minimum loan amount of ₹10 lakh with 90% of the project cost coverage and a repayment tenure of 60 months is provided.

EGPS: Financial Boost for a Clean Environment

Aligned with India's clean energy and "Panchamrit" goals, SIDBI empowers MSMEs to go green. SIDBI helps MSMEs adopt energy-efficient practices, such as cleaner fuels and reduced carbon emissions, through this scheme.

In the range of ₹5 lakh to ₹100 lakh, 100% of the project cost is covered. Repayment tenure is a maximum 5 years with a moratorium period of up to 6 months.

Eligibility: Existing customers of the bank and new to SIDBI businesses with 3 years in operations are eligible for this term loan.

Meanwhile, read about how to pay off your debt with these amazing loan repayment alternatives by clicking here.

The Bottom Line

With the diversification of the term loan schemes, SIDBI provides an accessible platform for MSME units to rely on. Its ambitious expansion plans paint a promising future for India's small businesses. From green initiatives to women-led ventures, SIDBI strategically positions itself to become a pivotal force in fostering a thriving MSME ecosystem.

In the upcoming years, as it reaches its 25% market share target, SIDBI's impact on India's economic landscape is set to be undeniable. Yet, there is room for development, which can be accomplished by carrying out tech-related developments and introducing schemes for seed startups.