All You Need to Know About the Govt’s Loan Scheme for MSMES
The coronavirus outbreak has put a pause on the growth of micro, small and medium enterprises (MSME). The MSMEs contribute a substantial amount, i.e., 37.5% to India’s GDP. Offering them monetary support will cushion the operational expenses of MSMEs. Recently, Finance Minister Nirmala Sitharaman has announced several loan schemes for the benefit of MSMEs. Here’s a glimpse of what is in store for them –
- 1. One year of moratorium for MSMEs Under the government funding scheme, MSMEs can apply for a four-year loan with a moratorium of repayment with an interest capped at 9.25% and 14% for NBFCs.
- 2. An additional funding of Rs 3 lakh Under Emergency Credit Line Guarantee Scheme (ECLGS) all small business owners who have an annual turnover of Rs 100 crore and an outstanding credit of Rs 25 crore as of 29th February 2020 and not overdue on loans by 60 days will receive an additional funding of Rs 3 lakh crore under Atma Nirbhar Bharat Abhiyan. This will help them ease the operational expenses and restart their businesses.
- 3. 100% guaranteed loan The amount of Guaranteed Emergency Credit Line offered to MSMEs and NBFC in the form of additional working capital term loans and additional term loans respectively will be 20% of their entire outstanding credit up to Rs 25 crore as of 29th February 2020. The GECL is a 100% guaranteed loan provide by National Credit Guarantee Company (NCGTC).
- 4. Guarantees for emergency loans The government has set aside a total of Rs 41600 crore fund under National Credit Guarantee Trustee Company Limited (NCGTC) for this scheme, which will be spanning over the next three fiscals. The guarantees for Emergency loans will be available until 31st October 2020 or till an amount of Rs 3,00,000 crore is sanctioned whichever is earlier.