SIDBI Make in India Loan for Enterprises (SMILE)

SIDBI Make in India Loan for Enterprises (SMILE) scheme was also launched by Government of India. The Scheme is intended to take forward the Make in India campaign of Government of India’s and help MSMEs take part in the campaign. The focus will be on identified twenty-five sectors under ‘Make in India’ programme’ with emphasis on financing smaller enterprises within the MSME sector. SMILE scheme provides a timely and adequate financial resource for the 25 identified sectors. In this article, we will look at SIDBI Make in India Loan for Enterprises (SMILE) in detail.

Objective of the Scheme

The objective of the SIDBI Make in India Loan for Enterprises (SMILE) scheme is to support new & existing MSMEs for purchasing growth opportunities This major new National program is designed to facilitate foster innovation, investment, protect intellectual property, enhance skill development and build best-in-class manufacturing infrastructure for MSMEs by providing financial support to meet the required debt-equity ratio for the formation of an enterprise.

Target Sectors

SIDBI Make in India Loan for Enterprises (SMILE) is providing financial assistance to following 25 Identified sectors under the Make in India programme.

Automobiles and Automobile Components
Aviation
Bio-Technology and Chemicals
Constructions
It and BPM
Electrical Machinery and Electronic Systems
Defence Manufacturing
Food Processing
Leather and Mining
Media & Entertainment
Oil & Gas
Pharmaceuticals
Railways
Ports & Shipping
Renewable Energy
Roads & Highways
Space and Thermal Power
Textiles & Garments
Tourism & Hospitality
Wellness Sectors

Eligible Enterprises

Enterprises eligible under the SIDBI Make in India Loan for Enterprises (SMILE) is listed below:

All MSMEs as per MSME Act 2006.
Emphasis on financing smaller enterprise within the MSME and also new enterprises in manufacturing as well as service sectors
Existing enterprises undertaking expansion, modernisation, technology upgradation and other projects for growing the business
Loans extended under the SIDBI Make in India Loan for Enterprises (SMILE) cannot be used for repayment of earlier loans
Focus on all the identified twenty-five sectors. Besides, to help MSMEs across other sectors, deserving proposals from any other sector can also be assisted on merits.

Types of Assistance

The government provides a soft loan in the nature of quasi-equity and term loan on relatively soft terms to MSME to meet the required debt-equity ratio for the establishment of an enterprise and for pursuing opportunities for growth for existing MSMEs.

Terms of Assistance

Terms of assistance under the SIDBI Make in India Loan for Enterprises (SMILE) is explained below

Soft Loan – In the Nature of the Quasi

Amount

The loan amount details under the SIDBI Make in India Loan for Enterprises (SMILE) is described here:
10% of the project cost subject to the maximum Rs.20 lakh and 15% of the project cost, subject to the maximum of Rs.30 lakhs for enterprises promoted by SC, ST, Persons with disability and Women (controlling stake of at least 51%)

Upfront Fee

The eligible MSME sectors need to pay 0.50% of the loan amount as an upfront fee for the SIDBI Make in India Loan for Enterprises.

Rate of Interest

For the First three years: 9.15% to 9.35% per annum
From 4th year onwards: 11.70% - 12.70% per annum based on the Bank’s PLR & Internal Rating (rate can be both fixed or floating)

Repayment Period

The repayment period for the soft loan under the SIDBI Make in India Loan for Enterprises (SMILE) is upto ten years inclusive of moratorium upto three years.

Security

Residual charge over the entire assets
Personal guarantee of the Promoter(s)

Prepayment

No premium will be levied under the SIDBI Make in India Loan for Enterprises (SMILE).

Other Details

On expiry of three years from the date of the disbursement, the outstanding soft loans together with any dues thereon will be converted into a secured term loan, and the entire loan will carry an applicable rate of interest as per internal rating of the borrower.

Term Loan – On Relatively Soft Terms

Amount

The loan amount details under the SIDBI Make in India Loan for Enterprises (SMILE) is described here:

Minimum Rs.50 lakh for new enterprises
Minimum Rs.25 lakh for existing enterprises

Upfront Fee

The eligible MSME sectors need to pay 0.50% of the loan amount as an upfront fee for the SIDBI Make in India Loan for Enterprises.

Rate Of Interest

For the first three years: 9.45% to 9.95% per annum (fixed), it is based on the rating
From 4th year onwards: 11.70% to 12.70% per annum. Based on Bank’s PLR / Internal Rating

Term Loan

Details of term loan provided under the SIDBI Make in India Loan for Enterprises is explained in detail below:

75% of Project Cost upto Rs.100 lakh
2/3rd for the rest subject to the promoters contribution and DER norms

Promoters’ Contribution

Minimum 15% of Project Cost upto Rs.100 lakh
20% for the rest subject to DER norms

Repayment Period

Upto ten years inclusive of moratorium upto three years.

Security Details

First charge over all the assets created under the project
Personal guarantees of the Promoters
Fixed asset coverages at least 1.40 times including the collateral security

Prepayment

No premium will be levied for SIDBI Make in India Loan for Enterprises (SMILE).

Fiscal Incentives Details

For the general category, ten percent of the project cost subject to a maximum of Rs.20 Lakh is issued as the loan amount
For the enterprises promoted by Scheduled Caste, Scheduled Tribe, Persons with Disabilities (PWD), and women, 15% of the project cost, subject to the maximum of Rs.30 Lakhs
Persons belonging to categories as mentioned above must own a controlling stake (i.e. 51% or higher)

Documents Required

The documents required for SIDBI Make in India Loan for Enterprises (SMILE) scheme is explained in detail below:

Proof of Identity: Passport, Driving License, Voter’s ID Card, PAN Card and Signature identification from present bankers of the proprietor, partner or director
Proof of residence: Recent telephone bills, property tax receipt, electricity bill, Voter's ID Card of Proprietor, partner of Director (if a company)
Proof of business Address - As per SIDBI’s KYC application form for Non- Individuals
Memorandum and articles of association (MOA) of the Company and Partnership Deed of partners etc
Biodata of promoters / Guarantors (as per enclosed format I)
Net Worth Statement of promoters and guarantors along with latest income tax returns (as per attached format II).
Rent Agreement and clearance from the pollution control board if applicable
Udyog Aadhar memorandum (UAM) registration
Projected balance sheets of the next two years if the working capital limits and for the period of the loan in terms of the term loan
Photocopies of lease deeds and title deeds of all the properties being offered as primary and collateral securities
Documents to establish whether the applicants belong to SC or ST Category
Certificate of incorporation from the ROC to establish whether majority stakeholding in the company is in the hands of the person who belongs to SC, ST and Woman category
Profile of the unit
Last three years balance sheet of the Associate and Group Companies.
Detailed Project Report
Manufacturing process details

SIDBI Make in India Loan for Enterprises (SMILE) - Application

The application procedure for SIDBI Make in India Loan for Enterprises (SMILE) scheme is explained in detail below: Step 1: The eligible MSME enterprise needs to approach the concerned branch for applying for a loan. Step 2: The applicant has to submit an application along with the required documents. The application form for the SIDBI Make in India Loan for Enterprises (SMILE), the format for Bio-data of the Promoters / Guarantors and Net Worth Statement is enclosed here: Step 3: After verifying the details, the SIDBI will sanction the loan and amount will be credited to the beneficiary’s accounts.