Last updated: March 28th, 2022 8:21 PM

SIDBI‘s Asset Light Scheme for Service Sector Entities

To facilitate the flow of credit to the asset-light type of businesses for meeting credit needs, the Small Industrial Development Bank of India (SIDBI) has recently launched a new scheme called Asset Light Scheme for Service Sector Entities. Under this scheme, financial assistance is provided to eligible MSMEs/ service sectors, in the form of a Term Loan & Revolving Term Loan with lower collateral requirements for meeting the credit needs. In this article, we will look at the Asset Light Scheme for Service Sector Entities in detail.

The objective of the Scheme

The objective of this scheme is to meet the credit needs of the ‘asset-light type of businesses‘ mostly in the new emerging segments of the service sector which do not involve the creation of fixed assets and generally operate from leased/rented premises. The key objective is to provide finance to the emerging segments in the services sector with lower collateral requirements.

Key Features of the Asset Light Scheme

The key feature of the SIDBI‘s Asset Light Scheme for Service Sector Entities is as follows:

• It is one of the quick delivery products of SIDBI; a loan under the scheme will sanction within 2 days.
• SIDBI provides up to 50 crores for registered MSME units and `35 crores for other eligible service sector projects.
• Under this step scheme, enterprises will get funding for Capex including investment in light assets like interiors, equipment, furniture & fixtures, project-related intangibles, etc.
• To avail of the loan under the scheme, the borrower does not need to pay any processing fee.
• Simplified documentation is the feature of SIDBI’s Asset Light Scheme.

Eligible Enterprises for Asset Light Scheme

SIDBI offers term loans to Service businesses registered as Micro Small Medium Enterprise (MSME) units or other eligible service sector projects as defined by SIDBI

Indicative profile of businesses

Indicative profiles of these service businesses are as follows:

• Restaurant Chains & budget hotel chains, Diagnostic/specialty clinic chains
• Gyms/fitness centers
• Media & entertainment companies
• Other service businesses which invest intangible but light assets like interiors, equipment, computers, etc
• Organized retail outlets, which invest primarily in interiors and stock, etc

Eligibility Criteria for Asset Light Scheme

The eligibility criteria for availing of the loan under the SIDBI‘s Scheme for Service Sector Entities are as follows:

Eligibility criteria for Existing entities

• To avail of the financing under this Scheme, the MSME unit should have a minimum of 3 years of operations
• Established model of profitability with net profits in at least 2 of last 3 years.
• VC/PE-assisted companies that have not achieved profitability could also be assisted selectively if they present a clear plan/ trend for achieving profitability.

Note:  Other financial norms as specified from time to time will also apply.

Eligibility criteria for New Entities

• New entities could be considered selectively only if they are promoted by entities/promoter groups with such track records as stated above / related line of business.
• Franchisees of well-known franchisors with a track record and franchising experience are also eligible to apply

Loan under the SIDBI‘s Asset Light Scheme

SIDBI ‘s Scheme for Service Sector offers loans either in the form of the Term Loan or Revolving Term Loan

Eligible heads for financing

Capex includes investment in light assets like interiors, equipment, furniture & fixtures, project-related intangibles, etc.

Quantum of Assistance

The Quantum of Assistance under the SIDBI ‘s new Scheme is as follows

• SIDBI is providing Rs. 50 lakh for eligible entities based on the needs under this scheme for Service Sector Entities. 
• Maximum assistance is subject to caps not exceeding `50 crore for registered MSME units and `35 crore for other eligible service sector projects.
• Franchisees of well-known franchisors with a track record and franchising experience for maximum assistance of `100 lakh

Rate of Interest

The interest rate for the loan under the scheme will be based on the credit rating and linked to Prime Lending Rate (PLR)

Repayment Period

SIDBI offers a repayment period of up to 5-7 years including a moratorium under the SIDBI’s Asset Light Scheme. Repayment could be suitably structured for seasonal businesses

Security Details

• The assistance shall be secured by tangible assets, acquired under the assistance and/or other unencumbered assets of the company
• Collateral requirement of 30-50% of assistance

Documentation for Asset Light Scheme

SIDBI offers a simple one-page application and a built-in checklist for this scheme. The Standard KYC checks and due diligence are also available for the STEP Schemes.

Asset Light Scheme Application Procedure

The eligible MSME needs to access the SIDBI’s online application page to apply to the scheme.

• The online Registration Login page will display, by clicking on the Registration tab, a new user can register in SIDBI and avail of the loan.
• The applicant entity needs to provide the details of Enterprise Name, Phone number, Email, and Proposed Total Loan Requirement.
• On successful registration, the user name and password will be provided to the entity. After login into the portal, the applicant needs to fill in a simple one-page application and built-in checklist.

• After the Standard KYC checks and due diligence, the loan amount will be credited to the applicant’s account within 48 hours.