SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme

To facilitate the flow of credit to the Ministry of Micro, Small, and Medium Enterprises for meeting working capital requirements, the Small Industrial Development Bank of India (SIDBI) has recently launched a new scheme called SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme). Under this scheme, medium/short term financial assistance is provided to eligible MSMEs, in the form of term loans for augmenting Net working capital (NWC) and to execute urgent confirmed orders. In this article, we will look at the SIDBI SANGAM Scheme in detail. Know more about the SIDBI Make in India Loan For Enterprises (SMILE)

The objective of the Scheme

The objective of the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme is to support new & existing MSME units to provide medium/short term financial assistance for augmenting NWC and/or to execute urgent confirmed orders. STEP Scheme also aims to provide Incremental working capital requirements for MSME after satisfying about nonenhancement of regular WC limits from existing lenders.

Key Features of the STEP Scheme

The key feature of the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme 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 100% finance for existing and new Ministry of Micro, Small, and Medium Enterprises
Under this step scheme, enterprises will get funding for augmenting NWC and/or to execute urgent confirmed orders.
To avail of the loan under the scheme, the borrower does not need to pay any processing fee.
Another important feature of the scheme is that the borrower can avail of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) cover
Simplified documentation is the feature of SIDBI’s STEP scheme.

Eligible Enterprises

SIDBI offers term loans to Micro, Small, and Medium Enterprises under the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP).

Eligibility Criteria

The eligibility criteria for availing of the loan under the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme are as follows:

Existing MSMEs as per the Micro, Small and Medium Enterprises Development Act, 2006 only can apply for the scheme
To avail of the financial under the STEP Scheme, the MSME unit should have a minimum of 3 years of operations and 2 years for Existing customers of SIDBI
Working Capital Term Loan shall be provided to only those enterprises not availing Western Coalfields Limited (WCL) / Overdraft account facility from any Banks / financial institution.
The Micro enterprises should be Operating profit during the past 2 years and 1 year for Existing Customers of SIDBI
The Micro enterprises should not have any default/delinquency to any bank /Financial Institution
Standard Scheme Norms will apply such as CIBIL / CMR, due diligence checks, etc.

Quantum of Assistance

The Quantum of Assistance under the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme is as follows

Upto Rs 300 lakh for existing SIDBI customers
Upto Rs 200 lakh for New Customers

Interest Rate

The interest rate for the loan under the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Schemes marginal cost of funds based lending rate (MCLR) based Return on investment as per internal rating.

Repayment Period

SIDBI offers a repayment period of up to 3 years including a moratorium of upto 6 months under the SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Schemes.

Documentation for STEP Scheme

SIDBI offers a simple one-page application and built-in checklist for SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Schemes. The Standard KYC checks and due diligence are also available for the STEP SChemes.

STEP 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.

SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme The applicant entity needs to provide the details of Enterprise Name, Phone number, Email, and Proposed Total Loan Requirement.

SIDBI’s Term Loan to Enhance Production of MSMEs (STEP) Scheme 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.