The National Small Industries Corporation (NSIC) has entered into a Memorandum of Understanding (MOU) with private and nationalized banks. As per the MOU, the NSIC aims to offer financial aid to micro, small, and medium enterprises (MSMEs) and SMEs.
This agreement helps small businesses receive credit facilities from the financial institutions under the bank credit facilitation scheme.
Objectives of the bank credit facilitation scheme
The objectives of this scheme are as follows:
- Loan facilitation for the SMEs and MSMEs from public and private sector banks.
- Including more small businesses and providing them with access to formal credit facilities, helping them grow their ventures.
- Option for the businesses to transfer their existing bank account or open a new account in another bank.
- Provide credit facilities at affordable SME loan interest rates based on the rating given by the Performance and Credit Rating from the Ministry.
- Offer assistance in filling out the SME loan application form and preparing the required documents along with help in submitting the application.
Different types of loans available under the scheme
The following three types of loans are available under this scheme.
- Term loans
These are repaid in regular intervals for a period between one and 10 years. In certain cases, the repayment tenure may be extended to 30 years. Term loans are further classified as short-term, medium-term, and long-term facilities. Businesses can use the money to purchase assets and other equipment required for their operations.
- Non-fund based limits
The business owner can open a credit account with a bank or another financial institution. They can then withdraw cash up to the available limit as per their requirements. Non-fund based limits include foreign letters of credit, letters of credits, and foreign bank guarantees.
- Working capital limits
These loans are revolving cash credit facilities. The borrowers receive sanctions for a working capital limit, which can be drawn down under the cash credit facility at any time during the business loan tenure. Such limits can be in the form of bill discounting, open cash credits, and overdraft against book debts. These limits can be used to meet the working capital requirements of the business.
The basic SME loan eligibility is that the business should be duly registered. Any venture that has a government-recognized ID can avail of a loan under the scheme. They can apply for the loan by approaching the NSIC branch officer or visiting the NSIC website.
Small businesses can also avail of loans from non-banking financial companies (NBFCs) like Mahindra Finance. The lender offers competitive interest rates and offers flexible repayment tenure. The entire process is quick and hassle-free and minimal SME loan documents are required. So, visit the official website of Mahindra Finance and apply for one now.
