{"id":6997,"date":"2021-03-11T06:09:39","date_gmt":"2021-03-11T06:09:39","guid":{"rendered":"https:\/\/kredx.com\/blog\/?p=6997"},"modified":"2023-10-26T05:51:44","modified_gmt":"2023-10-26T05:51:44","slug":"latest-credit-facilitation-scheme-msmes-must-know","status":"publish","type":"post","link":"https:\/\/www.kredx.com\/blog\/latest-credit-facilitation-scheme-msmes-must-know\/","title":{"rendered":"Latest Credit Facilitation Scheme MSMEs Must Know"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">In 2020, the MSME sector employed over 110 million individuals in India single-handedly. In addition to providing employment, the sector also contributed 48% to exports and 30% to GDP, as per a report on Livemint.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hence, you can already see why the government leaves no stones unturned to boost the sector&#8217;s growth and strengthen its infrastructure.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To facilitate objectives of this sort, the government has launched multiple <\/span><a href=\"https:\/\/www.kredx.com\/business-loan\/\"><b>business loan<\/b><\/a><span style=\"font-weight: 400;\"> schemes over the years, of which is the Bank Credit Facilitation Scheme.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">Find out more about this credit scheme from the section below.<\/span><\/i><\/p>\n<h2><b>Bank Credit Facilitation Scheme \u2013 In A Nutshell<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">It is essentially an agreement or a memorandum of understanding between two parties \u2013 the National Small Industries Corporation (NSIC) and several private and national banks in India.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Such an agreement is drawn to help small and medium enterprises meet their credit requirements and access <\/span><b>business loans<\/b><span style=\"font-weight: 400;\"> from both private and national banks. Under this scheme, MSMEs can receive required assistance with a loan application, documentation, and other formalities.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Note that every registered and government-recognised business, be it a small, medium or micro enterprise, is eligible for this facilitation scheme. However, they must have a KYC compliant account to avail a loan under this scheme.\u00a0<\/span><\/p>\n<h2><b>Types Of Loans Under Bank Credit Facilitation Scheme<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">You can apply for any of these<\/span><b> business loans <\/b><span style=\"font-weight: 400;\">under this scheme \u2013<\/span><b>\u00a0<\/b><\/p>\n<ul>\n<li aria-level=\"1\">\n<h3><b>Working Capital Limit<\/b><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The loans under this category can take the form of overdraft facility against book debt, <a href=\"https:\/\/www.kredx.com\/bill-discounting\/\">bill discounting services<\/a>, and open cash credits.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><b>Non-fund-based Limit<\/b><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This type of loan category includes guarantees like foreign bank guarantees, <a href=\"https:\/\/www.kredx.com\/lc-discounting\/\">letter of credits<\/a>, and credit letter. To benefit from this credit facility, entities need to open a credit account that allows account holders to withdraw cash within a pre-set credit limit.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><b>Term Loans<\/b><\/h3>\n<\/li>\n<\/ul>\n<p style=\"text-align: left;\"><span style=\"font-weight: 400;\">You can apply for long-term, mid-term, or<a href=\"https:\/\/www.kredx.com\/short-term-business-loan\/\"> short-term loans<\/a> based on your requirement and repayment capability. Generally, enterprises apply for this loan to purchase equipment or meet other large-scale expenses essential to set up an enterprise or its expansion.\u00a0<\/span><\/p>\n<h3><b>Salient Features Of Bank Credit Facilitation Scheme<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Check out the most noteworthy features of this credit facilitation scheme \u2013<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Integrates both private and public sector banks to provide <a href=\"https:\/\/www.kredx.com\/msme-registration\/\">MSMEs<\/a> access to credit.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Helps enterprises secure lower interest rates under the Ministry&#8217;s Performance and credit rating scheme.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The loans obtained under this scheme usually come with a repayment tenure, ranging from 5 to 7 years. In some exceptional cases, the same can stretch up to 11 years.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Under this scheme, the National Small Industries Corporation helps MSMEs to complete and submit the same.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It extends help to MSMEs while switching banks or transferring account details from one financial institution to another. The scheme also assists when applying for a new account.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Other than these, this scheme also aims to provide transparency to MSMEs to filter and access more favourable credit proposals sponsored by NSIC.<\/span><\/p>\n<h3><b>Steps To Apply For Bank Credit Facilitation Scheme<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">You can apply for this bank credit facility by following these steps \u2013<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Step 1 &#8211; Go to the NSIC&#8217;s official website\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Step 2 &#8211; Look for the application form\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Step 3 &#8211; Download and print the form\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Step 4 &#8211; Provide essential details to fill up the form\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Step 5 &#8211; Submit the duly filled form along with all the essential documents\u00a0<\/span><\/p>\n<h3><b>Documents Required For Bank Credit Facilitation Scheme<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Based on your purpose of taking a <\/span><b>business loan<\/b><span style=\"font-weight: 400;\">, you may need to submit a different set of documents \u2013<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Proof of Identity\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Proof of residential and business address<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Asset and Liability Statement with latest ITR<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rent agreement or lease deed<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Copy of SSI registration certificate or Entrepreneurs Memorandum\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Profile of the unit<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Balance Sheet with IT\/ST returns of the last 3 years<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Projected Balance Sheet for the next 2 years<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">CMA data shared in<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The prescribed format when the limit is Rs. 100 lakhs or more\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Details of an account standing with existing bankers<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Project Report highlighting term loan requirements<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Quotations of the sanctioned building plan, etc.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Partnership Deed\/Certificate of Incorporation\/Trust Deed\/Memorandum and Articles of Association, etc.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Sanction from Electricity Board or clearance from Pollution Control Board<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Monthly production and sales data, finished goods, value of the stock, debtors, creditors, etc.<\/span><\/li>\n<\/ul>\n<h3><b>Bottom Line<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">There are several parameters and processes that entrepreneurs must meet to avail a <\/span><b>business loan<\/b><span style=\"font-weight: 400;\"> under the bank credit facilitation scheme. But in case you are looking for a simpler financing option that does not increase the loan burden, you can opt for an alternative funding option like invoice discounting.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Such a financing option helps businesses to leverage unpaid invoices to raise capital. Through invoice discounting, businesses can easily access funds within 24 hours to 72 hours and meet immediate working capital or cash flow-related crises. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In 2020, the MSME sector employed over 110 million individuals in India single-handedly. In addition to providing employment, the sector also contributed 48% to exports and 30% to GDP, as per a report on Livemint. Hence, you can already see why the government leaves no stones unturned to boost the sector&#8217;s growth and strengthen its [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7002,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,155],"tags":[522,72,36,523,524,227],"class_list":["post-6997","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-msme","tag-bank-credit","tag-bill-discounting","tag-business-loan","tag-latter-of-credits","tag-short-term-loans","tag-working-capital-loan"],"_links":{"self":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/6997","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/comments?post=6997"}],"version-history":[{"count":1,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/6997\/revisions"}],"predecessor-version":[{"id":13647,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/6997\/revisions\/13647"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media\/7002"}],"wp:attachment":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media?parent=6997"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/categories?post=6997"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/tags?post=6997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}