On 18th August 2015 the then Finance Minister Arun Jaitley has launched two funds the India Aspiration Fund (IAF) and SIDBI Make in India Loan for Enterprises (SMILE) under Small Industries Development Bank of India (SIDBI) in line to carter funding for start-ups and to aid small enterprises in India. SIDBI under the first fund India Aspiration Fund (IAF) would invest in venture capital funds for meeting the equity requirement of MSME start-ups and for this the initial corpus of Rs. 2,000 Crore has been set. Life Insurance Corp. of India (LIC) will be a partner and co-investor in this fund. SIDBI has set Initial corpus of Rs. 10,000 crore under SMILE fund.
Objective – The objective of the Scheme is to provide soft loan, in the nature of quasi-equity and term loan on relatively soft terms to MSMEs to meet the required debt-equity ratio for establishment of new MSME unit and pursue growth opportunities for existing MSMEs.
- Eligibility
- All MSMEs as per MSMED Act.
- Emphasis will be on covering new enterprises in the manufacturing as well as services sector. The emphasis will, however, be on financing smaller enterprises within MSME
- Existing enterprises undertaking expansion, to take advantage of new emerging opportunities, as also undertaking modernization, technology upgradation or other projects for growing their business will also be covered
- Loans extended under the scheme cannot be used for repayment of earlier loans.
- Target Sectors – Focus on identified 25 Make in India sectors. In addition, deserving proposals of MSMEs from any other sector can also be assisted on merits.
- 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
- Benefits of SMILE
- Competitive interest rates
- Funding of part Promoter contribution by way of soft loans
- Longer repayment period
- Quick dispensation
- Attractive Interest Rates starting from 8.50% onwards
Types of Assistance
The government provides two types of assistance for promotion of this National program Is explained herein.
- Soft Loan – In the Nature of Quasi – Equity
- Term Loan – On Relatively Soft Terms
Quasi – Equity – Soft Loan
- i. Loan Amount
- 10% of the project cost subject to maximum Rs.20 lakh
- 15% of the project cost subject to maximum Rs.30 lakh for enterprises promoted by SC / ST / Persons with disability / Women (controlling stake of at least 51%)
- ii. Processing Fee – 0.50% of the loan amount is an upfront fee of SMILE
- iii. Rate of Interest
- First 3 years: 9.15% to 9.35% p.a. (fixed)
- From 4th year onwards: 11.70% – 12.70% p.a. – Based on Bank’s PLR / Internal Rating (rate can be both fixed and floating)
- iv. Repayment Period
- Maximum up-to 10 years inclusive of moratorium up-to 3 years.
- v.Residual charge over the entire assets.
- vi.ACR and FACR norms would be applicable in terms of extant Loan Policy Soft Loan
Note: Interest rates, and other charges are indicative and are subject to change at the sole discretion of the bank, NBFC and RBI. GST and service tax shall be levied extra on the charges.
- Term Loan – On Relatively Soft Terms
- i. Loan Amount
- Minimum Rs.50 lakh for new enterprises
- Quantum of assistance: Minimum Loan Size – ₹ 25 lakh for existing enterprises.
- ii. Rate of Interest
- First 3 years: 9.45% to 9.95% p.a. (fixed) – Based on Rating
- From 4th year onwards: 11.70% – 12.70% p.a. – Based on Bank’s PLR / Internal Rating
- iii. Term Loan
- 75% of Project Cost up-to Rs.100 lakh, and
- 2/3rd for the rest subject to promoters contribution and DER norms.
- Minimum Promoter Contribution of 15% subject to Maximum DER of 3:1
- iv. Security
- First charge over all assets created under the project
- Personal guarantee of the Promoter(s)
- Fixed Asset Coverage of at least 1.40 times including collateral security
- Cases involving term loan up to `2 crore may be covered under Credit Guarantee Scheme of CGTMSE
- v. Repayment Period
- Term Loan Tenure and moratorium Longer repayment period up-to 10 years and moratorium up-to 18 months.
Documents Required
The documents required for SIDBI Make in India Loan for Enterprises (SMILE) scheme is explained in detail below:
- Company/Firm Profile.
- Profile of promoters / Guarantors
- Proof of business Address – As per SIDBI’s KYC application form for Non- Individuals
- 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)
- Memorandum and articles of association (MOA) of the Company and Partnership Deed of partners etc
- Certificate of incorporation from the ROC to establish whether majority stake holding in the company is in the hands of the person who belongs to SC, ST and Woman category
- Manufacturing process details, if applicable
- Rental Agreement and clearance from the pollution control board if applicable
- Udyog Aadhar memorandum (UAM) registration
- Projected balance sheets of the next three years if the working capital limits and for the period of the loan in terms of the term loan
- Last three years balance sheet of the Associate and Group Companies.
- Detailed Project Report
- Net Worth Statement of promoters and guarantors along with latest income tax returns.
- 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
