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By CA Sabhya Kant

After the PM Modi Aatmanirbhar package of 20 lakh crore, Smt. Nirmala  Sitharaman yesterday announced MSME loan Scheme focused on Getting back to work i.e., enabling employees and employers, businesses, especially Micro Small and Medium Enterprises, to get back to production and workers back to gainful employment. This also Includes Msme Loan for new business also.

The main benefit of this msme loan scheme is that it is a msme loan without collateral that means you can apply for msme loan with no guarantee and no collateral.

Msme loan eligibility and msme loan details are as follows-

1. Rs 3 lakh crore Emergency Working Capital Facility for Businesses, including MSMEs

“No guarantee fee, no fresh collateral”

 To provide relief to the business, additional working capital finance of 20% of the outstanding credit as on 29 February 2020, in the form of a Term Loan at a concessional rate of interest will be provided. This msme loan without collateral will be available to units with upto Rs 25 crore outstanding and turnover of up to Rs 100 crore whose accounts are standard. The units will not have to provide any guarantee or collateral of their own. The amount will be 100% guaranteed by the Government of India providing a total liquidity of Rs. 3.0 lakh crores to more than 45 lakh MSMEs.

KEY TAKEAWAYS

• Additional Working Capital Finance of 20% of outstanding credit as on 29 February 2020 as msme loan for business.
• This will be given in form of a Term Loan and not via enhancement in CC/OD limit.
• msme loan rate of intrest is yet to be decided by GOI in consultation with RBI.
•  Eligibility:-
• Additional finance would be available only to those msme business units whose CC/OD limit outstanding amount is upto Rs. 25 Crore.
• Additional finance to those units who are having Business Turnover upto Rs. 100 Crore.
• Account should be in Standard Condition i.e it should not be declared as NPA(Non Performing Asset) by the Bank.
• MSME is regularly harassed with providing of Collateral Security while approaching for Bank Finance. Govt of India has addressed this issue in this time of distress for MSMEs and has declared that units will not have to provide any guarantee or collateral of their own i.e this additional finance to MSME would be a Collateral Free Loan  which would be 100% guaranteed by GOI(on Interest as well as principal portion of the loan)
• Loans to have 4 year tenor with moratorium of 12 months on Principal repayment.
• Scheme can be availed till 31st Oct 2020.

• Rs 20,000 Crore Subordinate Debt for Stressed MSME

Provision made for Rs. 20,000 cr subordinate debt for two lakh MSMEs which are NPA or are stressed. Government will support them with Rs. 4,000 Cr. to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE). Banks are expected to provide the subordinate-debt to promoters of such MSMEs equal to 15% of his existing stake in the unit subject to a maximum of Rs 75 lakhs.

KEY TAKEWAYS

• Government has also decided to provide support to MSMEs whose Loan Accounts has become NPA(Non performing Assets) due to either non-repayment or any other irregularity.
• Government will provide funds through a credit of Rs. 4,000 Cr. to Credit Guarantee Trust for Micro and Small enterprises (CGTMSE)which will be made available to Banks for further financing to MSMEs.
• This scheme will provide sub-ordinate debt to the promoters of MSMEs equal to 15% of his existing stake in the unit subject to a maximum of Rs 75 lakhs which will then be infused by promoter as equity in the Unit.
• This would extensively help the promoters in giving away the salaries/wages of the employees and would also help to provide for Interest obligation of Bank on loans taken by MSMEs(those who have not availed the facility of Moratorium of 3 Months earlier announced by GOI).

• Rs 50,000 crores equity infusion through MSME Fund of Fund

Govt will set up a Fund of Funds with a corpus of Rs 10,000 crore that will provide equity funding support for MSMEs. The Fund of Funds shall be operated through a Mother and a few Daughter funds. It is expected that with leverage of 1:4 at the level of daughter funds, the Fund of Funds will be able to mobilise equity of about Rs 50,000 crores.

KEY TAKEAWAYS

• Government will help the MSMEs to bailout the working capital and liquidity crunch by way of providing Equity Funding support to MSMEs.
• Government will set up a SPV (Special Purpose Vehicle) company with the sole objective of investing in the Equity of the MSMEs.
• Will provide equity funding for MSMEs with Growth Potential and Viability.
• Will encourage MSMEs to get listed on main board of Stock Exchanges.

MSME NEW DEFINITION-

After the above definition, msme loan Eligibility is changes now and you can check the msme loan eligibility with the definition of above business as small, micro and medium msme.

Msme loan is applied both as online and offline, to become a member of a msme, you have to apply for msme registration online after which msme certificate is issued by the government of india. To apply for msme certificate, you can visit- www.taxadvisory.in or write at- info@taxadvisory.in.

CA Sabhya Kant

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