Working Capital Finance Scheme

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What is the scheme?

SIDBI has tied up with a few commercial banks to offer the working capital facility to MSMEs who approach them. The unit has an option of choosing a preferred bank out of the list of banks that SIDBI has tied up with.

How much funding can a unit expect under the Scheme?

The minimum amount offered is ₹ 10 Lakhs, and there is no upward limit under this scheme. Eligible units are encouraged to borrow to their capacity. Limits up to ₹ 2 Crs can be covered under Credit Guarantee Program.

Which units are eligible under this scheme?

MSMEs registered under the scheme are eligible for the assistance. MSMEs, who have outstanding Term loans from SIDBI or wish to avail both TL & WC from SIDBI can avail capital facility along with Term Loan. Units which do not have a WC facility with any other bank are also eligible. New entities, where SIDBI considers term loan are also available under this scheme. The takeover of working capital accounts, as a part of term loan takeover, may be considered too. Units applying for a working capital facility are expected to reflect financial discipline measured as TOL/TNW below 4, Current Ratio in upward of 1.25 and Interest Coverage at minimum 1.50.

What are the loan tenure options?

Since it is a working capital facility, the tenure offered is 12 months.

What kind of collateral and margin is required?

It is expected to have an Asset Coverage of 1.30. Proposals up to ₹ 2 Crs can be considered under Credit Guarantee without any collateral. The Promoter’s margin is to be at 25%.