Learn About Bank Credit Facilitation Scheme for SMEs

Despite the fact that MSMEs account for roughly 45 percent of the country’s manufacturing output, just 16 percent of them receive loans from established lenders. The National Small Industries Corporation (NSIC) partnered with various financial institutions under the Bank Credit Facilitation Scheme to help smaller businesses. This blog will tell you more about it.

What is Bank Credit Facilitation Scheme?

The National Small Industries Corporation has signed a memorandum of understanding with numerous national and private banks in India in order to address the credit needs of various small and medium-sized businesses. The Bank Credit Facilitation Scheme is a collaborative agreement that attempts to give diverse MSMEs the credit help they require from national or private banks. The NSIC primarily aids MSMEs in the documentation and filing process and other associated operations, such as submitting proposals to banks. All of these services are supplied to small and medium-sized businesses for free under the Bank Credit Facilitation Scheme.

Features and Benefits

The Bank Credit Facilitation Scheme offers the following salient benefits:

MSMEs have easy access to credit.
Providing MSMEs with assistance with loan application submission and paperwork
Assisting SMEs in obtaining favorable interest rates
Assisting SMEs in obtaining bank financing
Making finance more accessible to all types of MSMEs
Bank Credit facility Eligibility Criteria

A Bank Credit Facilitation Scheme is available to all registered businesses, whether they are micro, small, or medium. They can apply for a Bank Credit Facilitation Scheme as long as the enterprise ID is registered and recognized by the government.

Documents Required for Bank Credit facility

To be eligible for a Bank Credit Facilitation Scheme, the following documents and reports need to be presented:

Identification Proof: This might be in the form of the applicant’s passport, driver’s license, or voter ID card.
Proof of residency: invoices such as utility bills, passports, and driver’s licenses can be used as proof of residency.
Proof of the company location’s address
Statements of liability with the most current IT return.
A complete list of the directors’ and guarantors’ assets.
The SSI registration certificate and a business memorandum should be submitted.
A detailed document describing the company’s nature and operations should be created. The names and addresses of the promoters, as well as the company’s shareholding patterns and experience, should all be included in this document.
The IT/ST returns’ entire balance sheet for the previous two years.
Completed the application for credit facilitation.
Calculate the balance for the next two years.
A copy of the Credit Monitoring Agreement
Requirement for a term loan based on the business project reports
All possible bank account records in the name of the company and participating shareholders.
Estimates and bids for all building plans that come with it.
A month-by-month record catalog of the current financial year’s state and sales. This comprises the worth of the goods, the value of the stocks, and even any debts and credit records.
A pollution control certificate, as well as a letter of approval from the electrical and other authorities, must be obtained.
Deeds such as partnership deeds, by-laws, trusts, and memorandums, and rules are also required.
Loan Repayments

Although the loan repayment time varies from bank to bank and is dependent on the income generated by MSME units, it usually ranges from 5 to 7 years. It can be prolonged up to 11 years in extraordinary circumstances. One-year refundable capital finance limits are available on demand. There are self-liquidating, specialized loans that are linked to the overall transaction tenor. Self-liquidating loans, such as export credit and bill finance, are linked to natural times of transaction.

Type of Enterprise According to which Loan Amount Varies

Micro-Enterprise

Micro enterprises are manufacturing firms with a total asset worth of up to Rs 25 lakhs in machinery and plant.
It is a service business with equipment with an original investment worth of up to Rs. 10 lakhs.
Small Enterprise

Small businesses are manufacturing establishments with a total actual worth of machinery and plant of more than Rs 25 lakhs but less than Rs 500 lakhs.
It is a service business with an original equipment investment worth of up to Rs 200 lakhs but less than Rs 10 lakhs.
Medium Enterprise

Manufacturing units with a total actual worth of machinery and plant of more than Rs 500 lakhs but less than Rs 1000 lakhs are classified as medium enterprises.
It is a service business with an original equipment investment worth of up to Rs 500 lakhs but less than Rs 200 lakhs.
How to Apply for Bank Credit facility?

To apply for Bank Credit Facility, follow the below-mentioned steps:

Step1: Visit the official NSIC website

Step 2: Print the application form after downloading it.

Step 3: Fill up the blanks on the form with the correct information and data.

Step 4: The completed application form, along with all required documentation, should be sent to a delegated officer.