The Small Industries Development Bank of India (SIDBI) is a government-owned financial institution established in 1990. It supports and promotes the growth of small and medium enterprises (SMEs) in India. SIDBI offers a variety of financial products, including loans, equity, and other support services, specifically tailored for SMEs.
Its loan offerings cater to various business needs, such as working capital, machinery upgrades, and business expansion, with loan amounts ranging from₹10 Lakhs to ₹25 Crores, depending on the requirement. Also, there's no collateral required for loans below ₹1 Crore. SIDBI plays a vital role in strengthening India's MSME sector by providing accessible and affordable credit options.
The key functions of SIDBI are to:
Aid financial institutions in lending to small-scale industries so they can have a healthy financial standing.
Offer loans for small-scale industry (SSI) development and production
Help in the expansion of marketing channels for SSI sector products both domestically and internationally
Promote industries that create jobs for people in semi-urban areas
Facilitate the timely flow of credit for working capital and term loans to small-scale industries in partnership with commercial banks
Work to empower employment and upgrade technology in the sector
Benefits of SIDBI
Some major advantages offered by SIDBI to budding entrepreneurs and small-scale businesses are as follows:
Low Interest Rates
SIDBI has collaborations with many banks and international financial institutions. By leveraging these partnerships, SIDBI can offer concessionary rates of interest
Custom-made
SIDBI offers loans that are customised to your business needs
Collateral-free
Businessmen can get up to ₹1 Crore with the help of SIDBI without having to put up any security
Venture and Equity Funding
SIDBI offers equity-based venture capital to small businesses through their subsidiary SIDBI Venture Capital Limited
Subsidies
You can seek the help of SIDBI to take advantage of various government schemes
Below, you will find a list of the 6 products that SIDBI offers under Direct Loans:
SMILE (SIDBI Make in India Soft Loan Fund for MSME): SMILE focuses on covering the financial requirements of new enterprises. The loan amount offered under this scheme is a minimum of ₹10 Lakhs for equipment finance and ₹25 Lakhs for other purposes. There is a maximum repayment tenure of 10 years, with a moratorium period of 36 months.
SMILE Equipment Finance (SEF): With a simplified application process and competitive rates, it's an excellent choice for any MSME entity looking for new equipment financing. The loan has a repayment period of 72 months and starts at a minimum of ₹10 Lakhs.
Loans under Partnership with OEM (Original Equipment Manufacturer): This loan scheme is a great option for MSMEs. Eligibility requirements are that the business must have a minimum of three years in operation, and the repayment period is up to 60 months. The maximum loan amount is ₹1 Crore.
SIDBI Trader Finance Scheme (STFS): STFS is a loan scheme specifically for retail and wholesale MSMEs that have been in existence for at least 3 years. The amount of the loan starting from ₹10 Lakh can go up to ₹1 Crore and it can be repaid over a maximum of 60 months.
Loan for Purchase of Equipment for Enterprise’s Development (SPEED): This loan scheme offers 100% financing and a loan amount of up to ₹1 Crore for new customers and ₹2 Crores for existing ones.
- Working Capital (Cash Credit): Working Capital Loan is available to small and medium businesses. With instant approvals, this service offers a flexible loan to meet the needs of the applicant.
Here are some of the direct loans provided by SIDBI to MSMEs and SSIs:
Loan Scheme |
Loan Tenure |
Loan Amount |
Smile Equipment Finance (SEF) |
72 months |
The minimum amount is Rs.10 Lakhs |
SIDBI Make in India Soft Loan Fund for MSME (SMILE) |
10 years, including a 3-year moratorium |
₹10 Lakhs to ₹25 Lakhs |
Working Capital (Cash Credit) |
As per the terms and conditions |
As per the financial capability of the applicant |
Loans under the partnership with OEM (Original Equipment Manufacturer) |
5 years with an eligible moratorium |
Up to ₹1 Crore |
SIDBI – Loan for Purchase of Equipment for Enterprise’s Development (SPEED) |
5 years and a moratorium of 6 months |
|
SIDBI-Loan for Purchase of Equipment for Enterprise’s Development Plus (SPEED PLUS) |
5 years and a moratorium of 6 months |
New customers: Up to ₹2 Crores |
Top-up Loan for Immediate Purposes (TULIP) |
5 years |
30% of existing exposure or 20% of net sales subject to Max ₹2 Crores |
SIDBI Term-Loan Assistance for Rooftop Solar PV Plants (STAR) |
5 years and a moratorium of 6 months |
Up to ₹2.5 Crores |
SIDBI Assistance to Healthcare Sector in War Against Second Wave of COVID-19 (SHWAS) |
5 years |
Up to ₹2 Crores |
SIDBI Assistance To MSMEs To Tackle COVID-19 Pandemic (AROG) |
5 years |
Up to ₹2 Crores |
Corona Crisis Assistance For Timely Working Capital (TWARIT) |
4 years and a moratorium of 1 year |
Total outstanding loans of 20% with SIDBI up to ₹25 Crore |
*Disclaimer: The mentioned details are subject to change at the discretion of SIDBI. For the latest updates check the official website of SIDBI.
Here are some indirect loan offers facilitated by SIDBI that you should know about:
Assistance to NBFCs: SIDBI loans are available to NBFCs that are registered with the RBI and are involved in providing financing to the MSME sector.
Refinance Scheme: Under different refinancing programs, SIDBI would give financial support to scheduled banks having solid financial results.
- Assistance to Small Finance Banks (SFBs): SIDBI assists banking institutions that are making equity investments for SFB capitalisation to bridge the financial deficit.
How to Apply for a Loan from SIDBI?
The 5-step process to apply for a loan from SIDBI is as follows:
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Visit the official website of SIDBI and click on the ‘Borrower’s Corner.’
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Click on ‘Online Loan Application.’
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Enter your username and password.
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The applicant can choose the amount of loan they would like to borrow.
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A personal details form will appear on-screen. Personal information such as name, username, email, mobile number, business address, state, and district is required. Click ‘Register’ to finish the registration process.
FAQs on SIDBI
What documents should I submit if I wish to apply for a SIDBI direct loan?
As an applicant, you need to submit address and identity proof, PAN Card, along with business documents.
What are the types of finance offered by SIDBI?
SIDBI offers Working Capital Assistance, Term Loan Assistance, Foreign Currency Loan, Support against Receivables, Equity Support, and Energy Saving Sheme for the MSME sector.
Is SIDBI a government bank?
It is a government-owned bank. Its major shareholders are the Government of India, the State Bank Of India, and the Life Insurance Corporation of India.
Is the individual’s credit score taken into consideration when applying for a SIDBI loan?
No, the credit score is not considered when applying for a SIDBI loan.
Are MUDRA loans offered by SIDBI?
Yes. The Pradhan Mantri Mudra Yojana (PMMY) is a plan established by the Government of India through MUDRA which is a subsidiary of SIDBI to assist small business owners in obtaining financing.
Is SIDBI a subsidiary of the Reserve Bank of India?
SIDBI (Small Industries Development Bank of India) is a subsidiary of IDBI (Industrial Development Bank of India), which was founded under a special Act of Parliament in 1988 and went into effect on April 2, 1990.
What is the maximum loan amount and repayment tenure offered under the SIDBI loan?
The highest loan amount you can procure under the SIDBI loan program is ₹25 Cores, and the maximum payback period is 10 years.
What is the role of SIDBI as a Nodal Agency for Government Schemes?
SIDBI is the Nodal Agency for administering TUFS (Technology Upgradation Fund Scheme) subsidies to units aided by co-opted SIDBI PLIs (Production Linked Incentive Scheme). SIDBI has co-opted 130 banks in the commercial and cooperative sectors, as well as SFCs (State Finance Corporations).
Which are the Subsidiary Associates of SIDBI?
Here are the subsidiaries of SIDBI:
MUDRA
UDAAN
RXIL (Receivables Exchange of India Limited)
Acuite
Online PSB loans
Istsl (India SME Technology Services Limited)
What have been the key initiatives of SIDBI over the past 25 years?
SIDBI's significant activities over the previous 25 years have included providing ₹5.40 Lakh Crore in support of MSMEs. Additionally, through its microfinance activities, it provides loans to millions of impoverished individuals, primarily women.
