The Guaranteed Emergency Credit Line (GECL) is a government initiative to help businesses, especially MSMEs, to combat challenges due to the COVID-19 pandemic. The scheme aims to provide additional collateral-free funding to eligible businesses and MSMEs. Helping businesses without substantial assets to remain functional during an economic setback.

The scheme is backed by the government, thereby providing lenders security to offer borrowers quick access to credit at low interest rates. Helping businesses and MSMEs benefit greatly from the scheme.

Purpose of GECL Scheme

The main purpose of the GECL scheme is to help businesses, especially Micro, Small and Medium Enterprises (MSMEs) mitigate the financial challenges of the COVID-19 pandemic. The scheme comprises of the following components that offers different purposes for different sectors, these are:

ECLGS 1.0: For businesses and MSMEs having an outstanding balance of up to ₹50 Crore which is less than 60 days past due as on 29th February 2020.

ECLGS 2.0: For businesses and MSMEs that fall under the covid related stressed sectors identified by Kamath Committee on resolution framework and healthcare sector. These sectors must have outstanding loans above 50 Crore up to 500 Crore. Which is not more than 60 days past due.

ECLGS 3.0: Businesses and MSMEs falling under the hospitality and related sectors such as hotels and restaurants, canteens, marriage halls, etc, travel and tourism, adventure or heritage facilities, travel agents, tour operators, leisure and sporting, private bus operators, rent-a-car service providers, car repair services, event/conference organisers, beauty parlours / salons, motor vehicle aggregators, spa clinics, cinema halls, entertainment parks, theatres, bars, auditorium, yoga institutes, gymnasiums, other fitness centres, swimming pools, units / person engaged in catering or cooking and floriculture products. So also, Civil Aviation Sector- Airlines (including scheduled and non-scheduled airlines, chartered flight operators, air ambulances), airports, aviation ancillary services such as ground handling and supply chain whose days past due are up to 60 days as on 29 February 2020.

ECLGS 4.0: For the purpose of providing financial assistance of up to 2 Crores to set up Pressure Swing Adsorption for on-site oxygen producing plants to existing hospitals, nursing homes, clinics, medical colleges or units engaged in manufacturing of liquid oxygen, oxygen cylinders and more. These sectors must have a credit facility which is 90 days past due.

GECL Loan Interest Rates

The interest rates for GECL loans are capped to help businesses and MSMEs get financial aid at affordable rates. Enterprises getting a GECL loan from banks and financial institutions will enjoy an interest rate of 9.25% while those getting it from NBFCs will get a rate of 14%. While the interest rates are capped, lenders may still offer different interest rates.

Business Loan Schemes Interest Rate
GECL Loan 9.25% - 14%
MUDRA Loan 7.50% p.a. onwards
CTGMSE Loan 8.40% p.a. onwards
Stand Up India 6.50% p.a. onwards
Startup India 12.00% p.a. onwards
PSB Loan in 59 Minutes 6.8% p.a. onwards
Note: These rates are indicative and subject to change. Always check with the bank for the most up-to-date information before making any investment decisions.

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The State Bank of India offers Guaranteed Emergency Credit Line, which is a scheme that is part of ECLGS. This scheme is a government initiative to provide support to businesses facing financial challenges because of the COVID-19. SBI GECL loan offers collateral-free credit to eligible businesses and MSMEs. This will help to ensure their business continuity and recovery. The loan offered comes with favourable terms, including a government backed credit guarantee.

SBI GECL Interest Rate

The GECL interest rate is capped at 9.25% for all banks and financial institutions. However, SBI offers GECL interest rate according to the different categories and whether the borrowers are MSMEs or not. The rates are given as follows:

Category Loan amount
GECL 1.0 Up to 30% of total outstanding credit. Maximum amount is ₹15 Crore.
GECL 2.0 Up to 30% of total outstanding credit. Maximum amount ₹150 Crore.
GECL 3.0 Up to 50% of total outstanding credit. Maximum amount ₹400 Crore.
GECL 4.0 Maximum amount ₹2 Crore.

Purpose for Loan

SBI GECL loan offers loan amounts and interest rates depending on the category of the loans. These categories have their own purposes that will ensure each business sector gets the help they require. The purpose for each category is as follows:

Category Purpose for loan
GECL 1.0 To buy raw material, meet liabilities of business and operational costs.
GECL 2.0 To buy raw material, meet liabilities of business and operational costs.
GECL 3.0 To buy raw material, meet liabilities of business and operational costs.
GECL 4.0 To provide credit to healthcare facilities and units producing oxygen related equipment.

SBI GECL Loan Tenure

The tenor for the SBI GECL loans will vary from depending on the following categories:

Category Tenor
GECL 1.0 60 months with a moratorium period of 24 months.
GECL 2.0 72 months with a moratorium period of 24 months.
GECL 3.0 72 months with a moratorium period of 24 months.
GECL 4.0 60 months with a moratorium period of 6 months.

SBI GECL Loan Validity

The validity of the scheme for all sectors and categories is up to 31st of March 2023 or until the guarantee amount of ₹4,50,000 Crore has been sanctioned under the GECL scheme, whichever is earlier.

Other Fee & Charges

There are no additional fees or charges associated with the SBI GECL loan.

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Eligibility Criteria for GECL Financing

The GECL scheme offers financial aid to certain eligible businesses and MSMEs. The eligibility requirement covers different categories to ensure that help reaches all sectors of the economy. The eligibility requirements for GECL loan are:

  • All sectors falling under the different categories mentioned in the scheme are eligible.
  • Eligible borrowers of MSMEs and business entities should fall under proprietorship, partnership, registered company, trusts, and limited liability partnerships.
  • Eligible MSMEs or business enterprises with outstanding loans up to 500 crores as of February 29, 2020 can apply.
  • The annual turnover in the previous fiscal year (2019-2020) should be 250 crores.
  • Loans taken under the Pradhan Mantri Mudra Yojana before February 29, 2020, are included.
  • The borrower's loan account should be less than 60 days overdue as of February 29, 2020.
  • Both businesses and MSMEs must have a GST registration to qualify.
  • Businesses listed in the books of the Member Lending Institution (MLI) are eligible.
  • Borrowers classified as NPA or SMA 2 by lenders on February 29, 2020, are not eligible for the loan.

Maximum Loan Amount Under GECL Scheme

The maximum loan amount will vary depending on the category the business or MSMEs falls under, the total outstanding credit of the business and the lending institution.

  • Under GECL 1.0, the maximum loan amount will be ₹50 Crore.
  • Under GECL 2.0, the maximum loan amount is ₹500 Crore.
  • For GECL 3.0, the maximum loan amount is ₹500 Crore.
  • GECL 4.0 offers a maximum loan amount of ₹2 Crore.

Documents Required for GECL Loan

Several documents are required for a GECL loan, however, these documents may vary from one lender to another. Some common documents required are:

  • Proof of identity: PAN card, Aadhaar card, Voter ID.
  • Proof of address: Electricity bill, Utility bills
  • Proof of business existence: CIN for companies, GST registration
  • Financial statements: ITRs for the last 3 years, Balance sheets and Profit and Loss statements.
  • Bank statements for the last 6 months.
  • GST registration certificate, if applicable.
  • Udyog Aadhaar
  • Loan sanction letter and loan agreement of existing loan.
  • Projected financial statements for the next 2 years.
  • Audited balance sheet and profit and loss statements for the last 2 years.
  • PMMY sanction letter and loan agreement if the borrower has taken a loan under PMMY.
  • Consent for Credit Information Report (CIR).

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Exploring GECL Loan Benefits

The GECL scheme offers plenty of advantages to eligible businesses, especially MSMEs and PMMY borrowers. This scheme offers borrowers the following benefits:

  • Financial flexibility: GECL offers financial flexibility in the form of collateral-free loans, helping businesses with limited assets get financial aid. It also provides crucial working capital which enables businesses to meet operating expenses and short-term financial obligations. Furthermore, the flexible repayment tenures allows businesses to manage their cash flow effectively thereby, promoting financial flexibility to MSMEs.
  • Government support: The National Credit Guarantee Trustee Company (NCGTC) ensures a 100% guarantee for GECL loans. This enables lenders to provide a lower interest rate as compared to other unsecured loans. Making it a cost-effective option for businesses.
  • Improved business operations: GECL loans offer enhanced liquidity, which provides the required financial stability for businesses to concentrate on growth. With increased working capital, these loans encourage investments in new opportunities, technology, and infrastructure. Furthermore, by supporting business growth, GECL loans can contribute to job creation, thereby contributing to broader economic development.

How GECL Supports Small Businesses

GECL is vital for small businesses that have been affected by the COVID-19 pandemic, as it provides the necessary financial resources for them to thrive in the competitive market. Here is how GECL helps small businesses:

  • It provides accessible and affordable funding with flexible repayment plans.
  • Government security encourages low interest rates which promotes financial stability and liquidity.
  • Increased investment facilitates growth and expansion of the business.
  • GECL also indirectly contributes to job creation and thereby economic development.

Business Loan EMI Calculation

Determining the EMI for your business loan will provide valuable insights into managing the repayment terms. The repayment structure of any business loan will be divided into equitable monthly instalments. To determine the EMI, you can access an online business loan EMI calculator to simplify the process. This user-friendly tool provided below requires accurate inputs of the loan amount, interest rate, and tenure, helping you to ascertain your EMI amount effortlessly.

Monthly EMI 86
Principal Amount 1,000
Total Interest 32
Total Amount 1,032.00

Year Month Principal (A) Interest (B) EMI (A+B) Balance Loan Paid to Date (%)

You can also determinant the EMI amount by manually calculating, using the formula:

EMI=P * r * (1 + r)n(1 + r)n-1

P is the principal amount
r is the interest rate
n is the tenure

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Steps to Apply for GECL Loan

The application process for GECL loans will vary depending on different lenders. However, here are some common steps you can follow:

  • Step 1: Visit the lender or website where you have a business loan account with or where you would like to apply for the GECL loan.
  • Step 2: Fill in the GECL application form accurately and provide all the required information.
  • Step 3: Submit the application form along with all the required documents.
  • Step 4: Your application will then be reviewed and processed.

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GECL Loan Repayment

The GECL repayment shall be done in monthly instalments according to the different categories the business falls under. For GECL 1.0 the repayment can be made in 36 monthly instalments, GECL loans under categories 2.0 and 3.0 will be made in 48 monthly instalments and the repayment for GECL 4.0 category will be made in 54 monthly instalments.

There is a moratorium period for all GECL loans, during which businesses can pay their monthly EMIs or wait until the moratorium period is over. The moratorium period for GECL 1.0, 2.0 and 3.0 is 24 months while the period for GECL 4.0 is 6 months.

Businesses or MSMEs can prepay the entire loan amount before the end of the repayment tenure. Doing so will not result in any penalty or prepayment charges.

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Frequently Asked Questions

A GECL loan is a collateral-free loan which is backed by the government to provide financial support to businesses particularly micro, small, and medium enterprises that have been affected by the COVID-19 pandemic.

Existing MSMEs and PMMY borrowers who are affected by the COVID-19 pandemic are eligible.

A GECL loan can help provide a strategic approach to managing your finances, meet operational costs, simplify debt and achieve financial security.

The loan amount for GECL loans vary between 10 lakhs to 500 Crore, depending on the business’s eligibility and needs.

The application process is straightforward, all you need to do is submit the application form, documents and get approved if you meet the eligibility criteria.

No, there are no prepayment charges, penalty fees and charges associated with GECL loan scheme.

Business and MSMEs falling under proprietorship, partnership, registered company, trusts, and limited liability partnerships are eligible for the loan program.

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