SMILE Scheme - SIDBI Make in India Loan for Enterprisese

The SMILE - Small Industries Development Bank of India Make in India Loan for Enterprises is a scheme launched by the Small Industries Development Bank of India (SIDBI). It was launched to provide financial support to the Micro, Medium, and Small Enterprises in India to encourage participation in the ‘Make in India’ campaign. The scheme offers financial support in the form of Soft loans, making sure that the terms and conditions are not stringent, to balance the debt-equity ratio for establishing an MSME.

With the SIDBI Make in India Loan for Enterprises (SMILE), 25 sectors under the Ministry of Micro, Small & Medium Enterprises (MSME) have been identified as the focus group to be financed under this scheme. Offering attractive loan amounts and affordable interest rates.

The SMILE - SIDBI Make in India Loan for Enterprises scheme has boosted the MSME - Ministry of Micro, Small & Medium Enterprises sector by offering loans with quasi-equity support. So far, the total loan amount disbursed is ₹13,689 Crores.

Objective of SMILE Scheme

The main objective of the SIDBI SMILE scheme is as follows:

  • To support new and existing MSMEs to be able to establish and expand their ventures. With priority given to the 25 MSMEs that are established under the Make in India campaign.
  • The scheme aims to address the challenge of MSMEs that are unable to meet the debt-equity ratio mandated by banks and financial institutions. For which the scheme offers financial assistance to cover the expenses.
  • It also aims to fund MSMEs who are seeking expansion and growth by financing their purchase of equipment, upgrading technology to increase production capacity. Offering lower interest rates to make the loans more widely accessible and affordable.

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SMILE Loan Scheme Details

The SIDBI SMILE loan scheme offers MSMEs flexible loan amounts, attractive interest rates, and a long tenure to repay their loan. While the MSMEs will not be able to use the funds to repay any existing loans, they can use it for developing and growing their enterprises. Here are the SMILE loan scheme details:

Nature of the loan Soft Loan or Quasi-Equity
Loan Amount ₹10 lakhs - ₹25 lakhs
Interest Rate Will be set as per the enterprise’s profile and requirements.
Repayment Tenure 10 years
Moratorium period 36 months
Minimum promoter contribution 15% subject to a 3:1 Maximum Debt Equity Ratio (DER).
Security The lender has the first claim on all assets along with a personal guarantee by promoters.

SIDBI SMILE Loan Scheme Eligibility Requirements

The SIDBI SMILE scheme is a flagship scheme that addresses an important challenge faced by the Ministry of Micro, Small & Medium Enterprises - MSMEs. Given below are the SIDBI SMILE loan scheme eligibility requirements:

  • Eligible sectors: All registered MSMEs under the MSME Act, 2006 as well as the priority sectors:
    • Automobiles and Automobile Components
    • Aviation
    • Bio-Technology and Chemicals
    • Constructions
    • Defence Manufacturing
    • Electrical Machinery and Electronic Systems
    • Food Processing
    • It and BPM
    • Leather and Mining
    • Media & Entertainment
    • Oil & Gas
    • Pharmaceuticals
    • Ports & Shipping
    • Railways
    • Renewable Energy
    • Roads & Highways
    • Space and Thermal Power
    • Textiles & Garments
    • Tourism & Hospitality
    • Wellness Sectors
  • New Enterprises: Emphasis will be given to newly established enterprises in the service and manufacturing sectors.
  • Smaller Enterprises: Smaller enterprises will also be given financing priority.
  • Expansion or development: Priority will be given to all MSMEs that are under expansion to help them take advantage of new opportunities, modernisation of technology, and upgradation of techniques.
  • Experience: For SMILE Equipment Finance (SEF), the enterprise must have been in existence for at least 3 years with good financial stability.

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SIDBI SMILE Scheme Features & Benefits

The SIDBI SMILE scheme is an initiative to help MSMEs prioritise the expansion and modernization of their business. It offers a wide range of features and benefits, these are:

  • Customisable loan amount: You can get a loan amount between ₹10 lakhs to ₹25 lakhs that will fit the requirements and needs of the MSME.
  • Competitive interest rates: The SMILE scheme offers affordable interest rates to help the loan become more accessible, especially to Smaller enterprises.
  • Flexible repayment tenure: The scheme offers a lengthy repayment period of 10 years along with a moratorium period of 36 months. Making it a convenient repayment option for MSMEs.
  • Lower debt-equity ratio: The maximum debt-equity ratio required for the SMILE loan scheme is 3:1 which is lower compared to what banks and financial institutions require. Helping MSMEs get the funds they require.
  • Lower promoter contribution: With the SMILE scheme, the promoter is required to only contribute 15% as compared to traditional banks and financial institutions. Making funding more accessible to MSMEs.
  • Usage of the loan: MSMEs will not be able to use the loan amount they get from the SIDBI SMILE scheme to repay other existing loans.

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Frequently Asked Questions

The SIDBI SMILE scheme is a scheme that offers financing to MSMEs to help them contribute to the Make in India campaign.

SMILE stands for SIDBI Make in India Loan for Enterprises.

SMILE offers MSMEs a loan amount ranging from ₹10 lakhs to ₹25 lakhs.

MSMEs, especially those registered under the Make in India campaign are eligible to apply for the SMILE scheme.

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