As businesses across the country recover from the economic impact of the pandemic, the Financial Ministry of India is offering a line of credit loan under the Emergency Credit Line Guarantee Scheme, also known as ECLGS. This loan is being offered with a provision of a 100% credit guarantee from the National Credit Guarantee Trustee Company, or NCGTC.
The ECLGS scheme is a component of the Rs. 20 lakh package announced on 15th May, 2020 to aid the country’s ailing business sector. Since its launch in May, the Emergency Credit Line Guarantee Scheme and its implementation has been continually monitored and assessed to ensure that the maximum number of eligible businesses can avail of its economic benefits.
The line of credit loan offered under the ECLGS scheme can be beneficial to a variety of different businesses. However, as with any government-backed credit line schemes, the ELCGS eligibility is dependent on certain criteria such as:
If you are a business owner impacted by the pandemic, the emergency credit provided under the Emergency Credit Line Guarantee Scheme might seem like a considerable source of relief, leading you to wonder how you can apply for it. This is where it is important to note that the loans offered under the ECLGS scheme are not the typical form of business loans.
The loan application process for the ECLGS scheme works on an automatic pre-approval mechanism. This means that instead of a business owner approaching the lender for a loan, the business is approached by the lender. The MSME or business enterprise must, however, meet the eligibility criteria set by the ECLGS guidelines.
As the loans come pre-sanctioned, this mechanism makes the process of availing credit lines easier and far more accessible for businesses. Moreover, when a loan under the ECLGS is offered, the eligible business can choose to ‘opt out’ of it if it so desires. Meanwhile, businesses that are interested can undergo the documentation process laid out by the scheme. The funding provided under the scheme comes with a 100% credit guarantee coverage by the National Credit Guarantee Trustee Company Ltd.
An important factor in the process of opting for a loan under the ECLGS scheme is to determine how much of a loan amount you can actually avail. Here are the features that determine this factor:
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As the loans offered under the Emergency Credit Line Guarantee Scheme are aimed at providing emergency credit to struggling businesses, the cost of borrowing is relatively low for potential borrowers. Here are the primary guidelines regarding the repayment of loans under the ECLGS scheme:
With Finserv MARKETS, you can get a business loan of up to ₹35 lakhs. What’s more? Your loan application can be approved instantly! You also get to enjoy flexible repayment options and the whole process requires minimal documentation.