The Small Industries Development Bank of India (SIDBI) was established in 1990 to foster and finance the Micro, Small, and Medium Enterprises (MSME) sector. Additionally, it partners with institutions that provide similar services.
SIDBI loans help businesses grow and expand, without them having to provide collateral. Furthermore, the company’s finance schemes are available in an array of amounts and repayment periods. They range from Rs. 10 Lakhs to Rs. 25 Crores, and repayment periods can be up to 10 years. There's no collateral required for loans below Rs. 1 Crore.
Functions of SIDBI
The key functions of SIDBI are:
Aid financial institutions in lending to small-scale industries so they can have a healthy financial standing.
Loan offers for small-scale industry (SSI) development and production.
It also offers help in the expansion of marketing channels for SSI sector products both domestically and internationally.
SIDBI promotes industries that create jobs for people in semi-urban areas.
It also helps facilitate the timely flow of credit for working capital and term loans to small-scale industries in partnership with commercial banks.
SIDBI works to empower employment and upgrade technology in the sector.
Benefits of SIDBI
These are the top benefits of using SIDBI loans:
Convenient Interest Rates - Has collaborations with many banks and international financial institutions. By leveraging these partnerships, SIDBI can offer concessionary rates of interest.
Custom-Made - Offers loans that are customised to your business needs.
Collateral Free - Businessmen can get up to Rs. 1 Crore without having to put up any security.
Venture and Equity Funding - Offers equity-based venture capital to small businesses through their subsidiary SIDBI Venture Capital Limited.
Subsidies - Seek help from SIDBI to take advantage of various government schemes.
Transparency - The process and rates are transparent.
Loan Products Offered by SIDBI
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 for new enterprises. The loan amount offered under this scheme is a minimum of Rs. 10 Lakhs for equipment finance and Rs. 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 Rs. 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 Rs. 1 Crore.
SIDBI Trader Finance Scheme (STFS): STFS is a loan scheme specifically for retail and wholesale MSMEs that have been in existence for three years at the minimum. The amount of the loan starting from Rs. 10 Lakh can go up to Rs. 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 up to Rs. 1 Crore for new customers and Rs. 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.
Direct Loan Schemes Offered by SIDBI
Loan Scheme |
Loan Tenure |
Loan Amount |
Eligibility Criteria |
Smile Equipment Finance (SEF) |
72 months |
The minimum amount is Rs.10 Lakhs |
3 years experience required in the financial or business sector |
SIDBI Make in India Soft Loan Fund for MSME (SMILE) |
10 years, including a 3-year moratorium |
Rs. 10 Lakhs to Rs. 25 Lakhs |
Both new and existing enterprises can apply |
Working Capital (Cash Credit) |
As per the terms and conditions |
As per the financial capability of the applicant |
Existing consumers of SIBDI and other banks can apply |
Loans under the partnership with OEM (Original Equipment Manufacturer) |
5 years with an eligible moratorium |
Up to Rs. 1 Crore |
3 years experience required in the financial or business sector |
SIDBI – Loan for Purchase of Equipment for Enterprise’s Development (SPEED) |
5 years and a moratorium of 6 months |
For new customers: Up to Rs. 1 Crore |
3 years of business existence and experience along with profit-making for a minimum of 2 years |
For existing customers: Up to Rs.2 Crores |
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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 Rs.2 Crores |
5 years of business existence along with profit-making for at least 3 years. |
TOP UP LOAN FOR IMMEDIATE PURPOSES (TULIP) |
5 years |
30% of existing exposure or 20% of net sales subject to Max Rs. 2 Crores |
Existing customers of the SIDBI loan scheme for a year and have good financial records. |
Proof of cash profit in the previous financial year |
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SIDBI TERM-LOAN ASSISTANCE FOR ROOFTOP SOLAR PV PLANTS (STAR) |
5 years and a moratorium of 6 months |
Up to Rs. 2.5 Crores |
Show 2 years of cash profit for existing customers and 4 years of cash profit for new customers, and good financial records |
SIDBI ASSISTANCE TO HEALTHCARE SECTOR IN WAR AGAINST SECOND WAVE OF COVID19(SHWAS) |
5 years |
Up to Rs. 2 Crores |
Proof of cash profit for two years for new customers. Existing customers should be able to show cash profit in the previous audited balance. |
SIDBI ASSISTANCE TO MSMES TO TACKLE COVID19 PANDEMIC(AROG) |
5 years |
Up to Rs. 2 Crores |
Two years of proof of cash profit for new customers. Existing customers are required to show cash profit in the previous audited balance. |
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 Rs.25 Crore |
An annual turnover of Rs.100 Crores and outstanding credit facilities of up to Rs.25 Crores will be required |
Indirect Loan Schemes Offered Under SIDBI
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 capitalization to bridge the financial deficit.
Additional Loan Products of SIDBI
SIDBI has multiple features that include the following:
SIDBI’s Venture Capital: This loan scheme includes major initiatives to fund start-ups. This includes the start-up life cycle fund and SIDBI interventions fund. It also provides funds for the Aspire Fund and India Aspiration Fund.
Indirect Finance: Offers indirect assistance to Primary Lending Institutions by providing refinance. The goal is to establish a strong credit flow to the MSME sector, with an extensive branch network across India.
Micro Finance : Small Industries Development Bank of India offers loans to small-time entrepreneurs in the form of microfinance.
How to Apply for Loan Through SIDBI?
The 5-step process to apply for a loan from SIDBI is as follows:
Step 1: Visit the official website of SIDBI and click on the ‘Borrower’s Corner.’
Step 2: Click on ‘Online Loan Application.’
Step 3: Enter your username and password.
Step 4: The applicant can choose the amount of loan they would like to borrow.
Step 5: 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
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✔️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.
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✔️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, Energy Saving scheme for the MSME sector.
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✔️Is SIDBI a government bank?
Its major shareholders are the Government of India, State Bank Of India, and Life Insurance Corporation of India.
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✔️ 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.
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✔️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.
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✔️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.
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✔️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.
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✔️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).
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✔️Which are the Subsidiary Associates of SIDBI?
Following are the subsidiaries of SIDBI:
MUDRA
UDAAN
RXIL (Receivables Exchange of India Limited)
Acuite
Online PSB loans
Istsl (India SME Technology Services Limited)
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✔️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.
