SIDBI unveils new term loan program for MSMEs affected by Covid-19. Details here

MSMEs struggled with massive liquidity and tight supply amid Covid-19 lockdown

SIDBI will provide liquidity support through the urgent injection of funds through its new Direct Funding Window (LIQUID) 2.0. Check details

In an effort to increase liquidity for small and medium-sized industries affected by COVID-19, India’s leading financial institution for MSMEs, the Small Industries Development Bank of India (SIDBI), has unveiled a revamped version of its liquidity program . SIDBI will strive to provide liquidity support through an urgent injection of funds through its new Direct Funding Window (LIQUID) 2.0. For its existing clients, SIDBI has implemented LIQUID 2.0 under which it will provide a term loan for the purpose of fulfilling new orders, purchasing raw materials, equipment, settling unpaid creditors, etc. up to 20 percent of their highest outstanding amount in the previous 12 months, subject to a maximum of Rs 1.5 crore and an aggregate exposure of Rs 2.5 crore under the first and of the second version of the new liquidity regime.

The unique features of LIQUID 2.0 are – a) no contribution from company promoters, b) subsidized interest rate, c) low processing fees, d) no prepayment fees, e) simplified process, f) quick sanction and faster disbursement.

The new liquidity offers are a continuation of various measures taken by SIDBI and the government to provide a lifeline for MSMEs struggling with the business impact due to COVID-19 lockdowns. The central government has taken several initiatives to bring about reforms to improve the ease of doing business, especially for these small and medium industries. The new reforms meant that the government would strive to provide a more conducive environment for MSMEs and eliminate “inspector raj” in business-related licenses. The government has moved to a digitalized random inspection system that would reduce harassment faced by entrepreneurs managing these MSMEs.

Despite the challenges faced during the COVID-19 pandemic, 20 states have now adopted this system which were now eligible for additional loans worth Rs 39,521, PM Modi said in a LinkedIn blog. The State which implemented this new reform will now be eligible for an additional loan of 0.25% of its gross domestic product (GNP) of the State.

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