CRITERIA TO AVAIL COVID LOAN FOR SMALL BUSINESS

Updated: Oct 4

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Emergency Credit Line Guarantee Scheme (ECLGS)


As a part of the Economic package announced by the finance ministry, The Emergency Credit Line Guarantee Scheme (ECLGS) was launched to aid Micro, Small and Medium Enterprises (MSMEs) & business enterprise in view of the economic distress caused by the COVID-19 pandemic. The scheme aims at providing liquidity in the hands of small business owners so that economic activity can be resumed. The key highlights of the scheme are as follows:


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  • It is a fund based working capital term loan to be provided by Banks and NBFC’s registered with RBI

  • MSME borrowers with outstanding loans of up to Rs. 25 crore as on 29.2.2020, and annual turnover of up to Rs. 250 crore for FY 2019-20 are eligible for the Scheme.

  • Business Enterprises / MSMEs constituted as Proprietorship, Partnership, registered company, trusts and Limited Liability Partnerships (LLPs) shall be eligible under the Scheme.

  • Loans provided in individual capacity are also covered under the Scheme.

  • A separate loan account shall be opened for the borrower for extending additional credit under this scheme. This account will be distinct from the existing loan account(s) of the borrower.

  • This is a pre-approved loan. An offer will go out to the eligible borrowers for a preapproved loan which the borrower may choose to accept. If the MSME accepts the offer, it will be required to complete requisite documentation. Thus, an ‘opt-out’ option will be provided to eligible borrowers under the Scheme, i.e., if the borrower is not interested in availing the loan, he/she may indicate accordingly.

  • The Scheme is valid only for existing customers .

  • Number of Outstanding EMI’s for the existing loan should not be more than 60 days as on 29th February, 2020 in order to be eligible under the Scheme.

  • Maximum loan is capped at 20% of the borrower's total outstanding credit up to Rs. 25 crores, subject to the borrower meeting all the eligibility criteria. The maximum loan amount is Rs. 5 cr.

  • The entire funding provided under the scheme shall be provided with a 100% Government credit guarantee coverage

  • Repayment should be done in maximum 4 years from the date of disbursement

  • Moratorium period of one year on the principal amount is applicable. Interest shall, however, be payable during the moratorium period.

  • The principal shall be repaid in 36 equal instalments after the moratorium period is over.

  • Interest to be serviced as and when applied.

  • The scheme is valid till 31.10.2020 or till an amount of Rs 3,00,000 crore is sanctioned under the Scheme by all banks/NBFCs (as notified by NCGTC), whichever is earlier

  • The interest rate to be charged under the scheme is capped at 9.25% for lending Banks and 14% for NBFC’s

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