Over 110 million people in India were employed by the MSME industry on their own in 2020. Besides producing jobs, 48% were exported and 30% contributed to GDP, according to a Livemint analysis.

 

You can therefore immediately see why the government spares no stones to stimulate growth in the sector and strengthen its infrastructure.

 

The state has over the years developed several business lending programs, including the Bank Credit Facilitation Scheme, to facilitate such objectives.

 

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Facilitation of bank credit – in a nutshell

It is simply a deal or an agreement between the two parties – the NSIC and various commercial and domestic banks in India. It is an agreement or memorandum of understanding.

 

This is to support small and medium-sized firms in complying with their credit standards and accessing private and national banks’ business loans. This system allows MSMEs to be supported by a request for a loan, documents, and other requirements.

 

Note that all registered companies and publicly recognized enterprises, be they small, medium, or micro, are eligible for this support scheme. However, to use a loan under this arrangement, users must have a KYC-customer account.

Credit facilitation system for Types Of Loans Under Bank-

In this system, you can claim any of these company loans :

 

Working Capital Limit:

The loans of this category may be in the form of a book debt overdraft facility, bill discount services, and open cash credit.

Non-fund-based Limit:

This category of credit covers guarantees such as guarantees from international banks, credit letters, and credit letters. The companies must create a credit account that permits holders of the account to withdraw the cash within a predetermined credit ceiling to profit from this facility.

Term loans:

Based on your requirements and reimbursement capacity, you can apply for long, medium, or short-term credits. Companies generally ask for a loan for the acquisition of equipment or other substantial costs that are important for establishing or expanding a company.

Facilitation Scheme for the Salient Features Of Bank

Check out the most remarkable features of this system –

 

  • Integrate both governmental and private institutions to give financing for SMSE enterprises.

 

  • Helps companies get reduced interest rates in the performance and loan rating program of the Department.

 

  • The loans won via this scheme are normally paid back for 5 to 7 years. The same can last up to 11 years in some extreme circumstances.

 

  • This arrangement facilitates MSMEs to complete and submit them by National Small Industries Corporation.

 

  • It provides aid to MSMEs by switching from one financial institution to another bank or transferring bank details. The scheme also helps with a new account application.

 

In addition, this plan strives to provide MSMEs with transparency in filtering and accessing more favorable NSIC-sponsored lending proposals.

 

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Required documents to facilitate bank credit-

You may need to provide different documentation based on your aim of seeking a business loan –

  • Identity proof (any)
  • Address Proof of residential and business address
  • Asset and Liability Statement with ITR (latest)
  • Rent agreement or lease deed
  • SSI certificate copy or Memorandum to Enterprises
  • The unit’s profile
  • A balance sheet with 3-year IT/ST returns
  • Balance Sheet projected for 2 years.
  • Details of a current banker’s account.
  • Project report emphasizing the need for term loans.
  • Quotes from the building plan approved, etc.
  • Incorporation/trust deed/memorandum of understanding and association statutes of partnership, etc.
  • Sanction or clearance of the Pollution Control Board. Penalty for the Power Board.
  • Monthly sales and production data, finished goods, stock value, debtors, creditors, etc.