The State Bank of India (SBI), India’s largest lender, today gave SMEs a Diwali gift by launching ‘SME Assist’, wherein it will provide short-term working capital demand loans (WCDL) to the micro, small and medium entrepreneurs (MSMEs) for 9 months. Under this scheme, SBI will provide loans to MSMEs on their input credit claims under GST. The loans will be provided at a concessional rate of interest.
Announcing this, V Ramling, CGM (SME), SBI, said the bank has been at the forefront in handholding the SME sector. “This product will help them manage their working capital requirement till the time they get input credit. It also supports the government’s GST initiative, as it will help stabilize the SMEs to run their operations without any hurdle,” he said.
The working capital demand loan will be sanctioned outside Assessed Bank Finance (ABF) at 20% of the existing fund based working capital limit or 80% of input tax claim due on purchases, whichever is lower. With a nominal processing fee of Rs 2000, MSMEs can avail this loan to meet their working capital requirement. Companies applying for a loan under this product will have to provide a certificate from their Chartered Accountant confirming the input credit claims.
Also, under SME Assist, SME borrowers can enjoy a moratorium period for the first three months. The ad-hoc amount can be repaid either in one bullet payment or in 6 EMIs in the next 6 months after the moratorium period is over. Simple documentation is proposed and the SME customers of the bank can avail the SME Assist facility till March 31, 2018.