MSME Emergency credit – For Non-Registered Business and Retailers Too!

The Government of India announced INR 3 lakh crore emergency credit borrowing scheme,  which also covers retailers and other small business which are not registered under MSME.

Emergency Credit

Emergency credit

On May 12, Government announced the scheme, to help all the business which are merely devastated because of the Corona and the lockdown of 62 days and counting. So, the Non-MSME registered businesses can also enjoy this scheme.

As per the source from the Finance Ministry, around seven crore strong trading communities are included in this scheme.

The National Credit Guarantee Trustee Company (NCGTC), provides 100 percentage guarantee coverage to the emergency credit line facility. MLIs and Member lending institutions can get the guarantee for up INR 3 lakh crore for lending to eligible MSMEs.

The National Credit Guarantee Trust Corporation releases the guidelines for the scheme today. As per the guidelines, the businesses under this scheme constitutes,

  • Proprietorships
  • partnership
  • Registered companies
  • Trusts
  • Limited liability partnerships (LLP)

And also for Pradhan Mantri Mudra Yojana (PMMY) borrowers. The above-listed business is eligible to apply for this loan under the emergency credit scheme.

This scheme assists the business by providing additional working capital in the form of a term loan facility to the eligible MSMEs as listed.

Scheme’s Credit details

Emergency credit

The credit will be up to INR 5 crore. This scheme approves a loan of 20 percent of the total outstanding of the borrower.

The total outstanding of up to Rs.25 crores is the maximum consideration for the loan, which also excludes non-fund based exposures and off-balance sheet. They calculate these amounts as of February 29,2020.

As per the CAIT estimates, the retail businesses had INR 15,000 crores turnover per day before the pandemic.

Applicability of this scheme

This scheme applies for all the loans from May 23, 2020, to October 31, 2020, which is for 5 months. Or until they sanction 3 Lakh crores, whichever is earlier. These loans are applicable only under GECL.

This scheme will definitely help the small business to bounce back after the heavy hit of the pandemic.

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