Coronavirus Outbreak and Lockdown has caused a great impact on the small businesses and MSMEs in the country. Businesses are shut and hence millions of people who were employed with small and medium enterprises are facing a lot of financial problems.
Therefore, to provide support to millions of small businesses reeling under the impact of the Covid-19 lockdown, the government has announced a slew of liquidity measures that will help to boost the working of MSMEs. These measures include collateral-free automatic loans to small and medium enterprises. For this, a package worth ₹3-lakh crore has been announced which is a big ray of hope for these businesses.
Businesses with up to ₹ 25 crore outstanding and ₹100 crore turnover will be eligible for this loan.
Collateral Free Business Loan for MSMEs as COVID-19 Relief.
The ₹3 Lacs Crores loan budget without collateral for the MSMEs is for a tenure period of 4 years and a moratorium of 4 months.
There is another provision of ₹20 Thousand Crores as a subordinate debt in this loan scheme.
The scheme aims to help up to 2 Lacs MSMEs to bring their businesses back on the track.
There will be a 100% credit guarantee cover, the scheme can be availed till October 31, 2020.
#GoLocal was one of the important points of the Prime Minister’s last address to the nation. And in view of this, global tenders will be banned for government procurement up to ₹200 crores. Indian MSMEs often faced unfair competition from foreign companies. This will be a great step to build a self-reliant India and to support the MSMEs in the country.
Features of Covid-19 Relief Loan MSME Loans
- MSMEs will get an emergency credit line from banks and NBFCs of up to 20% of the outstanding credit.
- These Loans will have a tenure of 4 years and 12 months moratorium on principal payment.
- The loan will be totally collateral-free.
- 45 lacs units will be benefited and can resume their normal business activities through these loans.
- This business loan scheme can be availed up to the 31st of October 2020.
MSMEs are considered as the backbone of the country and contribute a major part in the country’s GDP. Improving them can help to improve the economic condition of the entire country and can give employment to millions of people.