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The Ministry of Micro, Medium, and Small Businesses (MSME) has been affected by the unusual situation caused by COVID-19 and the resulting lockdown. The Small Industries Development Bank of India (SIDBI) has launched the TWARIT (Timely Working Capital Assistance to Revitalize Industries in Times of Corona Crisis) Scheme to help MSMEs stay afloat during the crisis. The SIDBI intends to provide relaxation to the MSME sector as part of this Program by offering 20percent of overall outstanding loans up to INR 25 crore. The TWARIT Scheme of SIDBI is defined in detail in this article.

Timely Working Capital Assistance to Revitalize Industries in Times Of Corona Crisis, as previously mentioned, is a unique solution to the extraordinary situation created by the COVID-19 pandemic. The Timely Working Capital Assistance to Revitalize Industries in the Times of Corona Crisis Scheme aims to provide much-needed assistance to MSME units whose operations have been harmed by COVID 19.

ELIGIBILITY CRITERIA FOR THE SCHEME

• Panhandler accounts must be less than or equivalent to 2 months past due as of February 29, 2020, to qualify for the TWARIT scheme.
• To be eligible for the Program, all active applicant accounts, including those under Credit Delivery Arrangement, must total ₹25 crores in outstanding credit facilities as of 29-Feb-2020.
• Existing clients on the Bank’s records are eligible for the TWARIT Scheme.
• To benefit from the TWARIT scheme, the MSME must be GST certified in all instances; however, this requirement does not apply to organizations that are not required to register for GST.
• The entity’s turnover must be at least ₹25 crores to qualify for the payout in the FY 2019-20.
• The qualifying individual will be given an opt-out option under the TWARIT program, allowing them to choose whether they are interested or not in choosing the program.

The Scheme will be available to all applicants who have not been listed as Special Mention Accounts (SMA 2) or Search Queries Non-Performing Asset (NPA) by several of the Member Lending Institutions (MLIs) as of February 29, 2020.

BENEFITS OF THE SCHEME

• The applicant would have a four-year loan repayment period with a one-year moratorium under the TWARIT Scheme.
• The TWARIT pre-payment scheme does not include any penalties for the customers.
• MSME units do not have to pay any organizer’s contribution to secure a loan under this SIDBI Program.
• There is no cost to apply for a loan through the TWARIT program.

SECURITY UNDER THE SCHEME

• Under the TWARIT program, SIDBI makes the addition of charges on the Primary Safety or Conditional Safety.
• In case of cash flows and safety, the additional Working Capital Term Loan facility issued under TWARIT would be placed second behind current credit facilities, with a fee on assets funded under the TWARIT Scheme to be generated within three months of loan disbursement.
• Under this SIDBI Program, no extra collateral would be needed for additional financing.

RATE OF INTEREST

8.25 percent per annum standard rate with yearly reset.

TENURE

The loan scheme has a four years term.

FEE FOR APPLICATION PROCESSING

SIDBI will not charge an extra charge because additional credit under TWARIT is given to current customers, as previously stated.

SCHEME PROCEDURE FOR APPLICATION

The TWARIT scheme includes an automatic pre-approval process, eliminating the need for the borrower to notify the SIDBI for a loan. SIDBI will send qualifying applicants an offer letter for a preapproved loan, which they may approve or disapprove. If the MSME approves the bid, the applicant must complete the required paperwork.

A different account for the loan will be there for the applicant as part of this Program for the possibility of raising additional credit. This new account would be different from the consumer’s current loan account.

M/s Dinesh J. Shah & Associates is a CA firm in the field of Project Finance and Government Subsidy, Taxation, GST, Audit for more than 20 years. If you need further clarification/query, you can contact us on 9825373707 or mail at info@djshahca.com or officeidk@gmail.com.

The scheme aims to provide financial Assistance by Term loan to the existing MSME units who want to undertake expansion/modernization/capital expenditure in the same line of business by way of purchase of land, construction of factory building, Purchase of equipment, Plant & Machinery and Misc. Fixed assets, Installation of Rooftop Solar Projects, Acquisitions of other energy efficiency devices. This scheme is valid up to 31st March 2022 and may be extended on a need basis.

Eligible Criteria:-

• Financial assistance shall be provided to Micro, small and medium enterprises engaged in high growth and priority sectors (including sunrise sector), thrust sectors for undertaking expansion/modernization/capital expenditure.
• Brownfield enterprises having a minimum of 2 Years of operation and Audited accounts for at least two full years are eligible under the ARISE scheme.
• There must be cash profits in the last audited financial results.

List of Eligible Sectors under ARISE scheme
Automobiles (excluding dealership)	Automobile Components (include general Engg.)	Medical Equipment, healthcare and hospitals, and Nursing homes and Diagnosting Centers
Chemicals and Chemical products	Paper & Paper Products (include Printing)	Renewable Energy including Rooftop solar Projects
Electronic systems	Electrical Machinery	Rubber and Plastic
Food Processing	Textile and Garments	Ceramics and Stone Processing
Iron and steel	Drugs and Pharmaceuticals	Biotechnology
Aerospace& Defence

• MSME setting their projects other than the above-mentioned sectors may also allow being covered under the scheme subject to the approval of RO In- charge.

Quantum of Assistance: 

• Term loan up to Rs. 500 Lakh per borrower subject to a maximum of 80 % of the project cost shall be allowed.
• For smaller loans up to Rs. 3 crore for machinery/ equipment finance, 100% of the project cost shall be allowed.
• Higher term loan for plant & machinery, purchase of land, construction of factory building, etc. up to Rs. 700 lakh to one borrower can be allowed subject to the approval of RO In-charge.
• Promoters have to contribute a minimum of 20% of the project cost. In case of loans up to Rs. 3 crore on machinery/equipment where 100% financing is proposed, cash collateral up to 25% of project cost on the lines of SPEED scheme shall be applicable.

 Interest rate and Repayment:

• Interest rate will be 5.50 % to 6.80 % p.a for the first year. From the next years, it will be as per internal rating.
• Repayment up to 7 years including moratorium up to 2 Years.

Conclusion:

This scheme is to promote existing MSME engaged in high growth and priority sectors for undertaking Expansion/modernization projects.  The main benefits of the schemes are attractive ROI, 80% finance of project cost, maximum subsidy benefit, lowest security requirement, and quick sanction. MSME who wants machinery finance for their expansion project can avail 100% financing up to Rs. 3.00 Crore with an attractive rate of interest.      

M/s Dinesh J. Shah & Associates is a practicing CA firm in Ahmedabad in the field of Taxation, GST, Audit, Project Finance, and Government Subsidy for more than 20 years. If you have any queries, feel free to contact us on 9825373707 or mail at info@djshahca.com or officeidk@gmail.com

The STHAPAN Scheme aims to promote capital investments in the MSME sector by assisting Greenfield Manufacturing units. It provides financial assistance by way of term loan for plant & machinery, purchase of land, construction of factory building, purchase of equipment, Misc. fixed assets, installation of rooftop solar projects, etc. under the product-linked incentive schemes. This scheme is valid up to 31st March 2022 and may be extended on a need basis.

Eligibility Criteria:

• The main objective of STHAPAN is to provide financial assistance to Greenfield units for setting up new units.
• The Promoters of new entity should have 5 years of experience in the business. 

List of sectors under STHAPAN Scheme
Automobiles and Auto Components (excluding dealership but including general Engg.)	Specialty Steel
White Goods (including ACs and LEDs)	Textile Products: MMF Segment and technical textiles
High-efficiency solar PV modules	Advanced Chemistry Cell (ACC) Battery
Drugs and Pharmaceuticals(including ingredients)	Food Products
EV Charging Stations	Medical devices
Healthcare Centers (including Hospitals, nursing homes, and diagnostic centers)	Mobile Phone and accessories
Agri allied sectors	Renewable sectors (including rooftop solar
Aerospace and defense	Garmenting
Paper & Paper Products	Rubber and Rubber Products
Plastic & Plastic products (excluding single-use plastic	Chemical and Chemical Products

• MSMEs projects other than the above-mentioned sectors may also be allowed to be covered under the scheme subject to in-principle approval from RO In-charge.  

Quantum of Assistance:

• Term Loan up to Rs.1500 Lakh per unit/ borrower, subject to a maximum of 75% of the project cost.
• Higher Term loan for plant & machinery, purchase of land and construction of the building, etc. up to Rs.2000 Lakh to one unit shall be subject in-principle approval as per Loan Policy.
• Promoters have to contribute a minimum of 25% of the project cost.

Interest rate and Repayment:

• Interest rate will be 6.00 % to 7.30 % p.a for the first year. From the next years, it will be as per internal rating.
• Repayment up to 7 years including moratorium up to 2 Years.

Conclusion:

This scheme will boost capital investment in Greenfield manufacturing units.  Attractive rate of interest, term loan up to Rs. 2000.00 lakhs and quick sanctions are the main benefits under the scheme. MSME setting up their new units in identified sectors are benefited under this scheme.

If you need further clarification/query, you can contact us on 9825373707 or mail at info@djshahca.com or officeidk@gmail.com

M/s Dinesh J. Shah & Associates is a practicing CA firm in Ahmedabad in the field of Taxation, GST, Audit, Project Finance, and Government Subsidy for more than 20 years.