30 Oct Financing the Growth – Risk Capital Fund for MSMEs
Just the other day I met a prospect. Three professionals joined together and are running a successful company supplying materials to lot Tier-I corporates. Three years in existence, impeccable YoY growth in top line and bottom line. Clean and above board.
Recently, two of their customers have come out with identical request. A special machine at the cost of Rs.30 mils needs to be installed. That’s 80% of their FY 2009-10 top line! Bigger capacity requires bigger space, additional staff and increase in working capital requirements. A company with Rs.90 lacs Bank Borrowing is now staring at an investment of Rs.50 mils with no scope to meet margin requirements or provide collateral security. But they are moot points. Bank Manager shudders at the thought of considering Rs.50 mils lending without collateral security, up from Rs.9 mils. Expression of Interest by two BSE Sensex Companies means nothing to the Bank Manager. His retirement benefits mean more, obviously!
Actually, there is a way out in a scenario like this. It is just that it is a closely guarded secret just like CGTMSE. Previously nobody knew about CGTMSE. Now that people started talking about collateral free credits for MSMEs, everyone knows about CGTMSE but no one gets it!
In fact SIDBI has two schemes for funding companies like the ones discussed above. One of the two is Equity Assistance Scheme. This scheme is meant for well performing MSMEs. It can be for new business line, expansion or modernisation, marketing, R&D and working capital assistance. Even acquisition in India or Abroad can be considered under the scheme.
In case, someone wants to know the salient features of the scheme or the process involved, he/she may contact me at GYM@smbenablers.com
The other scheme is SFRC. What is SFRC? At the moment it is like Orient PSPO. I’ll be making another post on SFRC within a week.
Happy Deepavali to you all.