The Emergency Credit Line Guarantee Scheme was launched as part of the first Atmanirbhar Bharat 3.0’ package in May to mitigate the distress caused by the pandemic-induced lockdown. In a new stimulus, the Emergency Credit Line Guarantee Scheme (ECLGS 1.0) was extended till March 21, 2021. The scheme is a Working Capital Term Loan that helps in providing credit to different sectors, especially micro, small and medium enterprises (MSMEs).
Recently, the ECLGS 2.0: Credit guarantee scheme is being launched for stressed sectors as well as health care sectors. The tenor for this additional credit is five years, including a one-year moratorium. MSMEs with dues of Rs 50-500 crore as on February 29 are eligible for this credit facility. The rate of interest charged under the Emergency Credit Line Guarantee Scheme is capped at 14% for NBFCs, 9.25% for banks and other financial institutions.
ECLGS Eligibility Criteria
- Business Enterprises /MSME borrower that have a combined outstanding loan of up to Rs. 25 crores with an annual turnover of up to Rs. 100 crore for FY 2019-20 are eligible
- Loans that are covered under the Pradhan Mantri Mudra Yojana (PMMY) extended on or before 29th Feb 2020, and the same has been reported on the MUDRA portal are eligible for the ECGLS scheme.
- The borrower’s account should be less than or equal to the 60 days past due to qualify for under the ECLGS Scheme. Borrower accounts which had Non-Performing Asset (NPA) or SMA-2 status, as on 29the Feb 2020 shall not be eligible for the Scheme.
- Loans that are provided in individual capacity will not be covered under the Scheme.
- The total outstanding amount would comprise the on-balance sheet exposure. The Off-balance sheet and non-fund-based exposures will not be included and cannot avail the scheme.
- MSMEs constituted as Proprietorship and Partnership, a registered company, trusts and Limited Liability Partnerships (LLPs) can apply for the scheme.
- The Scheme is valid for existing customers on the books of the Master of Library and Information Science (MLIs).
- It is mandatory for Business Enterprises / MSME borrowers to be a GST registered individual in all cases.
- To be eligible under the Scheme it is not necessary that the existing loans of the borrowers should be covered under the Emergency Credit Line Guarantee Scheme (ECLGS) of National Credit Guarantee Trustee Company Ltd (NCGTC).
Documents Required
Documents for Identity Proof:
- Partnership deed/Certificate of Incorporation
- Establishment certificate
- A copy of the PAN Card of the Proprietors/Partners/Directors, Security providers and guarantors applying for the scheme.
Documents for Address Proof:
- Audited/Provisional Financials, Balance Sheet, Profit and Loss Account of the last 3 years is required, along with Schedules and Tax audit reports, Notes to Accounts, Statutory Audit report.
- Proof of a projected turnover mentioned on the letterhead, the current year performance of the entity
- Income Tax returns (ITR) of the borrowing individual of the last 1-year, if filed online an acknowledgement number is required for proof
- Latest Bank Account Statements for the last 6 months and 12 months.
Loan Repayment
- The loan repayment tenure limit is maximum of 4 years from the date of disbursement of the funds
- A moratorium period of one year is available on the principal amount, the interest will be charged during the moratorium period.
- The principal shall be repaid in 36 equal instalments after the end of the moratorium period.
- Interest rate to be serviced as and when applied.
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