SBI SME Collateral Free Loan Scheme

State Bank of India (SBI) is India’s largest state-owned public sector banking company. This bank has played a vital role in establishing the regulated banking sector in India as it offers a collateral free business loan for Micro and Small Enterprises engaged in Manufacturing and Service sectors. For the Manufacturing sector, original investment in plant and machinery should be up to Rs. 5 crores and for the Service sector, original investment in equipment up to Rs. 2 crores. In this article, we look at the SBI SME Collateral Free Loan Scheme. To know about CGTMSE scheme

Purpose of SME Collateral Free Loan Scheme

These business loans are intended for most business purposes to meet the requirement of working capital or for business expansion. The working capital includes the Fund Based and Non-Fund Based needs.
A combo of working capital and term loan. The Term loan for the construction of Building, office, acquisition of machines /equipment including expansion and modernisation of the unit.

Eligibility Criteria

New as well as existing

Micro, Small and Medium enterprises who are engaged in the process of manufacturing activity.

Documents Required

The below listed are the documents that need to be furnished at the time of applying for business loans in SBI Bank.

Identity Proof: PAN Card, Aadhar Card, Driving License, Voter ID Card Proprietor, partner of Director (if a company), etc.
Address Proof: Aadhar Card, Valid Passport, Utility bill, Property tax bill, etc.
KYC documents for promoters/units
Copy of IT Returns of promoters / Firm for the last three years
Details of the capital expenditure

Features of SME Collateral Free Loan

The below listed are the facilities offered with the subject to bank's discretion:

Cash Credit
Term Loan
Letter of Credit
Bank Guarantee

Loan Amount

Individual business loans with a lucrative rate of interest have been offered by the SBI Bank and also grants collateral free loan up to Rs. 1 crore (All facilities WC, TL and NFB facilities) under the CGTMSE cover.

Service Charges

People are offered with the concession of 50% in processing and service charges. Other chargers may also be applicable.
Credit Guarantee Fund Trust for the Micro and Small Enterprises (CGTMSE)
The borrowers those who are eligible under the scheme will be covered under CGTMSE guarantee scheme.
The Guarantee Fee and Annual Service Fee will be as per the rates prescribed by the CGTMSE scheme from time to time.

Security for SBI SME Collateral Free Loan Scheme

Security and Guarantee under the CGTMSE The Primary Security of credit facility is defined as the assets created out of the credit facility so extended. The unencumbered existing assets which are directly associated with the project or business for which the credit facility has been extended that includes Plant, Machinery, land & building pertaining to the project or business. There is no need for the third party, but in case if the constitution of the borrower is partnership or proprietary the personal guarantee of proprietor/partner is not treated as third party guarantee.

Repayment of SBI SME Collateral Free Loan Scheme

Working Capital (WC): One year, repayable on demand. The working capital limits will be renewed every two years. Therefore, the performance of the business unit and conduct of account will be reviewed annually for the continuation of limits.
Term Loan: The term loan is offered to the maximum of 7 years including moratorium period.

Collateral Free Loan Scheme Application Procedure

Kindly follow the below procedure to apply for the Collateral Free Loan Scheme at State Bank of India (SBI).

Approach the Branch

Step 1: You have to approach the nearest SBI Branch in your locality for applying for a business loan.

Get Application Form

Step 2: Then you need to get the application form from the bank office and have to fill out the business loan application form in a prescribed format.

Fill in the Right Credentials

Step 3: You have to fill the business loan application form with appropriate details without any mistakes.

Submit the Application Form

Step 4: You have to submit the business loan form in the prescribed format to the concerned bank official along with all the supporting certificates mentioned above.

Attach Required Documents

Step 5: After applying, you have to attach the specified KYC proofs along with the business loan application form. Note: Please carry originals of all relevant KYC documents such as PAN, Aadhaar, etc. for verification purposes.

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Frequently Asked Questions

Common questions about SBI SME Collateral Free Loan.

The SBI SME Collateral Free Loan Scheme is designed to provide business loans to micro, small and medium enterprises engaged in manufacturing and service sectors. These loans can be used for working capital requirements, business expansion, construction of buildings, acquisition of machinery or equipment, and other business purposes.

New and existing micro, small and medium enterprises engaged in manufacturing activities are eligible for the SBI SME Collateral Free Loan Scheme. For the manufacturing sector, the original investment in plant and machinery should be up to Rs. 5 crores, and for the service sector, the original investment in equipment should be up to Rs. 2 crores.

The SBI SME Collateral Free Loan Scheme offers various loan facilities, including cash credit, term loans, letters of credit, and bank guarantees. The specific facilities provided are subject to the bank's discretion.

Under the SBI SME Collateral Free Loan Scheme, individual business loans up to Rs. 1 crore (for all facilities such as working capital, term loans, and non-fund-based facilities) are offered without the requirement of collateral, provided they are covered under the CGTMSE guarantee scheme.

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a government scheme that provides a guarantee cover to loans extended to eligible micro and small enterprises. Borrowers who are eligible under the CGTMSE scheme will be covered, and the guarantee fee and annual service fee will be as per the prescribed rates.

The repayment terms for working capital loans (cash credit) under the scheme are one year, repayable on demand, with the limits being renewed every two years. For term loans, the maximum repayment period is 7 years, including the moratorium period.

The documents required to apply for the SBI SME Collateral Free Loan Scheme include identity proof (PAN card, Aadhaar card, driving license, voter ID card), address proof (Aadhaar card, valid passport, utility bill, property tax bill), KYC documents for promoters/units, and copies of IT returns of promoters/firm for the last three years.

The primary security for the credit facility under the SBI SME Collateral Free Loan Scheme is defined as the assets created out of the credit facility, including plant, machinery, land, and buildings pertaining to the project or business. Personal guarantees from proprietors or partners may also be required, but no third-party guarantees are necessary.

Yes, borrowers under the SBI SME Collateral Free Loan Scheme are offered a concession of 50% on processing and service charges. Other charges may also be applicable as per the bank's policies.

To apply for the SBI SME Collateral Free Loan Scheme, you need to approach the nearest SBI branch, obtain the application form, fill it out with the required details, submit it along with the necessary documents, and follow the prescribed procedure. The application process typically involves verifying KYC documents and evaluating the eligibility criteria.