Last Updated on March 4, 2023 by admin
As per Budget 2022-23, the Finance Ministry is extending the validity and scope of ECLGS scheme for SMEs and MSMEs and providing additional credit to these businesses that have been affected by the pandemic in the last two years. The guaranteed coverage for the scheme is expanded by Rs.50, 000 crore to Rs.5 lakh crore.
The Government’s objective of this scheme was to provide Rs.3 lakh crore collateral-free loans to various small-scale organizations across the country to minimize the significant losses during a pandemic. Such a scheme is categorized into four parts- ECLGS 1.0, ECLGS 2.0, ECLGS 3.0 and ECLGS 4.0.
Objectives of this scheme include:
- This scheme entails financial assistance to small organizations at an affordable interest rate against borrowed funds, allowing them to easily meet their operational liabilities.
- It improves access and enables additional funding advantages to the MSME MUDRA borrowers.
To avail the benefits of this scheme, individuals must meet the following eligibility:
- The loan borrowers from this scheme must be a member of GST registrar.
- The applicants with SMA 2 or NPA will not be eligible for the scheme. However, there are least chances of availing credit for businesses that are solely operated by individuals.
- A substantial portion of loan amount from this scheme is extended to various trusts, small registered companies, partnership firms etc.
As an alternative option, small business owners can also opt for a business loan from leading financiers at attractive rates and favourable lending terms.