Growth Capital & Equity Assistance (GEMS) P.K. Nath, DGM, SIDBI, Nagpur

OBJECTIVE For bridging the gap in Means of Finance for expansion / modernization / new business / diversification by entrepreneurs with established track record. Intangible investments viz., product development, marketing related expenditure, R&D, quality control, energy efficiency equipment, etc. Working Capital / MMWC. Any other bonafide expenditure required for growth of the business.

ELIGIBLE BORROWERS Existing Customers: (i) Satisfactory repayment track record (ii) Along with term loan assistance and (iii) Customers assisted under other schems with atleast 2 years of satisfactory conduct . New Customer: 3 years profitability and 2 year satisfactory banking track record. Exceptions: (i) Customers assisted by PE / VC / Angel funds (ii) Units with unique / novel business model with good cash generation capabilities and / or where equity interest could be reasonably expected in the medium term, (iii) Greenfield units where Risk Capital is being given alongwith Term Loan assistance where Risk Capital assistance is less than 50% of TL assistance.

SUB DEBT NORMS Ranging between 13.95% to 14.95% (Fixed rate). AMOUNT Generally Rs.1-10 crore. Minimum Sub-debt will be Rs. 25 lakh.. Maximum Assistance: (i) For SME3 and higher ratings : 50% of Tangible Networth. (ii) For SME4 and below ratings : 33% of Tangible Networth. RATE OF INTEREST Ranging between 13.95% to 14.95% (Fixed rate). Pre-payment Charges As per applicable Scheme Norms REPAYMENT PERIOD Moratorium - Min 3 years. Max 4 years. Total tenure 7 years DER When treated as quasi-equity - overall DER not more than 2 :1, Otherwise 3 : 1

NORMS continue… SECURITY OTHERS No collaterals insisted. Only residual charge on the business assets is obtained and hence improves credit rating of secured loans. Simpler documentation. Personal Guarantee of promoters. OTHERS Subordinated in ‘Repayments’ and ‘Security’ to senior lenders With or without conversion option - can be given to partnerships/ prop. Concerns Accepted as Quasi-equity by SIDBI for DER purposes. Could be used effectively to bridge the gap in the means of finance. Since the assistance under the scheme is without asset cover/ security comfort, hence there is a high element of risk attached. As such, enterprise / promoters having high level of financial discipline, proven track record, sound business plan, etc. will be considered for assistance under the scheme.

SIMPLER DISPENSATION Simpler Dispensation mode, faster process for providing Sub Debt / OCSD UPTO Rs.100 lakh only to SIDBI’s existing well performing customers. at least 2 years of satisfactory payment track record with SIDBI (including one full year of principal repayments) with SME3/ SER3/ LSME3/ CAA/ RAA (rating not more than 6 months old). OR at least 4 years of satisfactory track record with SIDBI (including 2 full years of principal repayments) with SME4/ SER4/ LSME 4/ CA/ RA rated customers (rating not more than 6 months old). Financial position is satisfactory with profits during the last 3 years. The borrower and associate concerns are not in default to any bank and FI.

Thank You