The Government has decided to expand the emergency credit line guarantee scheme and provide a special credit scheme for solo entrepreneurs too.
Earlier in May, Finance Minister Nirmala Sitharaman launched the emergency credit line scheme of ₹ 3 Lakh crore for the Indian MSME sector.
However, it did not stand to benefit solo entrepreneurs who do not hire a workforce. This led to banks rejecting loan applications from these businesses. The Finance Minister has issued a statement that prevents banks from doing so.
3 Features of special credit scheme for solo entrepreneurs
- The individual loans will be distributed to any solo business owner. A large number of borrowers take loans under the emergency credit scheme in their individual names, which is not allowed. Thanks to the special scheme allotted, they can now apply for individual loans under emergency credit to banks and NBFCs.
- The expansion of the credit scheme will cover truck drivers, khirana store owners, taxi drivers, lawyers, doctors, agriculture equipment owners. The scheme will especially help anyone who wishes to apply for a vehicle loan.
- Over ₹ 18,000 crores have been disbursed to NBFCs for the loan scheme. NBFCs are the primary lending institution for solo entrepreneurs to avail credit.
CNBC-TV18 Newsbreak confirmed; Govt to extend the Emergency Credit Line Guarantee Scheme to individuals now. Here’s more by the Finance Minister pic.twitter.com/nXspxsgcYC
— CNBC-TV18 (@CNBCTV18Live) August 1, 2020
What is Emergency credit line scheme?
The scheme is part of the Aatmanirbhar Scheme by PM Narendra Modi. The emergency scheme was launched on May 23rd and is open till October 31st to everyone in the MSME sector in India. Under the scheme:
The MSME sector gets access to over ₹3 lakh crore. As per a Financial Express update, the annual turnover limit of companies to be eligible to tap the scheme will be raised to ₹ 250 crores from ₹ 100 crores now, in sync with the New definition of MSMEs.
Did you know, as part of atmnirbhar bharat package, MSMEs having outstanding loan of Rs25 Crore & upto Rs100 crore turnover, are eligible to apply for Rs3.00 lakh crores Collateral free gurantee free loan. Our Champions control rooms are there to help you.https://t.co/wqwiXAwO2L pic.twitter.com/2J64YtfeJE
— Ministry of MSME (@minmsme) June 11, 2020
Banks and lending institutions interest rates now cap at 9% PA, NBFCs at 14% maximum. The Emergency credit line scheme provides 20% additional credit free of interest to the entrepreneurs.
Government has ramped up the outstanding loans limit from ₹25 crore to ₹ 50 crores.
InstaCash – Short loans for everyone
Over 60% of businesses today suffer in the pandemic because of a shortage of cash flow. The emergency credit line for solo entrepreneurs helps you with long term capital needs like vehicles and equipment. However, if your business is in need of urgency capital, do not resort to hard cash from loan sharks.
Take an online, secure route. InstaCash, powered by Instamojo, is the short term loan you need to help your business bounce back.
Features of InstaCash Short term business loan
- InstaCash allows eligible customers to borrow up to ₹ 1 Lakh based on the underwriting policy, for a period of either 7 days or 14 days.
- Simply place a request for the loan amount by clicking on the InstaCash option on the Left-Hand Side of your dashboard.
- Once approved, your bank account is credited with the InstaCash amount.