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MSME Stands to Gain As ECLGS Scheme Extended till 2023

by AndrewSmith

During the Union Budget of 2022-23, the Finance Minister announced the extension of validity and scope of the ECLGS scheme for MSMEs till March 31, 2023, considering the pandemic. This scheme has always extended necessary additional funds to more than 130 lakh MSMEs, allowing them to reduce the negative effect of a pandemic.

The hospitality and related services, especially those by MSMEs, are about to regain their business level. This ECLGS scheme will be extended up to March 2023, and the guaranteed coverage will be expanded by Rs.50, 000 crore to Rs.5 lakh crore. Read along to know more about this scheme in detail.

An overview of Emergency Credit Line Guarantee Scheme (ECLGS)

In 2020, the country’s finance ministry introduced this scheme to offer financial assistance to the pandemic-hit economic structure. Through this scheme, the Government aims to extend Rs.3 lakh crore of collateral free loans for MSME and organisations across the country to alleviate the significant losses in the last two years.

Keeping this impact in mind, the Indian Government extended the deadline of this scheme till March 2023. In addition, this ECLGS scheme provides financial assistance to companies from different sectors, such as hospitality, sports, travel and tourism sector, etc.

Purposes of ECLGS scheme

This scheme provides 100% guaranteed coverage to financial institutions and other lending institutions, allowing them to extend emergency credit to business entities that have suffered during a pandemic and are struggling to meet working capital requirements. Such a government-backed programme is divided into four categories such as ECLGS 1.0, ECLGS 2.0, ECLGS 3.0 and ECLGS 4.0.

These categories offer business loans to borrowers belonging to different sectors for a certain repayment tenor. Below discussed are the objectives of this scheme in detail:

  • As per ECLGS scheme, it offers necessary financial support extended by National Credit Guarantee Trustee Company Limited to the MLIs, NBFCs etc.
  • It increases access and enables the availability of additional funding advantages to MSME and MUDRA borrowers. It further reduces economic distress witnessed by the MSMEs.
  • Moreover, it ensures an affordable MSME loan interest rate against the borrowed funds, thereby allowing small business to meet their operational liabilities and restart manufacturing and production with ease.

Eligibility for Emergency Credit Line Guarantee Scheme

The eligibility parameters for the application of this scheme are mentioned below:

  • The borrower must be a member of GST registrar. This is one of the main criteria that need to be fulfilled before applying for this scheme.
  • The applicants with SMA 2 or NPA are not eligible for this scheme. There are least chances of getting credit for businesses that individuals solely operate.
  • The majority of these schemes are extended to businesses with partnerships, trusts, authorized small and registered companies.

Alternatively, young business owners can also opt for business loans from leading financiers like Bajaj Finserv at an affordable interest rate and plausible lending terms. Moreover, individuals must know about the ideal credit scores to have when applying for business loans to get competitive rates and flexible tenors.

Furthermore, availing credit from these leading financial institutions can avail pre-approved offers on a range of financing options, such as personal loans, business loans, credit cards, etc. These offers significantly alleviate the hassle of extensive documentation and save time. Therefore, existing borrowers can check their pre-approved offers by mentioning their names and contact details.

Conclusively, to revise economy that witnessed major disturbances due to the COVID lockdown, the Government of India took charge of making the country self-dependant under ECLGS scheme. All reputed lenders extend flexible eligibility parameters for borrowers seeking credit for meeting their operational liabilities. To boost the Indian economy, the Government has extended the ECLGS scheme to financially support small-scale organizations and help them develop their businesses.

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