COVID Loan for Small Business and MSME – Should You Opt?

COVID Loan for small business and MSME is a new option for the business people facing a cash crunch due to Coronavirus. It is a known fact that coronavirus pandemic is creating financial crises in the whole world including India. The lockdown condition forcing a business shutdown and thus a problem of liquidity.

To help businesses during this tough time banks and financial institutions have come up with COVID Loan or COVID 19 emergency credit line. The facility is available to almost all small businesses and MSME. The sanctioned amount is based on creditworthiness.

Here is list of 5 COVID 19 emergency credit line or COVID Loan offered to business.

#1 SBI Covid 19 Emergency Credit Line Loan

SBI Covid 19 Emergency Credit Line is a special type of loan offered to businesses at the time of the virus outbreak. The SBI Covid 19 Emergency Credit Line Loan is available up to 30th June 2020. All the standard account holders of SBI are eligible for this loan. Key features of SBI COVID Loan are given below.

  • The maximum loan permissible under this scheme is 2 Cr.
  • The interest rate is 7.25%.
  • The maximum tenure of this credit line loan is 12 months.
  • The repayment structure is uniform up to 12 months. This loan also supports moratorium benefit.
  • The customer with existing loan at SBI can top up the loan by 10% during Corona crisis.

The sole purpose of this loan is to ease the business condition and help businesses during Corona Outbreak.

Also Read – How to do Home Loan Balance Transfer & Top Up?

#2 Bank of Baroda Emergency Credit Line for MSME

Bank of Baroda has also launched Emergency Credit Line for MSME. It is like short term loan/demand loan to existing MSME and corporate borrowers who have been affected by COVID-19. The key features of this loan are given below.

  • This loan is offered to all standard accounts that are not classified as special mention accounts.
  • The rate of interest of this loan is 8.15%.
  • The tenure of this loan is 24 months.
  • The moratorium of six months up to 15% of loan amount is permissible.
  • 80% of this loan is backed by shares and other receivable.

More information about Baroda Covid Emergency Credit Line – BCECL is available on Bank of Baroda website.

#3 Indian Bank COVID-19 emergency Loan for MSME

Indian Bank offers five special emergency loans for corporates, MSME, salaried employees, pensioners and self-help groups. This loan is offered to all MSME borrowers who are having working capital limits with Indian Bank. This loan is also known as IND-MSME Covid Emergency Loan.

  • The maximum loan amount offered under this category is 50 Lakh.
  • The interest rate is 8.75% fixed.
  • The repayment period is 3 years for 25 lakh and 5 years for above 25 lakh.
  • No processing charge applicable for this loan.
  • The moratorium period of this loan is six months.
  • This loan is available up to 30th Oct, 2020.

#4 Indian Bank COVID-19 emergency loan to Salaried Employee

Indian Bank also offers loan to salaried employees. This loan is also known as IND-COVID Emergency Salary loan. This loan is offered only if your salary account is maintained with Indian Bank. This loan is given to permanent employees of the government or reputed companies with 2 years of continuous service. Key features of this loan are given below.

  • The loan amount is 20 times the latest monthly gross salary up to maximum 2 lakh.
  • The loan tenure is up to 3 Years.
  • The rate of interest is 9.5% per annum fixed.
  • The moratorium period for this loan is six months.
  • It is medium term loan without any processing fee.

#5 Union Bank Emergency Line of Credit for MSME

Union Bank Emergency Line of Credit is for MSME. This loan is given to existing term loan borrowers irrespective of sector. The maximum loan amount under this scheme is 50 Cr. Key features of this scheme are given below.

  • The rate of interest is 8%.
  • It is term loan with repayment period up to 2 years.
  • This loan is available up to 30th Sept, 2020.
  • The moratorium period for this loan is 12 months.
  • The processing fee for this loan is NIL.

Covid India Loan

Should You Opt – COVID Loan?

The Covid Loan offers following benefits to customers.

  • You can fight against financial crisis that you might be facing due to business shutdown during this outbreak. The loan will also help you to continue your business smoothly.
  • As complete country is in lock down and the sales of your business might have gone down. The loan can help you to compensate the losses.
  • You might have taken raw material on credit as business is in shutdown you may not able to make payment to creditors on time. This loan will help you to make payment to your creditor.

If you are going through cash crunch and require money for running your business, you can opt for COVID loan.

This loan comes moratorium benefit. The moratorium is a temporary suspension of EMI. This means you need not pay EMI for a temporary period of a few months. The EMI and interest need to be paid after the moratorium period is over. It is just delay of principal & internet payment. It is not interest waiver. If you opt for this benefit you will end up paying extra interest. The only benefit is no penalty is applicable and CIBIL score is not affected.