SIDBI : Growth Capital & Equity Assistance Scheme for MSMEs
Objective & Purpose:
To provide growth capital to deserving Micro, Small & Medium
Enterprises as defined under MSMED Act 2006, for:
a) Bridging the gap in the means of finance for expansion/
modernization/ scaling up. New businesses/ diversification by entrepreneurs with
established track record can be considered, selectively.
b) Intangibles or non-asset creating investments viz product
development, marketing related expenditure, R&D, investments in quality control,
energy efficiency equipment, etc.
c) Margin money for working capital or working capital on
selective basis d) Any other bonafide expenditure required for growth of the
The enterprise should be an MSME as per MSMED Act, 2006 at
the time of application for assistance ; and fulfils any one of the following
a) 3 years profitability ; and
b) 2 year satisfactory banking track record ;
c) Preference will be given to Customers assisted by Private Equity investors /
Venture Capital Funds / Angel funds
Instruments of assistance :
(i) Non-participatory Debt Products :
(a) Subordinated Debt (SD) viz. a debt based assistance which is subordinated to
other secured debt and is quasi-equity in nature.
(ii) Participatory Debt Products
(a) Debt products with royalty participation
(b) Debt products with equity participation such as Optionally Convertible Debt
(OCD), Optionally Convertible Subordinated Debt (OCSD) viz. Debt which is
convertible to Equity alongwith Equity kickers
(iii) Equity based products viz. Optionally Convertible
Cumulative Preference Shares (OCCPS)
Quantum of assistance :
a) Upto 7 years (including need based moratorium). Depending
upon the cash flows and requirement of the customer, lower tenure can also be
b) For equity investments, the exit should be proposed within the above period.
c) Repayment could be structured in a flexible manner based on the cashflows of
Rate of Interest (coupon rate) :
As per the prevailing rate structure of SIDBI based on
Generally, 2%-3% above SIDBI’s Prime Lending Rate.