SIDBI : Start-up Assistance Scheme (SAS)
Objective & Purpose:
To provide structured financing for “startups” and “early
stage enterprises” mostly in sectors which traditionally do not involve physical
assets like technology, biotech, asset light service sector businesses, web/
mobile based businesses, clean technologies, social ventures, etc. Innovative
business models in other asset based sectors could also be considered
The financing instruments would have structural flexibility
and features to enable maximum chances of the project stabilization. The key
objective is to help small enterprises achieve operational stability or hand
hold to get mainstream bank financing or facilitate further angel/Venture
Early stage units where revenue has commenced after
product acceptance by – At least one corporate customer with repeat orders,
or – In case of retail consumers, a trend of revenue for 6 months.
Early stage Micro, Small & Medium Enterprises (MSME) as
defined in the MSMED Act, 2006 (Constitution of the units to be Private Limited
– Generally not in existence for more than 5 years; or
– not received adequate and regular bank credit facilities (except under Credit
Guarantee Trust for Micro & Small Enterprise or Over Draft against Fixed
– Could have incurred losses in past years. However, a clear plan for
profitability (EBIDTA, cashandnetlevel)shouldbeinplaceovernext2years
Instruments of assistance :
Optionally Convertible Debt (OCD) (OCD is a debt
instrument where SIDBI has the right to convert entire/part outstanding
amount into equity capital whenever a pre-determined event triggers)
Overall exposure could also include non-fund based facilities
like Bank Guarantee, Letter of Credit, etc.
Sub debt (SD) (Sub debt is subordinated in security &
repayments to lenders who have given secured loans to the enterprises and is
quasi equity in nature) could also be considered (upto 50% of networth) under
SAS in case companies have prior bank assistance.
Quantum of assistance :
Need based subject to a maximum of `200 lakh and Equity
kicker (1%-2% equity on paid up capital at par or suitably structured
Assistance will be generally released in tranches based on
Eligible heads for financing:
Capital Expenditure, Working Capital, Intangible project
heads, Preliminary and Pre-operative expenses, Interest During Construction
period (IDC) / Stabilization fund, Contingencies, any other bona fide head
required for the project/ business.
Rate of Interest (coupon rate) :
The assistance shall generally be secured by first charge
on tangible assets, acquired under the assistance.
The assistance may also be covered under the Credit Guarantee
Scheme of CGTMSE (Credit Guarantee Trust for Micro and Small Enterprises)
subject to availability of primary security including some tangible assets;
Units assisted under the above arrangement shall bear all the expenses and fees
for coverage under CGTMSE.