– Sanjay Chavre, Advisor, TAGMA India
Working capital is the lifeblood of small and medium enterprises (SMEs), enabling them to manage daily operations, meet short-term obligations, and drive business growth. Recognising this, the State Bank of India (SBI) offers a wide array of working capital instruments tailored for SMEs. These facilities support businesses at various stages whether established exporters, start-ups, women entrepreneurs, or micro-enterprises providing structured financial solutions key to sustaining competitiveness in today’s dynamic market environment.
SBI’s Working Capital Instruments for SMEs
1- Loans Against Property:
- Target Group :All Business Units who want to avail loan facility for manufacturing and services activities along with self-employed and professional individuals, wholesale/retail trade.
- Facilities Available :Drop-line Overdraft facility, Cash Credit, NFB Facility
- Quantum of loan :
- Minimum: Above Rs.10.00 lakh.
- Maximum: Rs.5.00 Cr.
- Pricing :
- Attractive Interest rates based on rating of the Borrower/ External Rating or as per Scheme Specific Rating (if applicable) or as per extant guidelines of the Bank. EBR (Linked to Repo Rate and Currently EBR is Repo Rate + 2.65%) linked (for MSMEs) & 6 months MCLR linked (for Non-MSMEs)
- Borrower’s Margin / Contribution :25%
- Repayment Period
- Dropline Overdraft Limit :Limits can be sanctioned for a period of 12 months to 180 months. The moratorium under the scheme should not be more than 6 months based on activity. Interest to be serviced monthly during the moratorium period.
- Cash Credit :On Demand. (No Moratorium)
- Processing Fee/ Upfront Fee :Up to 0.65% of the loan amount.
2- SBI Exporters’ Gold Card Scheme
| Parameter | Brief Information |
| Objective | Hassle-free availability of export credit on best terms for creditworthy exporters with good track record |
| Eligibility criteria | (a) Existing customers/new connections who fulfil the following criteria will be eligible for SBI Exporters Gold Cards: – i. Accounts classified as ‘Standard Asset’ continuously for a period of last three years. ii. No irregularities/ adverse features observed in the conduct of the accounts. However, occasional overdrawings should not be construed as an adverse feature. iii. The exporter has not been blacklisted by ECGC and/or included in RBI defaulters’ list/caution list. iv. The unit has not incurred losses during the past three years. v. Overdue export bills of the unit are not in excess of 10% of the previous year’s turnover. (b) Greenfield projects, may also be considered under the Scheme by the appropriate sanctioning authority on a case to case basis. (c) In case of take-over of the account, the extant take over norms should be complied with, together with the other eligibility norms listed above. |
| Assessment of Credit Limit | i. Sanction and renewal of the limits under the Scheme is based on simplified procedure ii. Standby limit of 20% will be sanctioned over and above the assessed fund based and non-fund based limits, to meet credit demands arising out of receipt of sudden orders etc. |
| Time Limit | Time frame for disposal of applications: – For disposal of fresh applications : 25 days – Renewal of limits : 15 days – Sanction of ad hoc limits : 07 days |
| Rate of Interest | Competitive rate of Interest on Pre & Post Shipment Rupee/ Foreign Currency Export Credit. |
| Service Charges /ECGC Premium | Simplified Service Charges structure for Export Credit Customers. Based on value of account further concession in Service charges may be provided at the Bank’s discretion. Exemption from ECGC guarantee in deserving cases at the Bank’s discretion. |
| Benefits to Exporters | Better terms of credit Simplified Applications process Faster processing of applications Limits sanctioned for 3 years with renewal subject to fulfilment of the terms and conditions of sanction Preference for grant of packing credit in foreign currency (PCFC) Provision for concessions in Interest Rates Standby limit for meeting exigencies |
3- Trade Receivable Discounting System (TReDS)
To help MSMEs unlock the funds lying in trade receivables at competitive interest rate RBI has come up with the concept of Receivables Exchange called TReDS platform. TReDS Platform (Trade Receivable Discounting System) is an institutional mechanism set up for financing of trade receivables of MSMEs from corporates and other buyers including Government Departments and Public Sector Undertakings (PSUs) through multiple financiers.
RBI has issued license to four entities to operate TReDS platform in India, namely Receivables Exchange of India Limited (RXIL), Mynd Online National Exchange (M1) ,Invoicemart (A.TReDS) and C2FO.
Eligible participants in the TReDS platform include Buyers, who purchase goods from sellers and pay at the end of the credit period, Sellers, who provide goods and services to large buyers and raise invoices for payment after the credit period, Financiers, who buy the sellers’ invoices and assume ownership of receivables to be paid by the buyer on the due date, and the Exchange Platform entities operating TReDS platforms in India.
The key benefits to participants are categorized for all participants, buyers, and sellers. For all participants, benefits include easy and quick access to funds, an end-to-end digital platform and payments system, competitive discount rates through an auction mechanism, a system-driven and transparent process, a paperless and hassle-free procedure, minimal administrative costs, and added benefits specifically for existing SBI customers.
For buyers, benefits include efficient risk management and reduced operational costs. Sellers benefit from timely payment of receivables, efficient risk management, reduced operational costs, and better liquidity management, all enhancing their working capital and cash flow management through the digital and transparent TReDS framework. This setup facilitates improved financial inclusion and operational efficiency among MSMEs and their corporate buyers.
4- SME Loan to Women Entrepreneur- SBI Asmita
Loan under this facility can be sanctioned for any legitimate commercial purpose, such as:
- Working capital needs
- Acquisition of machinery for modernization/ Expansion/ Renovation etc.
- For buying equipment by Self Employed Professionals/ Persons, Proprietorship and all other constituents.
- Design and introduction of new layouts in the factory to enhance productivity.
- Acquisition of consumable tools, jigs, fixtures, vehicles, equipment, furniture upholstery, etc.
- Purchase of new and old Commercial vehicle.
- Any other business-related purpose.
The above list is only illustrative. Loans for any legitimate requirement connected with the business activity of the applicant/ borrower (s) can be considered.
The facility offered is a Term Loan, Working Capital, Overdraft, and Non-Fund Based Facility. The quantum of the loan is above Rs 10,00,000/- as the minimum and up to Rs 5 Crores as the maximum. The loan term for Cash Credit is repayable on demand, and the loan is to be renewed every year. For Term Loan and Dropline Overdraft, the period is not more than 7 years, including a moratorium not exceeding 6 months, and an annual review is to be done for all loans. Repayment for Cash Credit is repayable on demand.
For Term Loan and Dropline Overdraft, the principal is equally distributed, with negotiated repayment for Term Loan and monthly reducing DP for Dropline Overdraft. Pre-payment is allowed without any pre-payment penalty. The pricing is competitive and linked to EBR, which is currently linked to the Repo Rate plus 2.65%. The security structure includes primary hypothecation of stocks, machinery, and movable assets acquired out of the Bank’s finance, with no collateral required. Personal guarantee is required from the proprietor, partners, and all the promoters’ directors as per the constitution of the firm. All eligible loans under SBI Asmita are covered under CGTMSE.
5- Loans to MSMEs above ₹10 Lakh to ₹5 crore [SME e-Smart Score]
The objective/purpose of the loan is to meet working capital needs and acquisition of fixed assets. The features include the target group, which comprises individually managed proprietary or partnership firms, as well as closely held public or private limited companies operating in the small and medium industrial and trading sectors under the C&I and SIB segments. Facilities available are cash credit and term loans, with the quantum of the loan ranging from above ₹10.00 lakh to ₹5 crore. Pricing is competitive and linked to the EBR (External Benchmark Rate), which itself is linked to the Repo Rate; currently, EBR is the Repo Rate plus 2.65%. The borrower’s margin or contribution is 25% for the working capital component and 33% for the term loan component.
The repayment period for working capital is repayable on demand, while term loans are capped at a maximum of 7 years, including a moratorium not exceeding 6 months. Processing fees or upfront fees are applicable as per the latest instructions for MSME units by the bank. Other charges are as per the bank’s guidelines and will be apprised to the borrower before loan sanction. Collateral security is managed as per the bank’s extant norms for working capital and term loans.
A special feature for term loans is the requirement of a project report covering the tenure of the loan, which must be obtained and processed per the bank’s norms. Eligibility criteria specify that the chief promoter or chief executive should be aged between 18 and 65 years. Additionally, the applicant must secure a minimum overall score of 60% with at least 50% under each sub-head like personal details, business details, and collateral details using the bank’s internal scoring model.
6- Finance to Start-ups (MSME UDAAN)
Objective/ Purpose :To provide financial assistance to Start-ups in MSME for their various requirements as below:
- 1. Prototype creation, product / website / app development
- 2. Team hiring
- 3. Legal and consulting services
- 4. Raw material and equipment’s
- 5. Licenses and certifications
- 6. Marketing and Sales
- 7. Purchase / Leasing of Office spaces and administrative expenses
The features of the loan for start-ups classified as MSMEs and registered or recognised by DPIIT, Government of India, include the requirement that start-ups have a sustainable business model and an established Proof of Concept, which involves testing assumptions to confirm feasibility, viability, and practical applicability. Additionally, the start-up should be supported by recognized incubators, accelerators, or investors as per the Start-up India portal. The facilities available under this loan include term loans, working capital (fund based, non-fund based, or cash credit facility (CEL)). The quantum of loan can be a maximum of Rs. 50 crores, categorized into two segments: up to Rs. 50 lakhs, and above Rs. 50 lakhs up to Rs. 50 crores.
Pricing is set at attractive interest rates based on the borrower’s rating, external rating, or as per scheme-specific rating applicable, or according to the bank’s existing guidelines. The pricing is linked to the External Benchmark Rate (EBR), which is linked to the Repo Rate, with the current rate being Repo Rate plus 2.65% for MSMEs, and a 6-month MCLR linked rate for non-MSMEs. Borrower’s margin or contribution is nil for loans up to Rs. 10 lakhs. For loans above Rs. 10 lakhs, term loans follow the debt-to-equity ratio specified under the product, and working capital requires a minimum 25% margin on stocks and receivables, if any.
The repayment period allows for door-to-door repayment of up to 120 months maximum, including the moratorium period, and bullet repayment may be allowed. Processing fees or upfront fees are as per the bank’s extant guidelines, and there are no other charges. A special feature of this product is that financing will be offered only through select branches, authorized by the bank’s circle. Existing start-up accounts financed under the bank’s usual credit dispensation will be migrated to these designated start-up branches, which provide dedicated value-added services and cater to the entire value chain/ecosystem for start-ups.
7- Small Business Loans: Small Loan upto Rs.10.00 lakh- SME Credit Card
The purpose of this facility is to meet any kind of credit requirements, including the purchase of a shop. The target group for this loan includes all micro enterprises, SSI units, SBF (Small Business Firms), retail traders, village industries, tiny units, professionals, self-employed individuals, and MSME units. Facilities available under this scheme include cash credit and/or term loan.
The quantum of the loan can be a maximum of up to Rs 10.00 lakhs. The pricing features attractive interest rates based on the rating of the borrower, external rating, or as per scheme-specific rating if applicable, or applicable as per the extant guidelines of the bank. The rates are linked to the External Benchmark Rate (EBR), which is linked to the Repo Rate, and currently, the EBR is Repo Rate plus 2.65% for MSMEs and 6 months MCLR linked for non-MSMEs.
The borrower’s margin or contribution is nil for loans up to Rs 50,000, and 10% for loans ranging from Rs 50,001 to Rs 10 lakhs. Regarding the repayment period, cash credit is repayable on demand with a validity of three years subject to annual review. For term loans, if the loan amount is less than Rs 5 lakhs, the maximum tenure is 5 years including a moratorium period up to 6 months, with an annual review. For loans Rs 5 lakhs and above, the maximum tenure is 7 years including a moratorium period of up to 12 months, with the interest to be serviced during the moratorium period.
Processing Fee/ Upfront Fee :
| Processing Fee | Upfront fee |
| Unified Processing Fee: | Rs 1000/- + GST |
| Unified Upfront Fee: | NIL |
Other charges for the loan are as per bank guidelines and will be apprised to the borrower before the sanction of the loans. A special feature of this loan scheme is that there is nil collateral security required. All loans under this scheme are covered under the Credit Guarantee Fund for Micro Units (CGFMU) as part of the Mudra Scheme. However, accounts that have already been opened and for which fees are being paid under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) will continue.
The assessment of the loan limit is done based on working capital and term loan requirements. For working capital, it is set as 20% of the turnover of the last 12 months through the account. For term loans, the assessment is based on the total project cost less the stipulated margin. For self-employed individuals and professionals, the assessment is 50% of their gross annual income as declared in their income tax return. This structure facilitates collateral-free access to finance for micro and small enterprises while providing banks risk coverage through CGFMU, thereby boosting credit flow to the MSME sector.
Conclusion
SBI offers an extensive suite of working capital solutions tailored to the diverse challenges of the SME sector. From traditional loans secured against property to specialised export and start-up credit schemes, these instruments are designed to support growth, manage liquidity, ensure competitiveness, and promote entrepreneurship across segments. With features like digital access, concessional pricing, dedicated products for women entrepreneurs, and sector-focused evaluation, SBI’s portfolio stands as a robust pillar for India’s evolving SME ecosystem.
About the Author
Sanjay Chavre is Advisor to TAGMA India.
A respected technocrat and policy strategist, Mr. Chavre has been a pivotal figure in the evolution of India’s manufacturing and tooling ecosystem. With decades of experience at the intersection of government and industry, he has contributed to the development of forward-looking policies that promote indigenous technology, strengthen domestic capabilities, and uplift MSMEs within the tooling and precision engineering sectors.
Mr. Chavre has held key roles in various government departments. He has been instrumental in formulating and executing initiatives that align with India’s long-term vision for industrial growth and self-reliance. His expertise lies in enabling public-private collaboration, fostering innovation ecosystems, and building frameworks that support sustainable industrial development.
In his current role as Advisor to TAGMA India, he continues to guide efforts aimed at enhancing the global competitiveness of Indian toolmakers. His insights have been vital in positioning the Indian tooling industry as a reliable and technologically advanced partner in the global supply chain.
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