GECL Scheme: Pre-Approved Loan Scheme for Eligible Business Enterprises; Micro, Small and Medium Enterprises

A special loan of Rs 3 lakh crore was announced by the government for eligible business enterprises/MSMEs (Micro, Small and Medium Enterprises) to deal with the impact of the Corona crisis. This scheme was announced under the Rs 20 lakh crore package of the Government of India. According to the information, GECL is a loan for which 100% guarantee will be provided by National Credit Guarantee Trustee Company to member credit institutions (MLIs).

Main purpose of GECL Scheme

The main purpose of GECLS is to provide financial assistance to MSME firms facing difficulties due to the Corona crisis. The main objective of this scheme is to provide assistance of Rs 3 lakh crore in the form of fully guaranteed emergency loan to mitigate the similar economic crisis faced by MSMEs. Financial institutions will be encouraged to provide low cost loans through GECLS.

Scheme Highlights/Features

• Additional working capital term loan facility.

• This scheme will also cover loans given under Mudra Yojana till 29 February,2020.

• The interest rate of the scheme is 9.25% for banks and financial institutions and 14% for NBFCs. The principal amount should be repaid in 36 installments after the initial moratorium period of 12 months.

• No fresh collateral security required.

• Loans granted under GECL will be for a period of four years and there will be no penalty for early repayment of loans.

• Period of loan is 4 years with a grace period of one year on the principal amount under the scheme

• MLI will be provided with 100% credit guarantee by NCGTC on the entire amount offered by GESL.

• No processing fee and Prepayment penalty.

Who is eligible for the GECL scheme?

• All business enterprises or MSMEs that have a combined outstanding loans across different banks, NBFCs and FIs up to Rs. 25 crore as on 29.2.2020 and when the annual turnover of the firm is up to Rs. 100 crore for FY 2019-20 is eligible for the Scheme.

• Proprietorship, partnership, registered company, trusts and Limited Liability Partnerships (LLPs) are all eligible under the Scheme, but only the loans taken for the business is being covered.

• Any loan taken by a promoter or director in his personal capacity will not be covered under the scheme.