The Covid-19 lockdowns imposed over the last two years has impacted businesses in India a lot. But, it’s the Small & Medium sector businesses or MSMEs that have suffered the most because of the pandemic. In order to help these businesses out, the government of India has introduced the Emergency Credit Line Guarantee Scheme (ECLGS) also known as Guaranteed Emergency Credit Line (GECL).
The GECL loan is a part of the economic package worth Rs.20 lakh crore consisting of a variety of solutions for MSMEs to help them meet their day to day expenses. Introduced mainly to help small businesses maintain an appropriate amount of working capital, a credit line, and a steady cash flow. You can read more about the features of this scheme below:
– The Guaranteed Emergency Credit Line or GECL loan is a term loan.
– THE GECL is valid till 31/10/2020 and its value can go up to Rs. 3 lakh crore, the threshold limit set by the Government Of India.
– The purpose of the GECL as defined by the government is that it has been introduced to benefit small businesses who want to take/have taken a small business loan in India. Launched by the National Credit Guarantee Trust Company Ltd or the NCGTC, it is specially meant as an additional term loan facility amidst the Covid-19 pandemic.
– GECL has a tenure of 48 months and in the first year only the interest amount is to be paid, and in the subsequent years, the borrower needs to pay the principal along with the interest amount.
– Certain eligibility criteria like being a registered company, Limited Liability Partnership, or a business that has previously taken an MSME loan need to be fulfilled in order to be eligible to avail of this credit facility. It’s not for borrowers who want to take a fresh loan.
Things to Keep In Mind While Applying For GECL Loan
– It is a collateral-free loan
– There is no prepayment/foreclosure charges
– There is zero processing fees
– Interest rate on this loan is 14% per annum
– GST registration is compulsory in order for borrowers to avail this credit facility.
If you are a business owner who hasn’t taken a loan previously and needs a small business loan in India, there are lots of solutions available in the market today like loans from relatives, banks, crowdfunding, angel investors, and working capital loans are great options to get funds.
In case, if you do not qualify for the GECL scheme, you have the option of an unsecured business loan which is one of the most efficient ways to get funds for managing your day to day business operation. This allows you to get your desired loan amount and focus on running and growing your business operations. You can easily avail of such loans with minimum documentation and get quick approval if you meet the following eligibility criteria: personalised deals help in expediting the loan processing.