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Loan SIDBI

SIDBI SMILE — MSME Term Loan

Term loan ₹10L–₹25L for new units and expansion

Maximum benefit
₹25 L
Typical processing
45–75 days from complete application to sanction
Apply on official portal

About this scheme

SIDBI Make in India Soft Loan Fund for MSMEs (SMILE) is a flagship lending product of Small Industries Development Bank of India aimed at the manufacturing and services sectors aligned with Make in India objectives. SMILE provides quasi-equity (soft loans with subordinate features) and term loans at concessional interest rates, covering project costs including infrastructure, machinery, and working capital margin.

What you get

  • Soft loan up to Rs. 25 lakh per project (or 20% of project cost, whichever lower)
  • Concessional interest: ~9.5%–11.0% per annum (lower than market term loans)
  • Soft loan features: longer tenure (up to 10 years), 36-month moratorium possible
  • Quasi-equity treatment — improves debt-equity ratio for further bank borrowing
  • Repayment flexibility: ballooning structure possible
  • Can be combined with bank term loan for the residual project cost
  • Hand-holding by SIDBI Make in India team for compliance and progress monitoring

Who qualifies

Existing and new units in 25 priority sectors under Make in India: automobiles, aviation, chemicals, defence, electronics, food processing, IT, leather, media, mining, oil & gas, pharma, ports, railways, renewable energy, roads, space, textiles, thermal power, tourism, wellness, etc. Eligible entities: proprietorship, partnership, LLP, OPC, private/public limited. Project cost up to Rs. 25 crore; SIDBI funding up to 20% as soft loan, plus standard term loan for the rest.

Industries (NIC divisions)
Food processingBeveragesTobaccoTextilesApparelLeatherWood productsPaperPrintingCoke / petroleumChemicalsPharmaPlastics / rubberNon-metallic mineralsBasic metalsFabricated metalsElectronics / computersElectrical equipmentMachineryMotor vehiclesOther transportFurnitureOther manufacturingRepair of equipmentMotor vehicle tradeWholesale tradeRetail trade
Business types
ProprietorshipsPartnershipsPrivate LimitedLLPsOne Person Companies

Available across India (central scheme).

How to apply

  1. 1Approach SIDBI directly or via partner bank with project proposal
  2. 2Prepare Detailed Project Report (DPR) covering technology, market, financials
  3. 3Submit application: DPR, financial statements (last 2 years if existing), promoter KYC, collateral details
  4. 4SIDBI credit appraisal: 30–60 days; on-site visit by appraisal officer
  5. 5Sanction issued; loan agreement + security documentation
  6. 6Disbursement in tranches linked to project milestones
  7. 7Periodic monitoring throughout project implementation

Key terms and conditions

  • Soft loan tenure: up to 10 years (including 36-month moratorium)
  • Term loan tenure: 7–10 years (standard SIDBI policy)
  • Promoter's margin: 25%+ for new units, 15-20% for existing
  • Asset hypothecation + extension of charge for security
  • Interest reset typically every 3 years

What disqualifies you

  • Activities outside the 25 Make in India sectors are not covered
  • Real estate, financial services, capital market activities excluded
  • Project cost > Rs. 25 crore handled separately under regular SIDBI loans
  • Existing units must have at least 1 year operational history
  • Defaulters to SIDBI or member banks not eligible

Documents typically required

  • Udyam registration
  • Project report
  • Last 2 years ITR
  • Promoter KYC
  • Collateral documents

Frequently asked questions

Q. Is the soft loan really a loan or is it a grant?
It is a loan — repayable with interest. But it has equity-like features (longer tenure, moratorium, lower rate) that make it easier to service than standard debt.
Q. Can I get the SMILE loan along with bank financing?
Yes — SMILE typically covers 15-20% of project cost; banks finance the rest. SIDBI and the bank co-lend on the project.
Q. What is the difference between SIDBI's direct loan and a bank loan?
SIDBI specialises in MSME financing with sector-specific expertise (especially Make in India sectors). The rates are often lower, and the policy is more conducive to manufacturing setups.

The content above is compiled from public information published by the scheme authority. Eligibility, benefits, and procedures are subject to change. Confirm details directly with the official portal before applying. BharatSeal does not process scheme applications.