Looking to reduce your MSME loan bill?

Look no further. This page contains all the information you will need on Subsidy Linked Schemes for MSME Business Loans offered by Canara Bank.

Canara Bank Subsidy Linked Schemes for Business Loans

Canara Bank offers five Subsidy Linked Schemes to MSMEs, viz:

  1. COIR Udyami Yojana (CUY)
  2. Prime Minister Employment Generation Programme (PMEGP)
  3. Energy Savings for Small and Medium Enterprises (SME)
  4. Deendayal Antyodaya Yojana – National Urban livelihood Mission (NULM) – Self-employment Programme (SEP) for Individual Enterprises (NULM-SEP-I)
  5. Deendayal Antyodaya Yojana – National Urban livelihood Mission (NULM) – Self-employment Programme (SEP) for Group Enterprises and Self-help Groups (NULM-SEP-G)

We look at each in some detail.

COIR Udyami Yojana (CUY)

Features of COIR Udyami Yojana (CUY)

This scheme provides a subsidy to MSME units involved in projects for the production of coir fibre, yarn or products. It is implemented at the national level through the COIR Board, a statutory organisation under the Ministry of MSME, which acts as the nodal agency and at the state level through COIR Board’s regional offices, project offices, etc.

Why this Scheme?

  • The borrower can enjoy subsidies on loans for Capital Expenditure and one cycle of Working Capital
  • There is no income ceiling for assistance for setting up MSME projects under the CUY scheme
  • The Rate of Subsidy is 40% of the overall project cost while Canara Bank finances 55%. The beneficiary puts in 5% of the total project cost under this scheme

Loan Amount

  • The loan amount is Rs. 10 lakh
  • The maximum cost of the project should be Rs. 10 lakh and working capital. This working capital should not exceed 25% of the project cost

Interest

  • As of February 2020, the applicable interest rate for this loan is not mentioned on the bank’s website. You may check with the nearest bank branch who can guide you further

Repayment

  • These loans need to be repaid within 7 years after the moratorium ends
  • As of February 2020, the repayment moratorium for this loan is not mentioned on the bank’s website

Security Needed

  • The bank asks for hypothecation of assets created out of this loan as well as the government grant/subsidy portion of the loan
  • Canara Bank also asks for CGTMSE coverage for this loan

Eligibility

  • The borrower should be between the ages of 18 years and 70 years
  • Only one person from one family can obtain financial assistance for setting up MSME projects in the Coir sector under the CUY scheme

Borrower Contribution to Total Cost (Margin Money)

  • The borrower has to cover 5% of the overall cost

Note: Margin money refers to the amount the borrower contributes to the overall amount required. The bank will cover the rest. For this subsidy scheme, the bank covers 55% and the Govt. covers 40% of the overall cost.

Service Charges

  • No upfront fee is charged on the Govt. sanctioned part of the loan
  • There is no specific mention of charges under this scheme

Other features to Know

  • This is a term loan
  • The project cost includes capital expenditure and the borrower can also include one cycle of working capital. The working capital that is allowed has a maximum limit of 25% of the overall cost of the project
  • The loan for working capital is sanctioned after the unit is set up

Prime Minister Employment Generation Programme (PMEGP)

Features of Prime Minister Employment Generation Programme (PMEGP)

This scheme provides a subsidy to MSME units involved in Manufacturing and Services sectors sanctioned under PMEGP. This scheme is designed to help generate employment in rural as well as urban areas.

Why this Scheme?

  • The borrower can enjoy subsidies on loans for Capital Expenditure; i.e. loans used for setting up projects in the Manufacturing and Services sectors
  • There is no income ceiling for assistance for setting up MSME projects under the PMEGP scheme
  • This scheme is reserved for new projects sanctioned under PMEGP

Loan Amount

  • The maximum loan amount sanctioned for this loan is 90% of the total project cost for beneficiaries in the General category and 95% of the total project cost for beneficiaries in the Other categories
  • The total project cost cannot exceed Rs. 25 lakh for units in the Manufacturing space and Rs. 10 lakh for Service sector businesses

Interest

  • The interest rate will be as per existing guidelines
  • It should be noted that interest rate applicable this loan is not mentioned on the bank’s website as of February 2020

Repayment

  • These loans need to be repaid in 3 to 7 years
  • There is no mention of any repayment moratorium on Canara Bank’s website

Security Needed

  • Eligible units must be covered under CGTMSE

Eligibility

  • The borrower should be above the age of 18 years
  • The beneficiary who wants to set up projects costing more than Rs. 10 lakh in the Manufacturing and Rs. 5 lakh in the services sector must have an education qualification of passing Class VIII
  • Only new projects sanctioned under PGMEP can avail this scheme
  • Self-help Groups including those under BPL who have not availed subsidies under other schemes are also eligible

Borrower Contribution to Total Cost (Margin Money)

  • The borrower may have to cover 15% to 35% of the project cost depending on the location of the project/unit

Note: Margin money refers to the amount the borrower contributes to the overall amount required. The bank will cover the rest.

Other features to Know

  • This is a term loan
  • Negative list of activities is not permitted
  • There is no income ceiling for assistance for setting up projects under PMEGP
  • The applicant must have received approval under PMEGP for the project before applying for this scheme

Energy Savings for Small and Medium Enterprises (SME)

Features of Energy Savings for Small and Medium Enterprises (SME)

This scheme provides a subsidy to SME units involved in acquiring or adopting energy conservation measures. All existing customers of Canara Bank with at least one year of satisfactory dealings with the bank can avail of this subsidy linked scheme.

Why this Scheme?

  • The borrower can enjoy subsidies for acquiring and/or adopting energy conservation measures
  • The loan covers the cost of purchasing energy conservation equipment as well as setting up of the equipment

Loan Amount

  • The maximum loan amount for this loan is Rs. 1 crore

Interest

  • The applicable interest rate for this loan is not mentioned on the bank’s website as of February 2020

Repayment

  • These loans need to be repaid in5 to 7 years from the time the loan was taken, including the moratorium period
  • The repayment moratorium for this loan is 6 months

Security Needed

  • The bank asks for hypothecation of assets created out of this loan as Prime Security
  • Collateral is not mandatory for loans up to Rs. 10 lakh. However, for loans above Rs. 10 lakh, the bank can ask for collateral on a case-to-case basis

Eligibility

  • All units in the Small and Medium Enterprises sector who want to acquire or adopt energy conservation equipment or set-up are eligible for this loan
  • The SME unit applying for this loan must possess the Energy Audit Report issued by a consultant or auditor
  • The total cost of energy for the unit should be at least 20% of the total cost of production

Borrower Contribution to Total Cost (Margin Money)

  • The bank charges 10% of the overall cost as margin money for this scheme

Note: Margin money refers to the amount the borrower contributes to the overall amount required. The bank will cover the rest.

Deendayal Antyodaya Yojana – National Urban livelihood Mission (NULM) – Self-employment Programme (SEP) for Individual Enterprises (NULM-SEP-I)

Features of Deendayal Antyodaya Yojana – National Urban livelihood Mission (NULM) – Self-employment Programme (SEP) for Individual Enterprises (NULM-SEP-I)

This scheme provides interest subsidy to individuals classified as urban poor for setting up gainful self-employment ventures or micro enterprises best suited to their skills, aptitude and local conditions. This is a term loan where the interest rate charged by the bank above 7% is available as a subsidy.

Why this Scheme?

  • The borrower can enjoy subsidies on loans for interest rate over and above 7% charged on the loan
  • The borrower does not have to pay margin for loans up to Rs. 50,000
  • No minimum qualification is required to avail this loan when setting up a self-employment venture or micro enterprise

Loan Amount

  • The maximum loan amount is Rs. 2 lakh

Repayment

  • These loans need to be repaid within 7 years including the moratorium
  • The repayment moratorium for this loan is 6 months

Security Needed

  • This loan is covered under a suitable guarantee coverage for SEP loans as per eligibility. It is decided by Canara Bank on a case-to-case basis

Eligibility

  • The borrower should be between the ages of 18 years and 70 years
  • The borrower should belong to the urban poor category
  • While there is no minimum qualification to avail this loan, if the Small Enterprise or Self-employment Venture required a special skill then the bank verifies the qualification at the time of application

Borrower Contribution to Total Cost (Margin Money)

  • Loans up to Rs. 50,000: NIL
  • Loans Above Rs. 50,000: The bank chargers anywhere from 5% to 10% margin on this loan. The actual margin is decided on a case-to-case basis

Note: Margin money refers to the amount the borrower contributes to the overall amount required. The bank will cover the rest.

Deendayal Antyodaya Yojana – National Urban livelihood Mission (NULM) – Self-employment Programme (SEP) for Group Enterprises and Self-help Groups (NULM-SEP-G)

Features of Deendayal Antyodaya Yojana – National Urban livelihood Mission (NULM) – Self-employment Programme (SEP) for Group Enterprises and Self-help Groups (NULM-SEP-G)

This scheme provides interest subsidy to groups of urban poor including Self-help Groups for setting up gainful self-employment ventures or micro enterprises best suited to their skills, aptitude and local conditions. This is a term loan where interest rate above 7% charged by the bank is available as a subsidy.

Why this Scheme?

  • The groups can enjoy subsidies on loans for interest rate over and above 7% charged on the loan
  • The group does not have to pay margin for loans up to Rs. 50,000
  • No minimum qualification is required to avail this loan when setting up a self-employment venture or micro enterprise

Loan Amount

  • The project cost is Rs. 2 lakh per member or Rs. 10 lakh for the whole group, whichever is lower
  • The Canara Bank loan granted will be either the difference between the project cost and the contribution of group members or four times the groups’ savings, whichever of the two options is lower

Repayment

  • These loans need to be repaid in up to 7 years including the moratorium
  • The repayment moratorium for this loan is 6 months

Security Needed

  • This loan is covered under a suitable guarantee coverage for SEP loans as per eligibility. It is decided by the bank on a case-to-case basis

Eligibility

  • The group should have at least 3 members
  • The ages of group members should be in the range of 18 to 70 years
  • At least 70% of the group members should belong to the urban poor category
  • While there is no minimum qualification to avail this loan, if the Small Enterprise or Self-employment Venture requires a special skill then the bank verifies the qualification at the time of application
  • Self-help groups formed by differently-abled persons are allowed to avail this scheme if they have at least 5 members instead of the 10 prescribed. It may be noted here that this point even though mentioned by Canara Bank runs contrary to the primary eligibility criterion that says only a minimum of 3 members are required in the self-help group to avail this scheme

Borrower Contribution to Total Cost (Margin Money)

  • Loans up to Rs. 50,000: NIL
  • Loans Above Rs. 50,000: The bank chargers anywhere from 5% to 10% margin on this loan. The actual margin is decided on a case-to-case basis

Note: Margin money refers to the amount the borrower contributes to the overall amount required. The bank will cover the rest.

Service Charges

  • Loans up to Rs. 5 lakh: The bank does not levy service charges on working capital loans or term loans for a loan up to Rs. 5 lakh

Documents Needed for Individuals

  • Loan Application Form duly filled and signed by the applicant and co-applicant, if any
  • Two Passport Size Photographs of applicant and co-applicant
  • Personal ID Proof: Aadhaar Card, PAN Card, Passport or Driving License. PAN Card/PAN Card Issuing Letter is must
  • Signature Proof: PAN Card, Banker’s Verification, Driving License or Passport
  • Residential Address Proof (Any One): Aadhaar Card, Electricity Bill, Post-paid Phone Bill, Valid Rent Agreement
  • Income/Banking Proof: Last 6 months Bank Account Statement of applicant and co-applicant, Loan Statement of Running Loans, Latest Closed Loan NOC, Net Worth of the applicant and co-applicant
  • Security (as applicable): Margin Money, Previous and Current Sales Deed, Plant and Machinery list, Plant and Machinery Current Valuation Report, Property Photographs, Previous Property Search and Valuation Report
  • A4 size copies of the aforementioned documents must be self-attested with blue ink

Documents Needed for Proprietorship and Partnership Firms

  • Loan Application Form duly filled and signed
  • Partnership Deed and Partnership Registration Certificate
  • ID Proof of the Firm: Firm PAN Card or PAN Issuing Letter
  • Office Address Proof: Electricity Bill, Post-paid Phone Bill, Valid Rent Agreement
  • Income Proof: CMA Data and Project Report, Debtors and Creditors Certificate, GST Return, Last 3 years ITR of applicant and co-applicant, Audited or CA Certified Computation of Income/Trading Account/Profit and Loss Account/Balance Sheet, Annual Audit Report and Tax Audit Report if audited, Form 16A if applicable, Net Worth of applicants, co-applicants and guarantors
  • Banking Proof: Last 1-year Statement of Company’s Major Account, Current Account, Cash Credit Account, Overdraft Account, Loan Statement of Running Loans, Latest Closed Loan NOC and Last 6-months Bank Statement of Applicant and Co-applicant’s Savings Account
  • Security (as applicable): Margin Money, Previous and Current Sales Deed, Plant and Machinery list, Plant and Machinery Current Valuation Report, Property Photographs, Previous Property Search and Valuation Report
  • Other Relevant Documents: Partnership’s Business Profile, Promoter/Guarantor’s Profile, Corporate Brochure, Business Experience Supporting Documents, Business References
  • All A4 size copies of the aforementioned documents must be self-attested with blue ink

Documents Needed for Private Limited and Public Limited Companies

  • Application Form duly filled and signed
  • Company ID Proof: Company’s PAN Card
  • Office Address Proof: Electricity Bill, Post-paid Phone Bill, Valid Rent Agreement
  • Business Proof: AOA and MOA, Company Incorporation Certificate, Business Commencement Certificate, Board Resolution, CA/CS verified Share Holding Pattern, ROC Annual Return, DIN Certificate, List of Directors on Company Letter Head, GST Number, Form 32 in case of Director Change
  • Income Proof: CMA Data and Project Report, Last 3 Years ITR Acknowledgement copy of Company and all Directors, Last 3 Years Annual Credit Report or Tax Audit Report with Article 3CB, Article 2D, Article 3CD, TDS Certificate/Form 16A, Net Worth Certificate
  • Banking Proof: Last 1-year Statement of Company’s Major Account, Current Account, Cash Credit Account, Overdraft Account, Loan Statement of Running Loans, Latest Closed Loan NOC and Last 6-months Bank Statement of Applicant and Co-applicant’s Savings Account
  • Security (as applicable): Margin Money, Previous and Current Sales Deed, Plant and Machinery list, Plant and Machinery Current Valuation Report, Property Photographs, Previous Property Search and Valuation Report
  • Other Relevant Documents: Company’s Business Profile, Promoter/Guarantor’s Profile, Corporate Brochure, Business Experience Supporting Documents, Business References
  • All A4 size copies of the aforementioned documents must be self-attested with blue ink

Reference Facts

  • Canara Bank Website: www.canarabank.com, www.canaramsme.com (website for MSME) and www.canarabank.in (net banking)
  • Headquarters: Bengaluru, Karnataka
  • Call Centre Toll-Free Number: 1800 425 0018
  • Email for MSME Loans: [email protected]