The SMILE initiative from SIDBI was introduced to give a boost to the ‘Make in India’ campaign. This scheme provides soft term loans to MSME enterprises to meet the debt-equity ratio for their establishment. The emphasis is on a set of 25 sectors defined under the 'Make in India' programme, with a focus on financing small enterprises in the MSME field. 

SIDBI plays a significant role in the implementation of this scheme. The scheme is expected to benefit approximately 13,000 enterprises, with employment for nearly 2 lakh persons. This allows existing MSME units to take advantage of emerging opportunities. They can also be supported by growth, restructuring, technical improvements and other projects to expand their business.

Objective of the SMILE Scheme

The scheme aims at offering soft loans, in the form of a quasi-equity and long-term loan on relatively low terms to MSMEs, in order to meet the debt-equity ratio needed for the establishment and to seek growth opportunities for established MSMEs.

A snapshot of the SMILE Scheme


 Financing type  Quasi – Equity (Soft Loan)
 Interest Rate  Based on the MSMEs profile and requirements
 Min. Loan amount  Rs.10 lakh for equipment finance
 Max. Loan amount  Rs.25 lakh
 Repayment period  Max. 10 years, including a moratorium of up to 36 months
 Minimum Promoter Contribution   15% - subject to Maximum Debt Equity Ratio (DER) of 3:1
 Security  First charge over all assets
 Personal guarantee of promoters


Key features of the SMILE initiative by SIDBI

  • Attractive interest rates

  • Shorter loan repayment terms

  • Quicker fund disbursement

  • Funding towards commitment of the Partial Promoter by soft borrowing methods

  • Contactless platform for speedy dispensation of machinery loan 

  • Lower amount of promoter contribution for SMILE equipment finance

Eligibility Criteria for the SMILE Scheme

Smaller enterprises within MSME are the main benefactors of the scheme. Focus will be on the incorporation of new companies in the manufacturing and services sectors. 

Established businesses undertaking expansion to take advantage of the emerging opportunities, as well as pursuing modernisation, technological improvements or other initiatives to expand their business, will also be covered. 

Rate of Interest

  • For the first 3 years the ROI is fixed at 9.15% to 9.35% p.a.

  • From the 4th year onwards it can vary between 11.70% – 12.70% p.a., based on the bank's internal guidelines 

Repayment tenure

The scheme offers a repayment tenure of maximum 10 years, with an initial moratorium period of 3 years

Additional Reading: What Government Loans Are Available For Entrepreneurs?

Quantum & Nature of Loan Offered

The financing is provided in the form of term loans on relatively soft terms. Minimum of Rs.50 lakhs for new enterprises and Rs.25 lakhs for existing units can be availed. A maximum of up to 75% of the project cost, subject to a Rs.100 lakh limit and 2/3rd for the rest, subject to promoter’s contribution and DER norms.


  • First charge over all assets created under the project perusing the scheme financing

  • Personal guarantee of the Promoters

  • Fixed Asset Coverage of at least 1.4 times including collateral security

  • Term loans of up to Rs.2 crore may be covered by the CGTMSE Credit Guarantee Scheme

Financial scope

  • For the general category, 10% of the project cost, subject to a maximum of Rs.20 Lakh is provided as the loan amount

  • 15% for undertakings promoted by Scheduled Caste (SC)/Scheduled Tribe (ST)/Persons With Disabilities (PWD) and women, subject to a limit of INR 30 Lakh

  • Persons belonging to these groups should have a controlling stake in the business, i.e. 51% or more

End Note: The SMILE initiative by SIDBI has given the much needed boost to the ‘Make in India’ campaign by placing soft term loans in the hands of deserving MSME enterprises.