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Bank of Baroda MSME Loan

Entrepreneurship is the backbone of an economy like India. As more and more youngsters are foraying into the start-up arena, there is an imminent need for a progressive financial plan to suit the fervent demand for funds and other financial aid. MSME Loans is one such apparatus that has been instrumental in the economic growth of Young India. Bank of Baroda has a number of MSME Schemes to help entrepreneurs realize their business dreams.

Baroda Vidyasthali Loan

This is a special scheme targeted at financing Educational Institutions. This loan can be availed by all Educational Institutions, including play schools associated with Zee school, Euro Kids, Kidzee, World school and their franchise.

  • The applying institutions must have a credit rating of BOB-6 and above
  • HUF are not allowed to apply for a loan under this scheme
  • Loans are disbursed as Term Loans or Overdraft facility
Purpose of the loan:

This loan is sanctioned for the following purposes:

  • Construction of building, including expansion, modernization & renovation
  • Purchase of instruments for education or training purposes
  • Purchase of land if included within the entire project cost
  • Overdraft facility for short term fund requirements, provided the institution is profit making
  • Finance of vehicle purchase as per Commercial Vehicle purchase guidelines
Eligibility & Quantum of Loan:
For Term LoansMin. Rs.25 lakhs – Max. Rs.15 crores
Vehicle Funding LimitAs per Commercial Vehicles Loan guidelines
Bus Funding LimitMax. Rs.2 crores
For OverdraftMax. Rs.3 crores (Rs.5 crores for Mumbai/ Greater Mumbai and Delhi-NCR) or 60% of expected total fees collection, whichever is less

Baroda Arogyadham Loan

Purpose of the loan:
  • Setting up/purchase of ready to occupy clinic/hospital
  • Expansion/renovation/modernization of existing clinic facility/hospitals
  • Purchase of new medical diagnostic equipment/office equipment
  • To meet working capital requirements including stocking of medicines
Eligibility & Other Conditions:
Eligible EntitiesAll MSMEs in Regulatory and Expanded At-least one of the Promoters/Director (non-individual)/Doctors should have requisite qualification in any branch of medical science
Nature of CreditDemand/Term Loan, Overdraft, LC or BG
LimitMin. Rs.10 lakhs – Max. Rs.30 crores

Composite Loans

Eligibility:

Small Enterprises (Manufacturing Sector) including artisans, village and cottage industrial units and Micro Enterprises in Small Enterprises Sector

Micro/Small (Service Sector) Enterprises engaged in industrial activities only

Purpose of the loan: This loan can be availed to meet fixed capital investment needs and/or working capital requirements

Quantum of loan amount: Up to Rs.100 lakhs. A margin of 15% – 25% on composite loans above Rs.25 lakhs up to Rs.100 lakhs

Security: Hypothecation of assets created out of loan amount and other collateral securities as determined on a case to case basis

Repayment tenure: Minimum 3 years and a maximum of 10 years (which can be extended), with initial holiday of 12 months to 18 months

Working Capital Finance

Working Capital is the money that is available to meet current obligations, those due in less than a year, and to acquire earning assets. Working Capital Finance loan enables corporations to meet their operating expenses, purchasing inventory, receivables financing, either by direct funding or by issuing letter of credit. This facility is available in both Indian as well as foreign currencies.

Term Finance

This loan is of two types, Fund based and Non-fund based. Fund based finance can be availed for capital expenditure or acquisition of fixed assets towards starting or expanding a business or industrial unit or to swap with high cost existing debt from other bank or financial institution.

Non-Fund based finance are offered in the form of Deferred Payment Guarantee for acquisition of fixed assets towards starting or expanding a business or industrial unit.

Small Business Borrowers

This loan is suitable for individuals conducting business independently, with or without hired labour - such as persons in the medical profession, lawyers, engineers, contractors, consultants, electricians, hairdressers, handicrafts artisans, etc.

  • The loan amount can be utilized for purchase of equipment or repair of existing equipment. It can also be used for generating working capital.
  • The maximum loan amount offered is Rs. 5 Lakhs for businessmen and professionals, of which the working capital should not exceed Rs. 1 Lakh.
  • An amount of Rs.10 Lakhs can be offered for professionally qualified medical practitioners setting up practice in semi-urban and/or rural areas (with sub-limit not exceeding Rs. 2 Lakhs for working capital)

MSME Loan

Eligible Entities:
  • Manufacturing Enterprises engaged in the manufacture or production, processing or preservations of goods with investment in Plant & Machinery
  • Service Enterprises engaged in providing or rendering services and have investment in equipment for their business
  • Loans for Food and Agro processing units will be classified under Micro and Small Enterprises, provided the units satisfy investments criteria prescribed for Micro and Small Enterprises, as provided in MSMED Act, 2006.
  • Commercial enterprises which may be outside the purview of regulatory definition of SME but having turnover of up to Rs.250 crores and new infrastructure and real estate projects where the project cost is up to Rs. 50 crores
Purpose of the loan:
  • Acquisition of factory, land and construction of building spaces
  • Purchase of plant and machinery including lab equipment, testing equipment, etc.
  • Meeting working capital requirements, like raw materials, stock-in-progress, finished goods and for purchase or discounting of bills
  • Temporary additional assistance for meeting the urgent needs of raw material
  • Additional monetary assistance for any eligible purpose

Baroda SME Loan Pack

Baroda SME Loan Pack provides a single line of credit for meeting SME borrowers working capital as well as long term requirements.

Eligibility:

All Enterprises, Micro, Small & Medium Enterprises, as defined under MSMED Act, 2006, and other entities with an annual sales turnover of up to Rs. 150 crores. These entities should be exclusively banking with Bank of Baroda. New borrowers having sole banking arrangement with Bank of Baroda can also be considered.

Purpose of the loan: To provide hassle free credit for working capital (fund based and non-fund based) as also long term requirements

Composite limit & margin: 4.5 times of borrower’s tangible net worth as per last audited Balance Sheet or Rs.5 Crores, whichever is lower. A margin of 25% is applied.

Baroda MSME Capex Loan:

Eligibility:
  • This loan is targeted at MSME borrowers (Regulatory) and SME (Expanded) rated BOB-5 and above.
  • The manufacturing/service sector units should have been established in the line of activity for a minimum period of two years
  • Account running with satisfactory dealings for last one year & above
  • No adverse features are reported in conduct of account

Purpose of the loan:

  • Replacement of old machinery
  • Purchase of balancing equipment
  • Modernization
  • Investment in Research and Development
  • Installation of captive power plants and upgradation of technology
  • Alteration in lay out of factory/office
  • Acquisition of software, hardware, and tools, jigs, fixtures etc. forming part of Plant & Machinery
  • Purchase of cars, passenger cars for staff and other vehicles for use of business purpose

Quantum of Loan:

  • 15% of Plant & Machinery for MSME(Mfg.)
  • 25%for Services sector outstanding as per last Audited Balance Sheet or 10% of the working capital whichever is higher based on DSCR and subject to cap
  • Baroda MSME Capex card: Min. 25 lakh and Max Rs.5 Crores
  • Baroda MSME Capex Loan: Min 25 lakhs and Max Rs.2 Crores
  • Repayment tenure of 3 – 7 years including the moratorium period

SME Short Term Loans:

Eligibility:
  • Micro, Small & Medium Enterprises as per regulatory definition and all other entities with annual sales turnover of up to Rs.150 crores
  • Satisfactory credit rating of BOB-5 & above for the last three years
  • Negative variance less than 10%
  • Satisfactory business conduct with the Bank for at least three years
Eligibility:

To meet temporary shortfall or mismatch in liquidity required for meeting genuine business requirements only

Quantum of Loan & Other Conditions:
  • Upto 25% of the existing Fund based Working capital limits, subject to a minimum of Rs.10 lakhs and maximum of Rs.250 lakhs
  • Repayment tenure of 12 months including the moratorium period

SME Medium Term Loans:

Eligibility:
  • Micro, Small & Medium Enterprises as per Regulatory definition and all other entities with annual sales turnover of Rs.1 crore to Rs.150 crores
  • Satisfactory credit rating for the last three years
  • Total Debt-Equity ratio should not be higher than 4.5:1 and total Term Liability and Equity ratio should not be more than 3:1
  • Average DSCR should not be less than 1.75:1
  • Satisfactory dealings with the Bank for at least 3 years

Purpose of the loan:

To help with the enterprises’ working capital gap and in improving the current ratio. The loan can be used for repayment of secured and unsecured loans of other banks or institutions, but not for any purpose which is not related to the enterprises’ activity.

Quantum of Loan & Other Conditions:

Upto 25% of the existing fund based Working capital limits (depending on the Credit Rating), subject to a minimum of Rs.25 lakhs and maximum of Rs.500 lakhs.

Repayment tenure not to exceed 36 months

BOB Weaver Mudra Scheme:

The scheme aims at providing timely assistance to weavers to meet their credit requirements. They can take care of their investment needs and working capital requirements in a flexible and cost effective manner.

Eligibility: Existing or experienced Handloom Weavers involved in weaving activity

Purpose of the loan: Purchase of loan and related capital expenditure. Also, for need based working capital requirement

Quantum of loan & other conditions: The loan is offered as a demand loan or working capital finance. The maximum loan amount is Rs.5 lakhs. The beneficiaries under the Scheme will be issued a Mudra Card having the daily withdrawal limit of Rs.5000/- per day.

Interest subsidy by the Government: In order to provide an effective interest rate of 6%, the Government will bear the difference between the actual rate of interest as applicable/charged by the Banks and 6% interest to be borne by the borrower. The maximum interest subsidy would be capped at 7%.

Interest rate on MSME Loans from Bank of Baroda

Effective October 1st, 2019, the interest rate on various MSME Loan products linked with Baroda Repo Linked Lending Rate (BRLLR) is given below:

For limits up to RS. 25 lacs:
LimitsMicroSmallMedium
Up to Rs. 50000/-MCLR+SP(MCLR+SP)+0.50%(MCLR+SP)+1.20%
Above Rs. 50000/-to 2.00 lacs(MCLR+SP)+0.50%(MCLR+SP)+0.70%(MCLR+SP)+1.20%
Above Rs.2.00 Lacs to Rs.10.00 Lacs(MCLR+SP)+0.70%(MCLR+SP)+0.85%(MCLR+SP)+1.20%
Above Rs. 10.00 lacs to less than Rs. 25.00 lacs(MCLR+SP)+0.85%(MCLR+SP)+1.00%(MCLR+SP)+1.20%

FAQs: Bank of Baroda MSME Loans

1. What are the types of Working Capital loans offered by a bank?

Working capital loans can be offered in the form of Cash Credit/Bank Overdraft, Trade Credit, Purchase or Discounting of Bills, Short-term loans or Invoice Factoring.

2. Which are the Government linked schemes for MSMEs available through Bank of Baroda?

Bank of Baroda supports various schemes introduced by the Government of India to facilitate MSME economy. The schemes available with them are:

  • Pradhan Mantri Mudra Yojana
  • Prime Minister’s Employment Generation Programme (PMEGP)
  • Credit Linked Capital Subsidy Scheme (CLCSS)
  • Standup India Scheme (SUI)
  • Technology And Quality Upgradation Scheme (TEQUP)

3. What is the general purpose of a MSME Loan?

MSME loans are generally offered for purchase of plant and machinery including lab equipment, testing equipment, etc. in the manufacturing and service industry. It also enables borrowers to meet their working capital requirements, like raw materials, stock-in-progress, finished goods and for purchase or discounting of bills.

4. What are the determining factors for the rate of interest on a MSME Loan?

The rate of interest on a MSME loan are dependent on the following factors:

  • Age of the business
  • Annual turnover of the past 3 years
  • Business relationship with the bank
  • Credit score of the borrower
  • Current assets and liabilities of the borrower

5. What is the current lending rate offered by Bank of Baroda?

The current base rate p.a is at 9.20%. 1 year MCLR is at 8.35%.

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