GECL Scheme for MSMEs Updated With Some Positive Changes

The Rs. 20.97 lakh crore economic package named Emergency Credit Line Guarantee Scheme(ECLGS), as part of the COVID-19 relief is reinfusing energy back in the economy. One of the biggest beneficiaries of this package is the MSME sector that has received a whopping Rs. 3 lakh crore aid to tackle the issues arising from halted or reduced business.While the smaller companies were mostly aided and provided sanctions, the government has introduced changes in the scheme to meet the demands of larger companies as well. Here are the 4 latest changes in the MSME credit guarantee scheme:

At the time of announcement of the package, companies with an outstanding loan of up to Rs. 25 crores as of February 29, were covered in the ECLGS. However, now the maximum ceiling of outstanding loan has been set to Rs. 50 crore.

The revised definition of MSME has brought both the manufacturing and services units under the same roof. Adhering to this new definition and quelling the demand for financial assistance, the government has included individual loans as part of the ECLGS. Thus now, professionals like lawyers, chartered accountants and doctors that want to venture into the business realm can take the loan under this scheme to support their venture.

The Guaranteed Emergency Credit Line or the GECL scheme for MSME which was earlier capped at Rs 5 crore has been extended to a maximum amount of Rs. 10 crores.

Earlier, the relief package announced was focused on mitigating the issues faced by smaller companies only. However, the impact of COVID-19 has hard hit the larger companies as well. In view of this, the government has extended the credit guarantee scheme to include companies with an annual turnover of Rs. 250 crores as opposed to the previous bar of Rs. 100 crores.

The COVID-19 pandemic is still creating havoc across the global. While the economy of India has got derailed for some time, this relief package will ensure the survival of domestic companies until the economy does not get stabilised again.Among other things, the relief package saw the announcement of quick payments to the MSME companies, and a setting of Rs. 50,000 crore fund helps the companies in generating equities. All these changes are bound to impact the MSME sector for good.

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