Sustainable Finance Scheme Sfs

Efficiency in energy usage and renewable energy sources are encouraged across the MSME sector. The Government of India, to promote MSMEs, which promote green energy, has launched the Sustainable Finance Scheme (SFS). This scheme offers financial assistance to MSMEs that promote Environment and climate-friendly energy production and consumption.

SIDBI’s mission for Sustainable Development of the MSME Sector is continually supported with various schemes that provide affordable and appropriate energy efficiency and environmental financing. Numerous projects are in place to enhance understanding within the MSME sector about the advantages of climate change. The targeted loan schemes of SIDBI encourage investments in renewable technology, energy-efficient techniques, and production processes.

The goal of the Sustainable Finance Scheme (SFS)

As mentioned above, the scheme aims to fund MSMEs that adopt energy-efficient practices within their business. The system operates with the following goals:

1. Enhance the energy efficiency of the MSME sector in India
2. Increase understanding of the advantages of climate control within MSE clusters. The targeted loan schemes of SIDBI encourage investment in renewable technologies and energy-efficient technologies/production processes
3. Help MSMEs in developing, scaling demonstration, and promoting new projects that are that are based on technology

The applicability is determined by the SFS loan scheme SFS credit scheme

This scheme is available to SMEs for the following tasks:

1. To introduce end-to-end energy efficiency measures
2. To pay for a portion of the capital expenditures, which includes the acquisition of equipment/machinery, civil works, construction, and commissioning. For the implementation of energy efficiency measures, as suggested in the DPR
3. Any other expenditure that is required to be incurred by the department provided that it does not exceed 50 50 percent of the total capital cost of the mentioned undertakings.

(Second-hand equipment and machinery financing (Land acquisition and building construction (except for minor civil work) are not included in the program.)

Activities that are eligible within the SFS Scheme

The loan scheme is open to registered MSMEs who are engaged in the following types of activities:

1. Renewable energy projects for captive or non-captive usage include solar power plants, wind generators, mini hydropower projects, biomass gasifier power plants, and more.
2. Any investment in CP (Clean Production) that requires managing waste
3. Green microfinance offering micro-credits up to Rs.5 lakh for green/energy-efficient equipment initiatives to micro-enterprises
4. Management and auditing services that are devoted to energy audits/environment regulation
5. The expenditure is primarily on Green Ranking, Eco-Friendly Marking, evaluating BEE ratings, etc.
6. Cost to obtain ISO 50001/14000 or other accredited orted environmental or energy management certifications.
7. Registration is required for CDM Expenditure confirmation
8. Appropriate aid for OEMs manufacturing energy-efficient/cleaner production/green machinery/ equipment. The assistance can be provided through deferred payments ch,annel partners/referral agreements, etc. It is essential that the OEM has to belong to an MSME or provides an extensive number of MSMEs with its products.

The borrowers who are eligible to borrow in the SFS Scheme:

1. MSME units that are involved in the services or manufacturing sector
2. The unit that is being sought to be operational for at least three years and earned cash profits during the two most recent years of operation. The team must not be in banking or FI insolvency.
3. The proposal should fall within the C1-C8 range. C8
4. The unit must have passed a Detailed Energy Audit (DEA) phase with a BEE-certified technical agency or consultant. Additionally, it is recommended that the Detailed Project Report (DPR) report should have been reviewed through an EEC of SIDBI
5. The unit shouldn’t have benefited from the Performance Linked Grant under the WB-GEF Project in the case of the planned EE Project
6. The facility must comply with the Environment & Social Management Framework

Quantum of Finance offered under the SFS Scheme & the repayment conditions

• The scheme covers up to 90 percent of the project cost the MSME submits. The minimum loan amount is Rs.10 lakh, and the maximum loan amount cannot exceed Rs.150 lakh per borrower eligible under this scheme.
• The repayment term should not exceed 36 months for loans up to Rs.50 lakh and 60 months for loans over Rs.50 lakh, which includes the initial moratorium of up to six months.
• The loan interest rates are based on the internal score assigned to MSME MSME through SIDBI.
• A 10 percent margin is payable by the lender.
• The purchase of assets acts as collateral to secure the loan.
• The need for collateral security can be a requirement in cases where it is necessary for coverage of assets.
• CGTMSE cover is available if it is there.

The application procedure for the SFS Scheme

1. A prospective lending institution must send the Detailed Project Report (DPR) to SIDBI to be vetted through the EEC. (EEC will make available a DPR in the format that it is used in DPR when required).

Step 2. Upon approval, the report must be sent to the SIDBI Branch Office. SIDBI Branch Office

Step 3. Alongside credit, the necessary amount of capital subsidy by CLCSS, TEQUP, etc., is also approved by the current guidelines.

Step 4 Disbursement must be in line with the terms and conditions of the regulations set forth within the letter of intent and other documents, by most current DCS guidelines.

Fiscal Incentive Energy Service Companies (ESCOs) implementing programs such as the Energy Efficiency/Cleaner Production/Renewable Energy Program can receive assistance through working capital or term loans. It is essential that the ESCO is required to be an MSME or, if not, the company that provides its services should be an MSME to be eligible for this program.

Things to Note: During 2012-13, SIDBI introduced this program for projects that promote greener production and energy efficiency but aren’t included in International and Bilateral Credit Lines issued by international or bilateral agencies. Thus, the application of this scheme covers any sustainable development project like greenhouses, renewable energy projects, and green microfinance. Bureau of Energy Efficiency (BEE) rating, eco-friendly certification, etc.