GECL: Benefits of GECL Loan Scheme in 2021 for Small Businesses

The Government of India helps medium and small enterprises with the benefits of the GECL loan scheme. The categorization of the food components under this loan scheme offers the small businesses its appropriate help. 

Components GECL Loan Scheme

First component 

The first component aims to help these small businesses start again while helping them procure raw materials. Moreover, it helps these business organizations meet the various liabilities of the business and the operational cost of the business in the package due to covid situation. For medium and small enterprises, the interest rate provided is 7.40 %. While for any non-medium and small enterprises, it is 7.95 %. One can use 20% of the loan amount.

Second component 

The second component of this source of business finance is to help these medium and small enterprises to buy various raw materials. They can also meet the operational cost and the business liabilities caused due to the covid-19 pandemic scenario. The interest rate provided under this second component for every medium and small-sized enterprise happens to be 7.65 %. But for every non-medium and small-sized enterprise, one can get the rate up to 7.95 %. 

Third component 

The purpose of the GECL scheme is to help every medium and small enterprise restart its business. They can do it by taking the loan amount and using it to buy the raw materials while clearing out the business’s liabilities. It can also help them to meet the operational cost. However, the interest rate under the third component happens to be the same as the second component. For the medium and small enterprises, it is 7.65 %, whereas, for any non-medium and small enterprises, it is 7.95 %. Therefore, one can avail a maximum of 40% of the total fund based on the credit outstanding.

Fourth component 

The last and the fourth component offers decorated facilities to the existing borrowers for setting up nursing homes, clinics, hospitals, medical colleges, or any units engaged in manufacturing oxygen cylinders and liquid oxygen. The rate of interest for search organizations happens to be 7.50 % per annum. 

The Indian government announced such a scheme to offer a relief package to revive the various business organizations that faced the massive outbreak of the covid-19 pandemic. It offers the business organizations to meet the business’s various operational costs and their needs related to the working capital. The borrowers can get the loan amount without providing the collateral. 

Under this credit scheme, the war needs to be a medium or small enterprise intruding, proprietorship, and limited liability partnership. The interest charged under the GECL scheme is 14% per annum.

Moreover, it has a tenor period of 48 months. But the scheme under the second and third components has five years and six years respectively. The borrower needs to pay no charges for prepayment, processing of foreclosure. It is even not required to provide any collateral to obtain the fund. The validity of such a scheme extends up to 2022. The government extended the last date of this scheme up to 30th June 2022.

The government introduced such an emergency credit line after the global pandemic of covid-19. It offers additional liquidity to the medium, micro, and small enterprises for meeting their operational liabilities. If any entrepreneur wants to start their business, they can look forward to such a scheme. It can help them by offering the sources of business finance to start their business. 

Business finance helps to provide full guarantee coverage in the form of loan assistance to eligible borrowers. Moreover, it can help the business organization use the loan as the working capital term loan facility.

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