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Emergency Credit Line Guarantee Scheme (ECLGS)

The Finance Ministry of India introduced a new business loan scheme Emergency Credit Line Guarantee Scheme (ECLGS) in May 2020 to support MSMEs affected by Covid 19. The government has planned to provide Rs. 3 lakh crore of MSME loan to business enterprises that are struggling to get pace in coronavirus lockdown.

The government announced a three-month extension of ECLGS till September 30, 2021.

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ECLGS 4.0

Apart from providing funds to MSMEs to manage their working capital flow, ECLGS will also be extending for sectors like hospitality, travel and tourism, leisure, gym/spa, and sporting sectors that were badly affected from Covid 19. ECLGS 4.0 will also offer 100% guarantee cover to loans up to Rs.2 crore to hospitals/nursing homes/clinics/medical colleges for setting up on-site oxygen generation plants, interest rate capped at 7.5%.

Loan Tenure

60 months including principal moratorium for the first 12 months.

ECLGS Key Highlights

Borrowers with up to INR 25 crore outstanding as of Feb 29, 2020, and up to INR 100 crore annual turnover for FY 2020 will be eligible.
Loans sanctioned under ECLGS would be up to 20% of the borrower’s total outstanding credit as of Feb 29, 2020.
Loans provided to Business Enterprises/MSMEs constituted as Proprietorship, Partnership, a registered company, trusts and Limited Liability Partnerships (LLPs) shall be eligible under the Scheme.
Business Enterprises/MSME borrower must be Goods and Services Tax (GST) registered in all cases where such registration is mandatory. This condition will not apply to Business Enterprises/MSMEs that are not required to obtain GST registration.
Borrower accounts which had NPA or SMA-2 status as on Feb 29, 2020 shall not be eligible under the scheme.
Nil processing charges and waiver of foreclosure/prepayment charges.
No additional collateral requirement.
Additional ECLGS assistance of up to 10% of the outstanding as of February 29, 2020, to borrowers covered under ECLGS 1.0, in tandem with restructuring as per RBI guidelines of May 05, 2021
The current ceiling of Rs. 500 Cr. of loan outstanding for eligibility under ECLGS 3.0 to be removed, subject to maximum additional ECLGS assistance to each borrower has limited to 40% or Rs.200 crore, whichever is lower.
Civil Aviation sector to be eligible under ECLGS 3.0.

ECLGS Validity

Validity of ECLGS extended to 30.09.2021 or till guarantees for an amount of Rs.3 lakh crore are issued. Disbursement under the scheme permittedup to 31.12.2021.

Quick Links

CGTMSE MSME Registration Udyog Aadhar MSME Full Form Goat Farming Loan Bakery Loan NSIC Loan Scheme

Frequently Asked Questions

What is ECLGS?

The Emergency Credit Line Guarantee Scheme (ECLGS) was unveiled as part of the Rs 20 lakh crore comprehensive package announced by Finance Ministry on 13/05/2020, to aid Micro, Small, and Medium Enterprises (MSMEs) sector in view of the economic distress caused by the COVID-19 pandemic.

How do I apply for an Eclgs scheme?

1) The borrower is required to register for GST or Goods and Services Tax. 2) A borrower with a status of the SMA-2 and/or 3) NPA as of the 29th of February, 2020 would be ineligible to apply for ECLGS. 4) The interest rate for ECLGS would be 14% per annum. 5) There are zero charges for processing.

Who can avail ECLGS?

The ECLGS 4.0 covered business enterprises in Hospitality, Travel & Tourism, Leisure & Sporting sectors, which had as of February 29, 2020, total credit outstanding not exceeding Rs 500 crore and overdue, if any, was for 60 days or less, on that date.

Is ECLGS scheme extended?

The Union government has decided to extend the validity of the scheme till 30 September 2021 or till guarantees for an amount of ₹3 trillion are issued. Companies in the civil aviation sector will also be able to get credit from the banks under the scheme.

Solving Real problems

Ram Yadav

I have been running my business for over twelve years but have not been able to undertake expansion activities. I applied to Ziploan and they cleared my loan application in a very short span of time.

Kanchan Lata

I approached Ziploan for an equipment finance loan. Their eligibility criterion was easy to fulfill because it required only 2 years ITR and 10 lacs of annual banking credit.

Babu Lal

I always thought that loans and credit facilities were only available to large businesses with significant turnover. I never thought I would be eligible to qualify for a business loan too. Ziploan is boon for small enterprises like me.

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Emergency Credit Line Guarantee Scheme (ECLGS)