The financial institution will also float a Flexible Assistance for Capital Expenditure (FACE) scheme, with multiple repayment schedules. These are to be linked to the economic cycle and cash flow of each component.
Many small and medium enterprises often fail to get adequate working capital, due to lack of adequate owners’ capital and all assets to be offered as security. Subordinated debt is a quasi-equity instrument, with minimal complexity and simpler documentation and, hence, quicker to deliver, Sidbi said on Wednesday.
This assistance is to be extended on the strength of cash flows, rather than asset coverage or security. The initial longer moratorium (three to five years) on principal installments will ensure greater chances of success of the ventures.
Sidbi said FACE would provide funding to MSMEs for capital expenditure to modernise, upgrade, diversify and meet global standards. The scheme provides flexibility for repayment to match with the nature, economic life and cash flow associated with each component of an investment. The tenure of each component is linked with its economic life and cash flow and could be in the range of three to seven years for movable fixed assets and as long as 10 years for land and building. It offers flexibility to plan capital expenditure for immovable and other fixed assets jointly or separately.
0 comments:
Post a Comment