Who is covered under the scheme?

All MSMEs set up as proprietorships, partnerships, registered companies, trusts and limited liability partnerships (LLPs), interested borrowers under the Pradhan Mantri MUDRA Yojana (PMMY), and individuals who have taken loans for business.

All about ECLGS 1.0, 2.0 and 3.0

ECLGS 1.0: Under ECLGS 1.0, MSMEs could borrow additional funds of up to 20% of their outstanding credit as of February 29, 2020. The credit facility under ECLGS 1.0 came with a tenure of 4 years and a moratorium of 1 year. MSMEs with outstanding loans of up to Rs 25 crore and Rs 100 crore in turnover were eligible under ECLGS 1.0.

ECLGS 2.0: ECLGS 2.0 extended cover to 26 stressed sectors identified by the Kamath Committee. 2.0 also increased the loan tenure to 5 years with a one-year moratorium. It removed the turnover cap and all businesses with an outstanding credit of Rs 50 crore-Rs 500 crore (as of February 29, 2020) were made eligible.

ECLGS 3.0: The latest version covers stressed service sectors like hospitality, travel & tourism, leisure and sporting. MSMEs can get additional credit of up to 40% of the total outstanding amount. 3.0 extends the tenure of loans to 6 years, with a moratorium of 2 years.

Eligibility criteria for MSMEs to get credit under ECLGS(2):

All MSMEs with combined outstanding loans of up to Rs 50 crore (across all lenders) in any sector and up to Rs 500 crore for borrowers in the hospitality, travel and tourism, leisure and sporting sectors (as on February 29, 2020).

All MSME borrowers in the 26 sectors identified by the Kamath Committee and in the healthcare sector with outstanding loans of more than Rs 50 crore and not exceeding Rs 500 crore across all lenders (as on February 29, 2020).

To be eligible, the MSME must be a customer of an MLI and have GST registration (unless GST registration is not required for the business).

Individuals who have taken loans for business

The Emergency Credit Line Guarantee Scheme has provided much needed low-cost credit to MSMEs. However, with the pandemic still in full-swing and a third wave expected in India, the impact on businesses around the country could be severe. Similar initiatives will be needed to ensure the long-term survival and eventual growth of MSMEs. Incentivising equity investments from the general public, prioritizing access to funding for MSMEs, and tax-friendly policies from the legislature could be the key to reviving the industry.

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