The long-term pandemic has caused the loss of jobs of several Indians. COVID-19 has also affected the economic situation of the country. However, to restore their financial positions, many Indians have thought of getting self-employed. They have taken steps to establish a business. They have tried to take advantage of the low SME loan interest rate. The Indian government has also understood the situation and has provided the economic stimulus package.
GECL is a part of the package. The major purpose of the package is to develop a self-reliant India. However, you have to know about the GECL loan full form to get value from it.
GECL stands for Guaranteed Emergency Credit Line, and the finance minister in India has introduced it. The Atma Nirbhar Bharat Package is intended to promote local products and take them to a global standard.
How does the GECL loan help you?
Cash flow and short-term liquidity are the major problems of several MSMEs and startups. To address these issues, the government has introduced the scheme. One of the best facts is that you will not need to pay the guarantee fee for the loan. Moreover, you will not need to choose new collateral for the loan.
Thus, the scheme responds to the unprecedented situation created by the pandemic. As startups and small businesses always look for the SME loan interest rate, it is the right choice. You can resume your business operations by securing the loan. You will receive a loan of up to Rs 3 lakh crore. You will have no concern about your operational liabilities.
Restrictions over the interest rate
The finance ministry has capped the interest rate to a particular percentage. The GECL loan interest rate for NBFCs must not cross 14% per annum.
When hospitals, clinics, and medical colleges apply for this loan, the interest rate should not be 7.5% per annum.
You can find the GECL loan in different versions-
GECL 1.0
You can take this pre-approved loan to restart your business. Moreover, you may also use the loan to purchase the raw materials and maintain business liabilities. The interest rate for MSME is 7.40%, while for non-MSME, it is 7.95%.
GECL-2.0
Although you can use this loan for different business purposes, you will find varying interest rates. The interest rate for MSME is 7.65%. On the contrary, it is 7.95% for non-MSME.
GECL-3.0–
The MSME and non-MSME loan interest rates remain unchanged. The eligible borrowers should work in the sectors like travel and tourism, hospitality, civil aviation, and sports. They can receive a loan of up to Rs 200.00 crores.
GECL-4.0
Borrowers in the medical sector will get credit facilities. Applicants may also purchase machinery with this loan.
Easy to repay the loans
You need to repay the GECL loan within 4 years. In 36 installments, the principal amount is payable. However, there is no obligation to make 36 equal installments. Based on your capacity, you can adjust the EMI structure. You do not need to pay any processing charge.
You have now clearly understood the GECL loan full form and the benefits of this financing option. To obtain a loan for your small business, you can choose this option. The collateral-free loan is easy to secure for your business. However, it is a short-term loan available at a low-interest rate. Still, your repayment ability, credit score, financial stability, and your overall profile will make a difference in the loan amount. In case if you do not meet the required criteria for the GECL loan, you can choose to avail of an unsecured business loan and get up to Rs. 45 lakh. One of the leading NBFCs, Bajaj Finserv, offers collateral-free business loans with quick approval and faster processing.