SIDBI Start Up Assistance Scheme

Scheme Objective
To provide structured financing for startups and early stage enterprises mostly in sectors which
traditionally do not involve physical assets like technology, biotech, asset light service sector
businesses, web/ mobile based businesses, clean technologies, social ventures, etc. Innovative
business models in other asset based sectors could also be considered selectively.

The financing instruments would have structural flexibility and features to enable maximum chances
of the project stabilisation. The key objective is to help small enterprises achieve operational
stability or hand hold to get mainstream bank financing or facilitate next angel/VC financing.

FAQs
1. How the process will work? Who should the form be sent to?

The processing and sanction process of the SIDBIs assistance shall be centralized at Mumbai.

The process of accepting applications will be 2 step process

i.

The interested companies shall submit brief information to SIDBI to enable SIDBI to check
the prima facie eligibility of the proposal. The form can be downloaded here. This should be
sent to
P V S Lakshminarayana
AGM, Equity & Risk Capital Vertical
SIDBI, Mumbai
Tel : 022 67531342 ; Cell +917738595255

lnarayan@sidbi.in
ii.
iii.
iv.

v.
vi.

vii.

Once SIDBI finds the company prima facie eligible, a detailed application form shall be
issued to the company.
The company shall submit the detailed form to SIDBI.
NASSCOM will have the product/ business model analyzed by a panel which shall submit a
brief report to SIDBI. If needed NASSCOM could also assign a mentor to the company for
strategic hand holding.
SIDBI shall process the case at Mumbai. Visit shall be carried out to the companys
operations site.
After completion of the processing, the case shall be submitted to the sanctioning
committee for sanction. The founders of the company shall be required to make a
presentation to the sanctioning committee.
After sanction of assistance, the proposal shall be forwarded to the branch for
documentation and disbursement formalities.

2. What is the financial assistance companies can expect?

The amount of assistance could be Rs.20 lakh to Rs.1 crore. The assistance is given on the basis of the
need and the scale of operations of the company.
3. Is this loan / equity?
The assistance is not by equity but by way of venture debt. The features of the assistance are as under :

4.

The assistance is structured as debt so that the assessment and delivery is simpler and
transactions can be concluded relatively quickly. Further the assistance is structured in a friendly
way to provide the best possible impact on the business.
The assistance shall carry a fixed coupon rate and could have some kicker (1-2% equity, etc)
The assistance shall be targeted towards companies where revenue has commenced, i.e. the
product has customer acceptance.
Assistance could be selectively considered to companies where there are past losses but where
the trend is towards profitability which could be achieved in near future.
Assistance could be for working capital, capex, marketing and other bona fide needs.
Milestones shall be set for the company to draw the assistance in multiple tranches.
The assistance helps companies to grow their businesses

Is Loan a good option for me?

If the company has revenues and the founders are confident of the sustainability of the
revenues and the business model, then debt in reasonable amounts could help the company
growth by shoring up its working capital, enabling execution of new orders or for other critical
business needs.
However, debt should be taken in modest amounts which the founders are confident of
servicing. While availing debt the mindset should not be that for availing equity.
Debt does not dilute the founders stake in the company.
It also provides the companies to scale up their ventures before they go to the next equity
investors.
Availing debt from an Institution and establishing a good track record with it helps the company
with future investors and banks.

***