Startups across India are witnessing a steep crash in the cash flows due to the countrywide lockdown due to the Coronavirus outbreak. While the government is planning to extend the lockdown, Small Industries Development Bank of India (SIDBI) has come up with a move to rescue startups from this downfall. The Lucknow, India headquartered financial institution has recently introduced a scheme called COVID-19 Startup Assistance Scheme (CSAS) that aims to ease liquidity issues faced by the startups across the country.
Under CSAS, startups can take a loan of upto Rs 2 crore with 36 months of tenure including the 12 months moratorium. The criteria specified by the development bank is that the startups which have positive unit economics are eligible to apply for the loan. The loan shall be provided at an interest rate of 10.5% per annum wherein the founder should have invested some capital in the startup.
However, as per reports, Indian Private Equity and Venture Capital Association (IVCA) has requested the bank to ease the criteria so that more startups can apply for the loan during the crisis prevailing in the country. The association fetched out the request as a larger number of startups shall not come under the purview of the scheme, reports informed. The startup ecosystem is trying to push the government to provide financial relief to the startups in the ecosystem.
According to Ashish Fafadia, Partner at Blume Ventures,
“The scheme is a proactive measure by the SIDBI leadership and will be helpful for startups.”
“To make sure that the scheme truly benefits the startup ecosystem, there are certain terms that the industry is requesting SIDBI to modify/remove. If those conditions continue to exist, there will be a large number of startups that may be pushed out from leveraging this scheme.”
Many companies, startups amid organisations including Meesho, Acko, Bounce, MakeMyTrip has laid off employees and there are some like Exotel who have implemented salary cuts due to heavy losses as a direct consequence of the pandemic situation. Fortunately, experts have confirmed that the startup ecosystem will see its rise when the crisis ends.