Raising money from IFCI for your business: A guide to approach the lender

GettyImages-170884638Besides offering business hand-holding, IFCI, the country’s oldest financial institution, offers several Government-supported funding avenues for deserving Indian MSMEs, says Emandi Sankara Rao, MD & CEO, IFCI Ltd.

Elaborating on the process of approaching IFCI for funding, Rao says that the IFCI venture capital fund and IFCI Factors Ltd are the two subsidiaries that are focused solely on addressing the funding woes of MSMEs.

As a first step towards sourcing funding, he advises MSME entrepreneurs to approach IFCI via the online route or to visit any of its regional offices or the Delhi- based offices of its two sub-entities mentioned previously. IFCI currently has regional offices across big metros including in Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata and Mumbai.

Simple short to medium term funding can be done via venture fund, for the rest, IFIC has its own dedicated corpus designed for the purpose, adds Rao.

“In case, IFCI venture fund is not able to fund any business plan, we have another entity called MPCON that provides advisory services. It can help MSMEs in producing viable business plans, which can subsequently be considered by IFIC venture fund or IFCI Factors Ltd.” MPCON is based in Bhopal.

Today, while big enterprises and players can either formulate great business plans on their own or have easy access to big consultants, MSMEs generally don’t enjoy such advantages, believes Rao, the chief of a 70-year-old NBFC mandated to provide financial support to industries across the spectrum.

“To offer a helping hand to MSMEs, IFCI is always ready to give their [MSMEs] business plan a better, effective and appealing shape, and see to it what kind of debt or equity they need to raise and how IFCI can help in their endeavours, besides providing them with concessional finance,” he adds.

To encourage entrepreneurship in lower strata of the society, the Government of India has designated IFCI as a nodal agency for “Scheme of Credit Enhancement Guarantee for Scheduled Caste (SC) Entrepreneurs”. Under this, multiple sources of funding avenues are currently being made available to deserving applicants, mentions Rao.

“Within our venture capital fund, we give seed capital to MSMEs and to entrepreneurs belonging to SC/STs/OBC fraternity. Our venture fund extends funds to deserving entrepreneurs under the government’s targeted schemes for OBCs. Under the fund meant for SCs, roughly around Rs 300 crore has already been sanctioned, of which almost some Rs 270 crore has been disbursed already.


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