Emergency Credit Line Guarantee Scheme (ECLGS): The Complete Guide

The Emergency Credit Line Guarantee Scheme (ECLGS) is a financial initiative introduced by the Indian government in 2020 as part of the Atmanirbhar Bharat Abhiyan—a series of reforms designed to revitalise the economy amid the COVID-19 pandemic. As the pandemic caused unprecedented disruptions—ranging from business closures and supply chain interruptions to revenue losses—MSMEs, the backbone of India's economy, were among the hardest hit. The ECLGS was specifically designed to support these enterprises, stabilise operations, protect jobs, and accelerate economic recovery.

Keep reading to discover the ECLGS scheme's details, including key features and eligibility criteria.

Phases of ECLGS Scheme

The ECLGS has evolved through multiple phases to address the financial challenges faced by businesses due to the COVID-19 pandemic, with each phase targeting different sectors and businesses. The ECLGS eligibility criteria for each phase are as follows:

ECLGS 1.0

MSME units, business enterprises, Mudra borrowers, and individual loans for business purposes with outstanding loans up to INR 50 crore and days past due up to 60 days as of February 29, 2020.

ECLGS 2.0

Borrowers belonging to 26 stressed sectors identified by the Kamath Committee, as well as the Healthcare sector, with loans outstanding above INR 50 crore and up to INR 500 crore, and days past due up to 60 days as of February 29, 2020.

ECLGS 3.0

Borrower belonging to Hospitality, Travel & Tourism, Leisure & Sporting, and Civil Aviation sectors having days past due up to 60 days as of 29.02.2020.

ECLGS 4.0

Existing Hospitals/Nursing Homes/Clinics/Medical Colleges/units engaged in manufacturing liquid oxygen, oxygen cylinders, etc. have credit facilities with a lending institution with days past due up to 90 days as of March 31, 2021.

Features of the ECLGS

Loan Amount

The overall ceiling initially announced for ECLGS was INR 3 lakh crore which was subsequently increased to INR 4.5 lakh crore. However, as ECLGS is a demand-driven scheme, sanctions/disbursements were made by lending institutions based on the borrower’s requirements and eligibility.

Repayment

Repayment tenures under the scheme range from 4 to 6 years, depending on the borrower's eligibility, the industry sector, and the specific phase of the scheme. Additionally, a moratorium period of 6 months to 2 years is available, subject to the same factors.

Government Backing

The loans provided under ECLGS are guaranteed by the Government of India through the National Credit Guarantee Trustee Company (NCGTC). This guarantee cover ensures that lending institutions are protected against defaults, reducing the risk for them and encouraging them to lend to businesses that may otherwise struggle to obtain financing.

How to Apply for ECLGS

To apply for an ECLGS loan, you must be an existing customer of a financial institution participating in the scheme.

Exploring Business Finance Options? Consider a Business Loan

Business loans can provide enterprises with the financial flexibility needed to grow and manage operations effectively. Here’s how they can help:

• Working Capital Support: Maintain smooth day-to-day operations, manage cash flow gaps, and cover expenses like payroll and inventory.
• Expansion and Upgrades: Fund business growth, open new locations, or invest in equipment and infrastructure to stay competitive.
• Seizing Opportunities: Quickly respond to market changes or new investment opportunities with timely access to funds.
• Improving Creditworthiness: Timely loan repayments can enhance credit scores, helping businesses secure better terms in the future.

Additionally, business loans often come with attractive interest rates and flexible repayment tenures, making it easier for business owners to manage repayments. They can also be unsecured, meaning businesses don’t need to pledge assets as collateral, reducing risk.

Conclusion

The ECLGS has provided much-needed financial support to businesses during challenging times, helping them recover and stabilise. However, please note that the ECLGS scheme ended in March,2022. Lenders are no longer accepting any applications under this scheme. Thus, if you are a small business owner and need funds, you may apply for a regular, unsecured business loan instead.

For enterprises seeking financial flexibility and support, business loans offer opportunities for growth initiatives, overcoming operational hurdles, and managing cash flow effectively. At SMFG India Credit, you can apply for unsecured business loans of up to INR 75 lakhs* with flexible tenures of up to 48 months* and competitive interest rates. Check your eligibility, estimate your EMIs, and apply online today to drive your business forward!