Setting up a Pellet Plant Project requires substantial investment, and securing a term loan can be a critical step. Here are some institutions in India that provide term loans specifically for Pellet Plant Projects:

State Bank of India (SBI)

SBI offers term loans for setting up bio-fuels extraction plants, including biomass suppliers and aggregators. These plants supply biofuels to oil marketing companies (OMCs), government organizations, and private companies for various applications such as transportation, power, and heating. The loan amount can go up to ₹50 crores and is available for both new setups and expansions.

SBI’s Scheme for Financing Biofuel Projects

  1. Purpose: To finance units for supply of Biomass pellets/Briquettes to NTPC/OMC/Private companies to be used as Biofuel.
  2. Facilities: Term Loan, Working Capital, LC, and BG.
  3. Interest Rate: 8.40% - 12.25%.
  4. Repayment: Repayable in 10-12 years with a moratorium of 6 months.
  5. Collateral Security: Up to ₹2 Cr – Nil (covered under CGTMSE), with an annual guarantee fee of approximately 2.47%.
  6. Margin: TL – 30%, WC – 25%.

Covenants of the Scheme:

  1. 100% land acquisition is required. For leasehold land, the lease period should exceed 16 years with mortgageable rights and SARFAESI compliance.
  2. Long-term tie-up arrangements with industries, farmers, municipalities, or government agencies for a regular supply of biomass/raw material are mandatory.
  3. A long-term Commercial Agreement (CA) between the Biomass Project Developer (Seller) and OMCs/Private companies (Buyer) for the purchase of biomass pellets/briquettes must be executed.
  4. At least 50% of the promoter's contribution should be brought upfront as equity.

Indian Bank

Indian Bank has a scheme specifically for financing MSMEs (Micro, Small, and Medium Enterprises) that are setting up biomass pellets manufacturing units. This scheme is designed for borrowers who have been awarded Letters of Intent (LOI) by the National Thermal Power Corporation (NTPC) for supplying biomass pellets.

Keep in mind that these details are based on the information available up to the current date. For more specific information and eligibility criteria, it is recommended to reach out directly to these institutions or visit their official websites.

IREDA Financing Scheme - “Manufacturing of Biomass Pellets/Briquettes/Torrefied Pellets/Refuse Derived Fuels (RDF)”

Objective: To provide financial assistance for setting up facilities for the manufacture of Biomass Pellets/Briquette/RDF, promoting the processing of agricultural crop residues/MSW economically and supporting a sustainable environment.

Eligible Entities: As per the Financing Norms of IREDA.

Projects Eligible for Assistance: All commercially viable Biomass pellets/Torrefied Pellets/Briquette/RDF manufacturing plants.

Minimum Loan: The minimum loan eligibility from IREDA will be ₹50 Lakh.

Promoter Contribution and Quantum of Loan:

  1. Project Cost up to ₹5 Cr: Loan Amount up to 70% of the project cost.
  2. Project Cost more than ₹5 Cr & up to ₹10 Cr: Loan Amount up to 60% of the project cost.
  3. Project Cost more than ₹10 Cr: Loan Amount up to 50% of the project cost.
  4. The minimum promoter contribution shall be 30% of the project cost.

Interest Rate: The applicable interest rate varies and depends on the grade of the project, as per the IREDA Credit Risk Rating system (CRRS):

  1. Grade I: 10.25%
  2. Grade II: 10.75%
  3. Grade III: 11.15%
  4. Grade IV: 11.45%

Repayment Period & Moratorium: The repayment period shall be a maximum of 6 years, depending on project cash flows and DSCR of the project, with a moratorium period of up to 12 months from the COD of the project.

Securities:

  1. Exclusive or pari passu charge on plant and machinery by way of hypothecation of movable assets.
  2. Pledge of a minimum 51% shares of the applicant company.
  3. Additional securities such as mortgage of collateral security, corporate/personal guarantees, third-party guarantee, deposit of PDCs, demand promissory note, BG/FDR for not less than 10% of the loan, etc.
  4. Revenue from the sale of pellets/briquettes/RDF to be routed through TRA, providing an exclusive charge on the Trust & Retention account (TRA).

Fees and Charges: As per the Financing guidelines of IREDA.

General Conditions:

  1. All commercially viable Biomass pellets/Torrefied Pellets/Briquette/RDF manufacturing plants are eligible.
  2. Site-specific biomass resource availability/survey reports must be provided.
  3. Market survey reports indicating potential buyers of pellets/briquettes around the site.
  4. The borrower must provide all necessary information and documents for the procurement of goods, services, and works financed by IREDA.
  5. Any subsidy/grant from the Central/State Governments shall be adjusted against the loan sanctioned by IREDA.
  6. Any interest subvention/interest subsidy given by the State/Central Government will be passed on to the project.
  7. Other terms and conditions shall be as per the prevailing Financing Norms/Guidelines of IREDA.

State Bank of India:

Credit Guarantee Scheme-I (CGS-I) of CGTMSE: The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS-I Scheme) by CGTMSE was initiated on August 1, 2000, covering collateral-free loans up to Rs. 5.00 crores for Micro and Small Enterprises (MSEs). It ensures risk coverage for loans sanctioned by Member Lending Institutions (MLIs) to eligible borrowers, including those engaged in trading activities. Eligibility requires obtaining an Udyam Registration Number. The scheme excludes credit facilities covered under other government schemes or secured by collateral. Introduction of the Hybrid Security model allows partial coverage under CGTMSE, enhancing accessibility to credit for MSEs.

Bank of Baroda:

Coverage of Collateral Free Loans (CGTMSE): Eligibility: Bank of Baroda extends collateral-free loans up to Rs. 500 lakhs under the CGTMSE scheme to Micro and Small Enterprises (MSEs) as defined under the MSMED Act. The scheme supports MSEs with credit facilities that may include collateral security. Primary security includes assets directly associated with the borrower's business or project, such as land, plant, and machinery, enhancing accessibility to credit for viable business expansions and working capital needs.

SIDBI:

What is CGTMSE: The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE), launched by the Government of India in collaboration with SIDBI, ensures collateral-free credit to the MSE sector. Established under the Ministry of MSMEs, CGTMSE operates through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), providing guarantees to MLIs for loans extended to MSEs without any security/collateral. Eligible enterprises can avail loans up to Rs. 5 crore for various business needs, including working capital and asset purchase.

HDFC:

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE): CGTMSE, launched in 2000, provides collateral-free loans to Micro and Small Enterprises (MSEs) through HDFC and other Member Lending Institutions (MLIs). The scheme supports MSEs by eliminating the need for collateral or third-party guarantees, thereby reducing borrowing costs and promoting financial inclusion. MSEs can access loans up to Rs. 5 crore under CGTMSE, facilitating business growth and expansion.

ICICI Bank:

Credit Guarantee Fund Trust For Micro and Small Enterprises: ICICI Bank offers collateral-free loans up to Rs. 2 crore under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme. Designed to support MSEs, the scheme provides cash credit for working capital and term loans for business expansion needs. Eligible entities include sole proprietorships, partnerships, and private/public limited companies, ensuring financial accessibility without the burden of collateral requirements.

Bank of India:

Know More About CGTMSE: Bank of India supports Micro and Small Enterprises (MSEs) through the CGTMSE scheme, covering term loans, working capital (fund-based and non-fund-based), and composite loans. Eligible sectors include manufacturing, services (excluding retail traders), and others approved under the MSMED Act, 2006. The scheme offers coverage up to Rs. 500 lakhs with provisions for partial collateral security for loans exceeding Rs. 10 lakhs.

For detailed information on CGTMSE eligibility, benefits, and how to apply, please visit the official CGTMSE website.

For more details, policies, and notices, please download the documents below.