KFC Rolls Out Collateral-Free Machinery Loan Scheme for MSMEs

Web desk

Published on Sep 10, 2025, 03:31 PM | 3 min read

Thiruvananthapuram: In order to accelerate the industrial growth and supporting the modernisation of micro, small, and medium enterprises (MSMEs) in Kerala, the Kerala Financial Corporation (KFC) has come up with a new loan scheme targeted specifically at funding machinery purchases.

The initiative, KFC Machinery Loan Scheme for MSMEs, is designed to help eligible enterprises acquire new machinery and equipment without the burden of collateral requirements. The scheme is backed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), enabling MSMEs to access financing of up to Rs. 5 crore, covering as much as 80% of the machinery cost.

The loans will carry a repayment tenure of up to seven years, including a moratorium of up to one year. Interest rates under the scheme are competitive, starting from 5% for units that qualify under the Chief Minister’s Entrepreneurship Development Programme (CMEDP).

Announcing the scheme, Finance Minister KN Balagopal said the objective was to remove key barriers that prevent small enterprises from scaling operations.

“This scheme is intended to make it easier for entrepreneurs to invest in technology and improve productivity without being constrained by the need for collateral,” he said.

The minister added that such initiatives are part of the state government’s broader efforts to strengthen the MSME sector and stimulate industrial development in Kerala.

Umesh NSK IAS, Managing Director of KFC, noted that the scheme would enable small and medium businesses to undertake timely upgrades and improve operational efficiency.

“By facilitating access to modern machinery, we aim to support innovation, competitiveness and job creation within Kerala’s manufacturing landscape,” he said.

To qualify, enterprises must be registered with both MSME-Udyam and GST, and must have been in continuous operation for at least three years. Eligible units should have reported profits and maintained a positive net worth in each of the last two financial years. In addition, the promoter must hold a minimum CIBIL score of 700, while the enterprise’s credit rating must fall between CIBIL grades 1 and 5.

The scheme mandates that only new machinery from reputed suppliers will be financed, with payments made directly by KFC to the supplier. Second-hand, old, or fabricated machinery will not be eligible under this scheme.

Applications can be submitted through KFC’s official website (www.kfc.org) or at any of its regional offices. The scheme is expected to play a significant role in enhancing the capacity and productivity of Kerala’s MSME sector at a time when technology-driven competitiveness is increasingly essential.