KFC - LoC Scheme for MSMEs
The LoC Scheme for MSMEs is a specialised credit facility implemented by Kerala Financial Corporation (KFC) to provide guarantees and financial assistance to MSMEs for executing work orders and managing project-linked funding needs. The scheme is currently operational and is designed to support MSMEs in activities such as work execution, bill receivable discounting, and acquisition of machinery, equipment, or vehicles required for contract execution. Through this scheme, your MSME can access a structured Line of Credit with multiple facilities under a single approved limit, ensuring flexibility and continuity in operations.
Key Features
- Type of Facility: This is a Line of Credit (LoC) facility with multiple sub-facilities, allowing MSMEs to utilise funds as per project and execution requirements.
- Purpose: The LoC is provided to support execution of work orders, discounting of bill receivables, issuance of performance guarantees, and acquisition of machinery, equipment, or vehicles required for executing assigned works.
- Upper Loan Limit: The maximum Line of Credit that can be sanctioned under this scheme is ₹50 crore, subject to appraisal and credit assessment by KFC.
- Validity of LoC: The Line of Credit is valid for 5 years, subject to annual renewal based on performance, compliance, and review by KFC.
- Credit Rating Requirement: A minimum internal credit rating score of 40% is mandatory for sanction under the scheme.
- Interest Structure: Interest rates for all facilities under the LoC are linked to the internal credit rating score and are fixed as per rates applicable to MSME units. An additional 1% interest is charged for Early Bill Discounting without security.
Financial Assistance
Facilities Available under the LoC
- Performance Guarantee Facility – Issuance of guarantees required for work orders
- Work Execution Facility (WEF) – Funding for execution-related expenses
- Early Bill Discounting Facility – Discounting of receivables before due date
- Government Bill Discounting Facility – Discounting of bills raised on government entities
- Equipment Finance Facility – Financing for machinery, equipment, or vehicles needed for work execution
For WEF, up to 50% of the sanctioned assistance may be released as advance only for work orders valued up to ₹100 lakh.
Eligibility Criteria
Who can apply:
- All entities with valid MSME–Udyam Registration
- All ‘Industrial Concerns’ as defined under the SFC Act, 1951
- MSMEs with valid GST registration (unless exempt under GST law)
- MSMEs having at least one work order in hand at the time of sanction
- MSMEs with operations in Kerala, including those supplying goods or services to PSUs or corporates within Kerala
- Entities with satisfactory due diligence, CIBIL reports, and financial statements
Special Conditions on Financial Statements:
- Latest audited financial statements are required
- MSMEs with annual turnover up to ₹200 lakh and paying income tax under presumptive taxation may submit IT returns and CA-certified financial statements instead
Documents Required
- MSME–Udyam Registration Certificate
- GST Registration Certificate (if applicable)
- Audited financial statements / IT returns with CA certification (as applicable)
- Copy of work order
- Bank statements
- KYC documents of promoters
- Details of existing loans and credit facilities
Application Process for the Scheme
Option 1: Apply with Bullit (Recommended)
Start instantly with our guided application support, where our team verifies eligibility, prepares documentation, and coordinates with the Industries Department on your behalf. Using our business loans and compliance calendar, you can track progress while focusing on project execution, we manage the application end-to-end.
Recommended for: MSMEs executing work orders and requiring multiple facilities under one credit framework.
Option 2: Apply Online
- Register as an applicant
- Select LoC Scheme for MSMEs
- Enter business, work order, and financial details
- Upload required documents
- Submit application and receive acknowledgement
- Track application status during appraisal and sanction
Option 3: Apply through KFC Office
- Visit the nearest KFC office
- Apply under LoC Scheme for MSMEs
- Submit work order and financial documents
- Application is appraised based on credit rating and eligibility
- LoC is sanctioned and facilities activated as per KFC norms
Power Combo with the Scheme
Related Schemes
Frequently asked questions
What is the main purpose of the KFC LoC Scheme for MSMEs?
The scheme is intended to provide guarantees and financial assistance to MSMEs for executing work orders, discounting bill receivables, and acquiring machinery, equipment, or vehicles required for work execution.
Can the Line of Credit be used for purchasing machinery or vehicles?
Yes. The scheme permits acquisition of machinery, equipment, and vehicles that are directly required for executing approved work orders.
Is the scheme meant only for working capital requirements?
No. In addition to work execution funding, the scheme also covers performance guarantees, bill discounting facilities, and equipment finance under a single Line of Credit.
What is the maximum Line of Credit limit under this scheme?
The maximum Line of Credit that can be sanctioned under the scheme is ₹50 crore, subject to credit appraisal, eligibility conditions, and internal credit rating assessment by KFC.
What is the validity period of the Line of Credit?
The Line of Credit is valid for a period of five years and is subject to annual renewal based on performance, compliance, and review by KFC.
Is a work order mandatory to avail the LoC Scheme?
Yes. The applicant MSME must have at least one valid work order in hand at the time of sanction of the Line of Credit.