Back Ended Interest Subsidy (BEIS)

What is Back Ended Interest Subsidy in Tamil Nadu?

Back Ended Interest Subsidy (BEIS) is an incentive of the Micro, Small and Medium Enterprises Department, Government of Tamil Nadu. BEIS pays part of the interest on a term loan taken by an existing micro or small enterprise for technology upgradation, modernisation or expansion, so that the real cost of borrowing falls after the loan is running.

According to the MSME Department's incentive guidelines issued under G.O. (Ms) No. 37, Micro, Small and Medium Enterprises Department, dated 6 July 2021, the subsidy is 5 per cent of interest for a maximum of 5 years, irrespective of how long the loan actually runs. The ceilings are:

• CGTMSE-backed loans, up to Rs 20 lakh per loan on loans taken up to Rs 200 lakh.
• Technology upgradation and modernisation loans; up to Rs 25 lakh per loan on loans taken up to Rs 500 lakh.

The word "back-ended" describes how the money moves. The enterprise pays its full EMI to the lender. The Government then reimburses the interest component to the financial institution once every three months, and the lender adjusts it in the borrower's loan account. Nothing is credited to the entrepreneur directly.

An older guidance page still on the MSME portal quotes the earlier MSMI Policy 2008 figures to 5 per cent for 5 years, capped at Rs 10 lakh per loan on loans up to Rs 100 lakh. The 2021 Government Order states in terms that "all the earlier orders on subsidies are hereby superseded", so the 2021 ceilings are the ones to work with, and the District Industries Centre will confirm which set applies to a loan sanctioned in a particular year.

Who is eligible for BEIS?

Your enterprise can apply if it is:

• An existing micro or small enterprise that has availed a term loan for technology upgradation or modernisation.
• A micro or small enterprise that has availed a term loan under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme.
• An existing micro or small enterprise taking up substantial expansion or diversification of its existing activity with a CGTMSE-backed loan.
• An existing micro or small enterprise that upgrades its plant and machinery with state-of-the-art technology, with or without expansion, by inducting well-established and improved technologies in the sub-sectors and products listed under the Government of India's Credit Linked Capital Subsidy Scheme (CLCSS), or as approved by the Technical Committee headed by the Principal Secretary, MSME Department.

Older portal guidance also lists loans taken under the National Equity Fund Scheme and for ISO certification and R&D programmes through the NSIC-SIDCO consortium.

Your enterprise is not eligible if:

• It is in a line of activity listed in the ineligible annexure of the MSME Policy 2021 guidelines. That annexure governs every incentive in the package.
• It has defaulted on the loan, for the period of the default. Subsidy stops for those quarters and resumes only when the instalment is paid.
• It is not in operation during the period for which subsidy is claimed. The guidelines require the unit to be working through the claim period.
• It has no Udyam registration, which is the base document for every Tamil Nadu MSME incentive.
• It is asking for subsidy on penal interest or belated payment charges, which the Government does not bear at all.

How much do you get and how is it paid?

Payment mechanics matter here more than in most schemes:

• The subsidy is reimbursed quarterly to the financial institution, not to the enterprise.
• The unit must be prompt in repaying principal and interest. Any default suspends the subsidy for that period.
• If the unit later clears the overdue instalment, the interest subsidy alone is paid for that period.
• Penal interest and belated payment charges are excluded entirely.
• The nodal agency maintains a separate bank account for the funds released by Government and renders a utilisation certificate to the Industries Commissioner and Director of Industries and Commerce every May.

Nodal agencies are fixed by who sanctioned the loan: TIIC for TIIC term loans, SIDBI for SIDBI term loans, and the General Manager of the District Industries Centre for loans sanctioned by banks.

How to apply for Back Ended Interest Subsidy

1. Confirm that your term loan falls in an eligible category: technology upgradation, modernisation, CGTMSE, or a CLCSS-listed sub-sector, and that your enterprise holds a valid Udyam Registration Certificate.
2. Ask your bank, TIIC or SIDBI branch for the interest certificate in the prescribed Annexure A format for the quarter you are claiming.
3. Register or log in on the Tamil Nadu MSME incentive portal at msmeonline.tn.gov.in and open the Incentives section.
4. Select Back Ended Interest Subsidy, and fill the online application with the enterprise details, the loan account number and the quarter claimed.
5. Upload the documents as PDFs of not more than 200 KB each: Udyam certificate, loan sanction letter, quarterly interest certificate, and the constitution documents where the unit is a partnership, LLP or company.
6. Submit and note the application reference number.
7. The application reaches the General Manager, District Industries Centre of your district, or the Regional Joint Director of Industries and Commerce if the unit is in Chennai. Keep all originals ready — they are produced for verification at the time of inspection and returned.
8. Repeat the claim after every quarter for as long as the loan runs, up to the 5-year limit.

How to check the status of a BEIS claim

1. Log in to msmeonline.tn.gov.in and use the Track Your Status link in the incentives section with your application reference number.
2. Follow up with the General Manager, District Industries Centre, who sanctions bank-financed cases, or with TIIC or SIDBI where they are the nodal agency.
3. Check the loan account statement at your branch. Because BEIS is back-ended, the credit shows up as an adjustment in the loan account, not as a transfer to the current account.

Why BEIS claims get rejected or held up

• Default in repayment during the claimed quarter. This is the single most common cause, and the fix is to clear the arrear and reclaim the interest subsidy for that period.
• Bank certificate not in the Annexure A format, or covering a period that does not match the quarter claimed.
• Loan purpose outside the eligible list: working capital or a general business loan does not qualify.
• Unit not in operation during the claim period.
• Ineligible line of activity under Annexure IV of the 2021 guidelines.
• Uploads over 200 KB or in the wrong format. The portal only accepts PDFs within that size.
• Originals not produced at inspection. Where originals are held by the bank, the copies must be attested by the branch manager of the financing bank.

Key dates

BEIS has no annual last date. The MSME Department's timetable of incentives lists back-ended interest subsidy as claimable on a quarterly basis after the completion of each quarter, which means the application window opens afresh every three months for the life of the loan, subject to the 5-year cap. Missing one quarter does not end the entitlement, but the department expects claims to be filed with the bank certificate for that quarter, so long gaps invite queries.

Help and grievance route

• General Manager, District Industries Centre of your district, the sanctioning authority for bank-financed cases.
• Regional Joint Director of Industries and Commerce, Chennai, for enterprises in Chennai district.
• TIIC and SIDBI branches, for loans they sanctioned.
• msmeonline.tn.gov.in, the Grievance menu carries separate entrepreneur and official logins.
• Industries Commissioner and Director of Industries and Commerce, Government of Tamil Nadu, the appellate level for scheme interpretation.

The MSME Department's published dos and don'ts for online incentive applications say it plainly: go through the scheme guidelines before filing, do not enter false data, do not hide a loan already availed under another government scheme, and do not be deceived by intermediaries.