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Benefits Of MSME Registration In India
Micro, Small and Medium Enterprises, coined as MSMEs, have come to become the Indian economy’s major pillar of foundation. The classification of these enterprises is as follows:
MSMEs enable citizens of a nation to venture out on their own and in turn, give back to society by creating new jobs and diversifying an area’s gross domestic production(GDP). They have also slowly and steadily revived the artisan class in the far reaches of India by providing employment, and access to loans and other services to the said class. Furthermore, they constantly support the up gradation of technology, infrastructure development, and trigger the modernization of the country and our society as a whole.
In terms of numbers, micro, small and medium enterprises contribute a staggering 30% to the country’s GDP, and around 45% of the manufacturing output, and approximately 48% of the country’s exports.
It is due to this very fact that they’re so crucial to our economic development and the reason why they’ve constantly been in the news ever since the pandemic struck in early 2020. However, as the pandemic subsides and the economy is slowly brought back to life, it presents a greater opportunity for business owners to get their MSME registrations done and avail a wide array of benefits.
In order to help MSMEs, the government of India introduced the MSME (Amendment) Bill Of 2018 and re-emphasized on the MSME ACT of 2006. Under these legislations, there would be no need for frequent inspections to check the required investments needed to be made in the plant and machinery needed. In addition, the operations of MSMEs would be allowed to continue in a transparent, non-discriminatory, and objective manner.
Some of the other added benefits of getting your MSME registered under the provisions of these laws are summarised in the section below.
1. Bank Loans (Collateral Free)
The Government of India has made collateral-free credit available to all small and micro-business sectors. This initiative guarantees funds to micro and small sector enterprises. Under this scheme, both the old as well as the new enterprises can claim the benefits. A trust named The Credit Guarantee Trust Fund Scheme was introduced by the Government Of India, SIDBI(Small Industries Development Bank Of India) and the Ministry of Micro, Small and Medium Enterprise to make sure this scheme is implemented (Credit Guarantee Scheme) for all Micro and Small Enterprises.
2. Subsidy on Patent Registration
Under the current laws, MSMEs registered with the MSME ministry stand to benefit from a 50% subsidy on their patent registration fees. This encourages small businesses and firms to keep innovating and working on new projects and technologies. The subsidy can be availed by submitting an application to the respective ministries.
3. Overdraft Interest Rate Exemption
Businesses and enterprises registered as MSMEs can avail a benefit of 1% on the OverDraft in a scheme that differs from bank to bank. This helps to make small businesses secure during unfavorable markets.
4. Industrial Promotion Subsidy Eligibility
Businesses that have been registered as MSMEs are eligible for subsidies for Industrial Promotion as provided by the Government.
5. Protection against Payments (Delayed Payments)
MSMEs constantly face the risk of delayed payments which in turn disturbs their entire business. In order to protect registered companies, the Supreme Court has mandated that any buyer of goods or services from registered MSMEs is required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods or services. If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay interest on the amount that was agreed to be paid. The interest rate is three times the rate that is notified by the Reserve Bank of India.
6. Fewer Electricity Bills
All companies that have the MSME Registration Certificate are entitled to concessions on their electric bill. This enables businesses to boost production and take in more orders without worrying about capital expenditure on costs like electricity and maintenance. micro, small and medium enterprises can avail of the concession by providing an application to the department of electricity along with the certificate of registration.
7. ISO Certification Charges Reimbursement
Any registered micro, small and medium enterprise can claim reimbursement of the expenses that were made in order to obtain an ISO certification. This motivates entrepreneurs to get their respective businesses ISO certified which helps them to do business abroad in terms of high-quality exports.
How To Get An MSME Loan For A New Business? Know Schemes and Benefits of MSME Loan
Financing is an essential part of a business. A capital investment, no matter how big or small, is needed for financing a business. Only through a solid capital structure can your business guarantee you a constant inflow of cash. Large companies that are well-established use many modes of raising finances, such as IPO’s, institutional loans, etc.
What about the marginal up-and-coming businesses? How do they raise finances for themselves since small businesses have low credibility with banks? MSME loans. MSME stands for Micro, Small and Medium Enterprises. The MSME loan is available for small-scale businesses as institutional banks do not finance them due to collateral and other credibility factors.
Most small businesses do not possess the factors and requirements that make them eligible for an institutional loan. Before we get into what the MSME loan is and how you can avail of it, here’s a short overview of the small-scale enterprises’ field and how it differs from mainstream high capital companies.
Micro Small & Medium Enterprises
Since we’re focusing on the MSME loan and not MSME itself, we’ll keep the briefing about small-scale industries short and concise. The primary difference between small and large-scale industries is the magnitude of investment made in both respective industries.
The regulations set by the government limit the capital of small-scale industries. Small or micro-scale sectors are most commonly set up by private individuals with the help of family ties or more informal connections. This industry uses lesser capital, machinery, and workforce compared to large-scale industries, hence the more secondary capital.
The capital regulation for micro-businesses should not exceed more than one crore, and its turnover should not exceed more than five crores. For small-scale businesses, capital should not exceed more than ten crores, and turnover should not be more than fifty crores. Finally, it should not exceed more than 50 crores for medium enterprises, and the turnover shouldn’t exceed more than 250 crores.
Any business that exceeds these regulations no longer qualifies as an MSME and is termed a large-scale industry. Some key examples of companies in the small-scale industry are bakeries, Kirana stores (provision stores), stationery shops, etc.
The MSME loan is widely known around the country as the under 60 minutes loan, and it is true to its name. The MSME loan is a financial aid scheme introduced by the government in September of 2018. This loan actively helps in the growth of the country’s economy as it helps finance numerous small businesses.
You can avail of the MSME loan to get a capital of a maximum of 1 crore for your business. This entire procedure takes around a week or more but before a fortnight at least. With no need for collaterals and various pre-requisites for credibility, the loan gets sanctioned for you within 60 minutes.
The interest rates are directly proportional to the magnitude and nature of the work taken up by the entrepreneur. The MSME loan has a starting base interest rate of 8.5% and increases accordingly.
Read more about – Detailed Review About Government Guaranteed MSME Loan Program
Availing the Loan for First-Timers
If you’ve wanted to start a small-scale business by yourself with little to no idea of how to raise finances for it, we’ll walk you through the basics of MSME schemes and how to apply for each of them. Since banking has now been highly digitized, you can apply for the MSME loan online.
The application process for the MSME loan starts with checking your eligibility. You need to be a resident of India aged between 25 – 65, and you also need to have a running business of over three years with the filing of income taxes for at least a minimum of one year.
Eligibility details include basic identification details such as first name, last name, email id (optional) and phone number. Business-related information such as the nature of and type of business with expected returns over 12 months are specified. Based on this, you will be notified whether you are eligible for an MSME scheme or not.
First-timers should visit the Udyami Mitra website, which is an online portal for you to apply on. You can fill the online form on the online portal, provide the minimal but compulsory documents needed to avail of the loan. If you find it challenging to apply for the loan, various guidelines are available on the website, making it easier for you to work around.
After you apply for the loan, your application goes through a screening process by professionals of the financing institution and accordingly either clear you or reject you. If you’ve been denied, you will have to review your application once more, or you might not have cleared the eligibility requirements. If you’ve been cleared for the loan, the process will take up to 8 – 12 days for the money to be deposited in your account.
Schemes and Benefits of MSME Loan
The MSME loan has various schemes that you can avail of and benefit from. We’re stating the two primary ones for you and hence let’s take a look.
Credit Guarantee Funds Trust for Micro and Small Enterprises was established in 2000 by the government as a trust fund that helps bring cash for micro and small businesses in the country. The CGTMSE is a crucial scheme to help raise finance for those with minimal to no experience in setting up businesses. This is a massive boost for those who want to set foot into the business world for the first time.
Credit Linked Capital Subsidy Scheme or CLCSS is a government MSME subsidy scheme for those in the MSME sector. This is a highly beneficial scheme for those that have difficulties in availing quality machinery for their businesses.
This scheme was mainly aimed at improving the technological standards of the MSMEs by providing subsidies of over 15% on plant and machinery for investments reaching up to one crore. To avail of this scheme, you need to pass the eligibility criteria stated by the PLI ( Production Linked Incentive ).
This article was a basic overview of the MSME loan, its two primary schemes, and how to avail each one. Although we’re sure it was helpful, for a more detailed and structured process of walking you through the application and availing of the loans, you can visit www.msmex.in/ask-experts to know more.
Grab MSME Loan In 59 Minutes – The Detailed Guide To PSB Loan Benefits & How To Apply
For the past few years, the Indian Government has been working on improving the status of MSMEs. Out of which, one of the sensational and tremendous decisions of the Government is the MSME loan in 59 minutes.
The loan processes for businesses are pretty daunting, including wandering around the banks for weeks to months, discussing with the staff, and frustrating documentation procedures. Thanks to the Indian Government for helping MSMEs avail of the loan in just an hour.
Narendra Modi, Prime Minister of India, announced this loan which is a part of PM Modi’s 12-point action plan for the growth of MSMEs. Using this scheme (MSME loan in 59 minutes), the borrowers can borrow up to 5 crores with a minimum limit of 1 lakh from the most authorized banks.
Learn more about – What Is MSME? Know About Micro, Small and Medium Enterprises
Multiple local and national banks have taken part in this scheme and served as the scheme’s lending institutions. The website “psbloanin59minutes.com” directs you with every step to avail of a loan from the banks.
Are you curious to know more about the PSB loan in 59 minutes? If yes, without any further delay, let’s dive in.
Purpose of Loan in 59 Minutes for MSMEs
The primary aim of this scheme is to provide the best services to the borrowers by maintaining all the banks under a single platform. Surprisingly, this system worked well and helped everyone understand the drawbacks of working as an individual financial system.
The primary focus of this scheme is on the MSMEs to support them by enhancing the emergency credit loans at a faster rate. This scheme has been recognized as one of the most significant policies ever made by Credit Suisse, which is an established international credit institution. This policy encourages micro to medium businesses, Mudra loan seekers, and companies to avail of loans within an hour.
Benefits of PSB Loan in 59 Minutes for MSMEs
The 59-minute loan scheme offers multiple benefits for MSMEs. Out of which, one of the significant benefits is the quick availability of loans for the businesses in the form of term loans and working capital loans.
The reduction of availability of loan periods from months to minutes is incredible. Moreover, this helps entrepreneurs and business owners to establish their business goals swiftly. Usually, the banks approve the loan within a week or eight days after receiving the approval letter within an hour.
Here’re the more benefits of PSB loans in the 59-minute scheme for the MSMEs.
- The entrepreneurs and retailers are provided with the in-principle approval that helps them to avail of the loan in the future at a faster rate.
- Usually, the candidates who want loans have to undergo hectic paperwork that is troublesome for novice business owners. However, this scheme has simplified almost all paperwork and increased the accessibility of loans for business owners from micro to large companies.
- Due to the Covid crisis, there’s massive destruction in the market, and several companies have undergone colossal debt. That’s why the state banks are taking the tremendous economic initiative to help businesses to stabilize employment rates and business profits.
- The businesses that are in need of credit can avail of this loan in an hour and achieve their dreams. It also allows companies to operate at a new level using credit in the pandemic era markets.
- As 59 minutes PSB loan is in good rapport with the international banking services, the Indian products are now easier to compete with the foreign brands in the global markets.
- Moreover, the loan has enhanced the small to medium business standards, and now most companies are competing with massive brands like Amazon and Flipkart.
Now, if you’re interested in applying for the loan, here is the detailed procedure. Keep reading!
How to Apply for 59 Minutes Loan
Before getting into the details of the registration and application process, here’re a few eligibility criteria and documents that you should submit to avail of the loan.
The candidates who’d like to avail of a 59-minute loan should consider given eligibility requirements.
- The self-employed candidates running a business, small companies, and medium businesses with a definite GST complaint are eligible for this scheme.
- The candidates should upload the cash flow statements to the banks for verification.
Usually, the banks qualify the borrowers based on the income generation, individual ability to clear loan interest and principal amount, current credits in the banks, and other aspects as mentioned in the terms and conditions set by the lending institutions.
These are the few things that you should know while applying for scheme loans. Also, here are a few documents required to complete the application process. Read on!
- GST Details – GST details play a crucial role in the loan application as banks review the status of the business and its operations through its GST statements.
- Income Tax Returns Details – This is another crucial document required to avail of the loan. The borrowers should submit the current version of the income tax returns report to the banks in XML format.
- 6 Months Bank Statement – This is the last documentation required to complete the application process. In general, the bank statements of at least three banks have to be provided during the application process for verifying the financial status of the business.
All these documents enhance the chances of getting a loan as soon as possible.
Learn more about – Complete Guide to GSTIN: How to get GSTIN Number, Documents Needed & More
To apply for the loan, you should register at the official website of the PSB 59-minute loan. Click here to navigate to the website. Follow the below-mentioned steps –
- Sign up at the website using your official name, email, and phone number. Then, verify your registration with an OPT sent to your mobile.
- Type in the OTP and confirm terms and conditions. Next, move to the next step. Give your GST information, including password, GST number, and income tax details. Submit the data in XML format. Or else, you can log in using your PAN or date of incorporation.
- After that, upload a bank statement of at least six months (PDF format). Here, you can log in through your net banking username and password for accessing the bank statements and other legit financial information.
- Then, give your directors, partnerships, proprietorship, and company information. Choose the core purpose of the loan and provide accurate details of your previous or current loans that you took for the business establishment and maintenance.
- In this step, you’ll need to select the bank from which you’d like to process the loan. Note that the interest for the scheme varies from one bank to another. Finally, pay the application fee of 1000 and the tax and download the pending loan approval documentation from the bank.
Multiple Banks Listed in The PSB Loan Scheme
Here are the multiple banks that are included in the scheme. You can use any of these banks from which you’d like to proceed with your loan sanctions.
- Canara Bank
- Bank of Baroda
- Indian Bank
- IDBI Bank
- IDFC Bank
- Yes Bank
- Kotak Bank
- UCO Bank
- Punjab National Bank
- Indusind Bank
- Bank of India
- Bank of Maharashtra
- Federal Bank
- Saraswat Bank
- Indian Overseas Bank
- Punjab and Sind Bank
- Central Bank of India
- Union Bank
Learn more about – Difference Between Banks and NBFCs – Which is Good for MSME?
This is all about the PSB loan in 59 minutes scheme eligibility, the application process, banks list, and benefits for MSMEs. Make sure you understand each aspect of the scheme and its eligibility requirements before applying for it.
Need expert assistance or education for your MSME business or startup? Check out our YouTube video linked below to know more.
Top 5 Government Schemes for Startups and MSMEs in India
“Govt. of India and the Ministry of MSME have launched several unique Government schemes and programs designed to empower startups and MSMEs in India. We have covered the top 5 Government Schemes for Startups and MSMEs, which can help them trigger growth, and more business.”
When it comes to Micro, Small, and Medium Enterprises (MSMEs) and startups, then the Govt of India is very clear: They need to be nurtured, protected, and encouraged for India’s betterment.
Govt of India wants MSME’s contribution to India’s GDP to reach 50% by 2024, from the current 29%, and provide jobs to 15 crore Indians, up from 11 crores currently. This is why the Ministry of Micro, Small, and Medium Enterprises has introduced several Government schemes for startups, and small businesses, which aim to provide them with more resources and a platform for triggering more growth.
Startups and MSMEs are the foundation based on which Govt’s Atma Nirbhar mission and Make In India vision will succeed – Generating more employment, increasing exports, improving the standard of living for millions of Indians, and making India strong globally.
Learn more about – What are Micro, Small and Medium Enterprises?
When it comes to startups, especially tech startups, India ranks among the fastest-growing ecosystems. Last year, Venture Capitalists infused record-breaking $48 billion into Indian companies and ideas for expanding their presence.
Hence, right now, India is in a unique position wherein both Govt and private investors want Indian entrepreneurs and startups, MSMEs to succeed and make their presence felt across the world. In this endeavor, the Govt of India and the Ministry of Micro, Small, and Medium Enterprises have launched several unique Government schemes and programs designed to empower startups and MSMEs in India.
Here are the Top 5 Government Schemes For Startups and MSMEs, which can help them trigger growth, and more business:
1. Pradhan Mantri Mudra Yojana
PM Modi launched Pradhan Mantri Mudra Yojana, wherein Micro Units Development and Refinance Agency Bank or MUDRA Banks provide loans at low rates to micro-finance institutions and non-banking financial institutions, who in turn provide low-interest loans to startups and MSMEs.
Hence, Pradhan Mantri Mudra Yojana is one of its kind fund of funds, devised and conceptualized to empower Indian entrepreneurs. Loans up to Rs 10 lakh can be availed under the MUDRA scheme.
It was launched in 2015 and within 2 years, more than 1.8 crore jobs were generated due to the loans and business generated via MUDRA. Till August 14th, 2020, more than 67 lakh loans amounting to Rs 48,000 crore have been sanctioned under the MUDRA scheme.
There are three categories of businesses, which can avail loans under MUDRA loan for startups:
- Category 1: Shishu, which is for new businesses. Loans up to Rs 50,000 can be availed
- Category 2: Kishor, which is a mid-aged business. Loans up to Rs 5 lakh can be availed
- Category 3: Tarun, which is an existing, experienced business. Loans up to Rs 10 lakh can be availed.
Mudra scheme covers MSMEs such as Small Manufacturing Units, Retailers, Wholesalers, Artisans, and more. More details can be availed here.
2. Credit Guarantee Trust Fund for Micro & Small Enterprises (CGT SME)
CGT SME is one of the biggest Startup Loan Schemes launched by the Ministry of MSME in India. Under this Government scheme, a collateral-free loan of up to Rs 1 crore is provided to eligible startups and MSMEs.The loan is dispersed via a trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which is powered by the Ministry of MSME and Small Industries Development Bank of India (SIDBI). More details can be availed here.
3. Financial Support to MSMEs in ZED Certification Scheme
Focussed on existing and new manufacturing units, ZED or Zero Defect and Zero Effect mission are to encourage manufacturers to create better products, with high quality and zero defects. The focus is to enable manufacturers to embrace world-class manufacturing processes, and use technology to ensure that their products are the best in the class.
The government scheme will provide both financial support, and technology and tools to ensure zero defects in their products. Startups and MSMEs can register for the ZED program here.
4. Credit Linked Capital Subsidy for Technology Upgradation (CLCSS)
Govt is clearly aware that technology is the tool that can propel Indian startups and MSMEs to compete with global competitors.
This is the reason for the creation of the Credit Linked Capital Subsidy for Technology Upgradation (CLCSS) Government scheme, wherein Govt provides financial help to MSMEs to upgrade their technology and implement state of an art technological platform for their business.
Under CLCSS, Govt provides a 15% subsidy for investment up to Rs 1 crore for upgrading technology for startups and MSMEs in India. More than 7500 products/services are covered under this Government scheme. More details can be availed here.
5. Design Clinic for Design Expertise to MSMEs
Design and innovation are critical for any sector, and every startup and MSME should have a design-centric approach to solve the problems of their niche. In order to encourage and inspire small businesses to experiment and try out new designs for their products, the MSME Ministry has created a Design Clinic for inducing design-related expertise for startups and MSMEs.
Under this Government scheme, Govt. will provide up to Rs 60,000 aid for attending design seminars and up to Rs 3.75 lakh or 75% of the cost of a seminar, wherein the entrepreneur and/or their team can learn and implement design theories and learn more about them. Via this program, entrepreneurs can know about the latest trends and practices related to designs, interact and network with other designers, entrepreneurs, and learn in-depth about design mentality and theories.
MSMEs, new businesses, startups, and agencies can apply online for this design clinic, and enter a new portal of innovation. More details can be availed here.
Bonus: Get Wealth of Knowledge, Information at Startup India Portal
Govt of India and the Ministry of MSME has launched a massive portal called StartupIndia, which provides a wealth of information and resources to new and existing entrepreneurs for their startups, businesses, and MSMEs.
In this portal, entrepreneurs can know more about Patents, Copyright Laws, Best Recruitment Practices, Market Research Reports, more info about all Startup Loan Schemes, Entrepreneur Development Programs, and more.
Besides, a list of all Government Schemes for Startups and MSMEs can be checked right here.
Top 4 Government Loan Schemes for MSMEs in India
Every business needs capital for survival and expansion. Without capital, no business is sustainable. After all, it’s the oxygen that every business needs to thrive and survive!
For these purposes, the Government of India is always keen to help and encourage more Micro, Small & Medium Enterprises (MSMEs) to spread their wings, and achieve more success and growth. The reason is simple: MSMEs are driving India’s growth and progress!
MSMEs have made massive contributions towards making India what it is today. Currently there are 6.5 crore registered MSMEs in India that are employing 11 crore Indians, and are responsible for almost 30% of India’s GDP. No other sector contributes to India’s overall business and economy than MSMEs, and the growth is only increasing.
However, the COVID-19 pandemic had brought the industry to a halt. There was a lack of access to capital to continue operations and most businesses had to shut down or operate at a lower capacity.
As the country begins its path towards recovery, the Govt of India has introduced several loan schemes to help rejuvenate MSMEs and to get things back on track. The sole purpose of the government is to strengthen MSMEs financially and make them capable of withstanding pressures like a pandemic, generate more business, thereby creating more stable employment, and contributing a lot more towards India’s economy.
Here are a few government-backed loan schemes for MSMEs:
1. MUDRA Loans for Small Business
Micro-units Development and Refinance Agency (MUDRA) is an organisation established by the government of India that provides business finance to micro-business units. The loans under the scheme are given to small companies and startups. The main aim is to fund the underfunded through the concept of low-cost credit.
The loans are generally given to micro or small businesses operating in the manufacturing, trading and services sector. There are three types of MUDRA loans based on a business’s current phase:
- New startups and SMEs can avail upto Rs 50,000 loan – Shishu plan
- Mid-range SMEs and startups can avail upto Rs 5,00,000 – Kishor plan
- Established SMEs and startups can avail upto Rs 10,00,000 – Tarun plan
More details about MUDRA and information on how to avail MUDRA loans can be found here – www.mudra.org.in
2. MSME Business Loans in 59 Minutes
SIDBI or Small Industries Development Bank of India launched “MSME loan in 59 minutes” as one of the unique Government Schemes for new businesses, wherein a loan is approved in 59 minutes flat.
Once the loan is approved, the disbursement process takes 8-9 days.
Under this scheme loans are given for financial assistance and encouragement of MSME growth in the country. Both new and existing businesses can utilize the scheme for financial assistance up to ₹ 1 crore. Loans are provided under a refinancing scheme, wherein five authorized public sector banks will grant the funds and the interest rate will depend on the nature of your business and credit rating.
Documents which are required for availing this loan under 59 minutes are:
- GST documents
- Income tax documents
- Bank account statements for the last 6 months
- Company ownership documents
- KYC details of the owner
- Credit rating/ CIBIL documents
- Other relevant documents
You can apply for this loan and get more information here – www.psbloansin59minutes.com
3. Credit Guarantee Fund Scheme for Micro and Small Enterprises
The CGMSE was first launched in the year 2000 as a monetary support scheme for micro and small enterprises. Launched by the Ministry of Micro, Small and Medium Enterprises (MSME Ministry) and Small Industries Development Bank of India (SIDBI), CGTMSE Scheme offers collateral free loans to small enterprises and businesses that satisfy its eligibility criteria .
The scheme provides working capital loans up to ₹ 10 lakhs without any collateral. However, for all loans above ₹ 10 lakhs and up to ₹ 1 crore, SMEs can provide primary security or mortgage of land and building associated with the business, which is again covered under Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
Assets created through the loan which are associated with the business are also considered as security when the loan amount exceeds ₹ 10 lakhs.
To learn more about CGTMSE – www.cgtmse.in
4. Emergency Credit Line Guarantee Scheme
The Emergency Credit Line Guarantee Scheme (ECLGS) is a new initiative introduced by the Modi government under the budget 2021 in order to re-energise the MSME sector. The scheme forms a part of the Rs. 20 lakh crore package for existing MSMEs or businesses to help them meet their daily operational expenses and maintain a healthy working capital or cash flow and invest in avenues to keep their businesses functioning.
Businesses need to be registered for GST in order to be eligible for ECLGS. MSME owners do not need to provide additional collateral to secure credit. The rate of interest will depend on the credit rating of businesses.
We hope this helps you get started on your journey to availing the best loan schemes for your business requirements! For more subscribe to our newsletter.
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