Micro Small And Medium Enterprises (MSMEs)

So, you have decided to be a job giver – An Entrepreneur

Applying for a loan at a physical location, means that you are approaching just one lender. When you apply for a loan in person, you may need to book an appointment. You could be waiting in a queue. You may have to travel for a while, to reach the lender’s physical premises.

Remember that business loans can be used for setting up new enterprise or stepping up (expansion, diversification, modernization, technology upgradation). These can be for the following:

Acquisition of factory, land and construction of building spaces,
Purchase of Plant and Machinery including lab equipment, testing equipment, furniture, electric fittings, etc
Meeting working capital requirements, like raw materials, stock-in-progress, finished goods, etc
Trade Finance (Bill discounting) – for paying the creditors, while awaiting payment from debtors
Launch of new product range, expansion of business, warehousing need, credit for marketing and advertising purpose
Additional monitory assistance for any eligible purpose.

It’s good that you have made up mind for applying business loan online. You will have choices of wider range of lenders (Banks / NBFCs / SFBs/ FinTechs) who can access your application and according to your geographic location, the nearest lender may approach you or a fintech from another city may also touch base you.

This means, you can apply online 24/7. You can apply even in your spare time at leisure. If you have your budget / documents / information ready, you will find the application forms are easy to fill in.

Understand MSMEs

MSME (Micro, Small & Medium Enterprises) are classified in two ways:

Manufacturing Enterprises engaged in the manufacture or production of goods pertaining to any industry or deploying plant and machinery in the process of value addition to the final product having a distinct name or character or use; and

Service Enterprises engaged in providing or rendering of service

The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery and Service Enterprises are defined in terms of investment in equipment.

Let’s understand it in a better way

MSME Classification (Manufacturing Enterprises and Enterprises Rendering Services)

	Investment in Plant & Machinery or Equipment	Annual Turnover
Micro	Not more than Rs. 1 Crore	Not more than Rs. 5 Crore
Small	Not more than Rs. 10 Crore	Not more than Rs. 50 Crore
Medium	Not more than Rs. 50 Crore	Not more than Rs. 250 Crore
Value of Plant and Machinery or Equipment In terms of RBI Circular dated August 21, 2020 , the value of Plant and Machinery or Equipment for all purpose of MSME classification and for all the enterprises shall mean the Written Down Value (WDV) as at the end of the Financial Year and not cost of acquisition or original price, which was applicable in the context of the earlier MSME classification criteria.

Finding Difficult in Filling Application

Need not to worry the portal will help finding the correct person / right agency to fill the form on your behalf. All you need is to Click here and fill in basic personal details with request for agency / person (small amount of fees may be charged by the agency / person). This facility is called as HAVE (Handholding in a virtual Environment).

Subsidies and incentives are provided by the Government of India

Various Subsidies and incentives are provided by the Government of India to promote a vibrant business. For any entrepreneur / promoter setting up a new startup or having an established business, it is important to know about these subsidies and incentives which can be availed while incurring capital expenditure to reduce capital cost, lessen interest burden and to achieve break-even faster. So, it’s the right place to Click for various subsidy schemes

No collateral security?

Government of India and SIDBI have set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE). Also, National Credit Guarantee Trustee Company (NCGTC) has been set up by the Government of India to act as the Trustee to operate the Credit Guarantee Funds for Educational Loans, Skill Developments Loans and any other funds to be set up from time to time. You can choose to avail the benefits of these Guarantees based on your loan needs through the Lenders.

Udyog Aadhaar (UA)

MSMEs are required to obtain Udyog Aadhaar Memorandum (UAM) which is for running units. It is not required for upcoming units. For registering yourself as a MSME under UAM, you can visit the following web link: Click here for Udyog Aadhaar Memorandum (UAM) Registration

Facing Liquidity Problems

MSMEs face constraints in obtaining adequate finance, particularly in terms of their ability to convert their trade receivables into liquid funds. The problem of timely realization of receivables persists despite the fact that the MSMED Act, 2006 mandates payments to MSMEs be made within 45 days of acceptance of goods and services.

TReDS is an online electronic institutional mechanism for facilitating the financing of trade receivables of MSMEs through multiple financiers. The TReDS Platform will enable discounting of invoices/bills of exchange of MSME Sellers against large Corporates including Govt. Departments and PSUs, through an auction mechanism, to ensure prompt realization of trade receivables at competitive market rates.

Receivables Exchange of India Ltd (RXIL), is a joint venture promoted by Small Industries Development Bank of India (Swavalamban Connect Kendra’s) and National Stock Exchange of India Limited (NSE). RXIL operates the Trade Receivables Discounting System (TReDS) Platform.

MSMEs benefit due to timely payments in a transparent mechanism at very competitive pricing. Assured of timely cash flows ensures better quality of products and processes in the long run for MSME sector

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