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ECLGS and CGTMSE have been the go to credit schemes for MSMEs in India. What other schemes are available beyond these two?
The PNB Seva Scheme is a credit product offered by PNB for MSME businesses. The PNB Seva Scheme offers loans in the form of Working Capital Loan, Term Loans and Non-fund based credit options.
MSMEs reap the maximum benefits through Supply Chain Financing. It makes them credit ready and helps them take care of working capital needs.
You can check MSME loan status online by visiting the lender’s or bank’s website. Most banks and lending institutions have online portals with specific sections dedicated to MSME loans. It is easy to check the loan status by following the steps mentioned on the webpage.
MSME or, Micro Small and Medium Scale Enterprises is the backbone of the Indian economy. They form a major part of the industrial sector in the country offering employment to more than 12 crore individuals across the nation.
The overwhelming growth of Micro, Small and Medium Enterprises (MSME) industries has resulted in the rapid development of the urban and rural sector in India over the years. The MSME scheme currently covers only manufacturing and service industries in India, aiding enterprise development through various subsidies and schemes.
As per the Government of India website, the MSME sector has contributed to around 45% of the country’s total industrial employment, 50% of India’s total exports and 95% across all industrial units, with over 6000 diverse products being manufactured by MSME industries.
Here is the eligibility criteria for the one-time loan restructuring offered by the RBI due to the Covid-19 pandemic
The Emergency Credit Line is basically a loan, for which 100% guarantee is provided by the National Credit Guarantee Trustee Company (NCGTC) to Member Lending Institutions (MLIs). MLIs include Scheduled Commercial Banks (SCB) and Financial Institutions (FI) that offer additional working capital loans to existing MSME borrowers under this scheme. NBFCs offer additional term loans to existing MSME borrowers under this scheme.
Yes, having a good credit score for MSMEs is always an added advantage in getting an MSME loan. MSME stands for Micro, Small and Medium Enterprises. An MSME loan is the funding offered by financial institutions to SMEs, MSMEs and Startup enterprises. These kinds of loans are mostly used by business owners and enterprises to suffice their working capital requirements, for business expansions, to enhance cash flow, purchasing equipment and machinery, etc. Many lenders also offer MSME loans without any security or collateral and at lower interest rates.
To help MSMEs handle the economic onslaught brought by the Covid-19 pandemic, the RBI has announced one-time restructuring for MSME loans. The scheme for restructuring loans of struggling MSMEs was already in place prior to the Corona outbreak. With the pandemic accentuating the cash flow problems faced by MSMEs, the RBI has extended the deadline for restructuring until 31st March 2021.
Most financial institutions like banks and NBFCs provide MSME loans to individuals who are looking forward to starting a business or need funds for their already existing business.
The government started the MSME scheme to promote small scale industries with their businesses. Only manufacturing and service companies can register and get benefits provided by the scheme.
To create more job opportunities in the MSME sector, the MSMEs will be defined in terms of turnovers instead of the investments put into the business. MSMEs are classified into two categories - Manufacturing enterprises, Service enterprises.
MSME registration is not mandatory but registering will help you reap benefits from the government which include getting credit at low interest rates, incentives on products for export and many other benefits. To make sure that the MSME sector doesn’t get affected by competition in the market, the government has given exclusive rights to manufacture certain products only to this sector. This is called the reservation policy.
Interest rates on MSME loans are between 8.30% and 16.25%. Depending on your lender there will be a limit on the maximum loan amount or some lenders wouldn’t have any such limits. Interest rates will also depend on your credit score. With a good credit background you will be able to get good interest rates and high loan amounts. Your lender would want to make sure that you have a good repayment capability, so that they are assured that you will be able to pay back the EMIs on time.
MSME loans are offered to Micro, Small and Medium Enterprises by financial institutions like banks and NBFCs. MSME loans can also be lent by the government with the help of various schemes like MUDRA loans, CGTMSE, PMEGP, etc. These schemes help upcoming entrepreneurs start a business and can also help businesses who want to expand.
There is no MSME registration fee, which was has been clarified by the Ministry of MSME. The Udyog Aadhar Memorandum is the official website to sign up your business. The registration process is simple, but if assistance is necessary they can get help from their respective District Industries Centre. The registration is not mandatory, but by registering you will be able to get a lot of benefits.
These MSME schemes are backed by the government and you can apply for an MSME loan with any financial institution that has the provision for any MSME scheme.
Eligibility for an MSME loan depends on the return on investment and the profitability of the project that is to be set up. Any lender you approach will approve your loan if they are assured repayment. The general conditions that lenders look at are technical/economic viabilities, promoters contribution and collateral securities. Your business will have to be involved in either of the two classes - manufacturing or service sector. Investment limits for micro, small and medium enterprises vary based on the stage of where the business is at now and the size of the business.
The Ministry of MSME had clarified that Udyog Aadhar Memorandum portal is the official website for MSME registration and there is no registration fee. Filling out the Udyog Aadhar Memorandum can be done only through the portal created by the Ministry. There is no registration fee charged for this purpose. The registration process is simple and you wouldn’t need to seek any third party assistance. If assistance is necessary, they can get help from their respective District Industries Centre for filing their Udyog Aadhar Memorandum.