MSME is micro, small and medium enterprises which are an emerging backbone of the economy of India. To help and support them, the government has proposed several schemes and initiatives so that their growth can be ensured.
According to the MSMED Act passed in 2006, these enterprises are classified into 2 separate classes:
- Manufacturing – Involved in the production of goods which fall under the industry list mentioned in the first schedule of Development and Regulation of 1951.
- Services – Engaged in proffering services as defined by the terms of investment in equipment.
If your business falls in this category, you can enjoy certain MSME benefits if you register. For example:
- You can avail loans from financial companies easily. It falls under the priority sector lending.
- Get reduced rates of interest.
- Avail exemption schemes on excise duty. You can also get exemptions under the Direct Tax Laws.
- Receive statutory support like a reservation.
Here is a look at the projection on which a company is decided whether it is micro, small or medium enterprises.
- If turnover is up to Rs. 5 crores, the company is a microenterprise
- If turnover is from Rs. 5 Crore to Rs. 75 Crore, company will be considered as a small enterprise
- If turnover is from Rs. 75 Crore to Rs. 250 Crore, the company will be considered as medium enterprise
So, your queries regarding what are MSME benefits in India now get resolved.
Most of today’s MSMEs require financial assistance at some point in time. As their business progress and they move forward on the growth curve, they need to buy necessary equipment and upgrade their infrastructure. Owners can easily meet such expenses by efficient financing solution like MSME Loan. Here’s what benefits can MSMEs avail with this loan.
These loans come with plenty of MSME benefits such as –
- No collateral – Noncollateral loans are the kind of unsecured loans. If one is applying for this loan, he/she will not be required any kind of declaration of their assets to prove the loan repayment guarantee.
- Quick processing cycle – There are numbers of lenders with which you may apply for a loan online. Loan processing cycle will then start. If you meet the eligibility criteria, you will get your loan request approved soon and money will then be transferred to your account within 24 hours.
- Online account access – As discussed above, almost all the lending institutes have started the online loan application process, with which a user can access, apply and track their loan request status in an easy way. People also prefer this kind of facility as it can save their time and headache as well.
- Short Term Commitment to Pay Loan – MSME loan mostly preferred to fulfill short term financial requirements. So it generates a short term commitment for a borrower to pay this loan. Which allows a business person to do easy management of cash flow and effective availability of resources.
As well as above discussed numbers of MSME loan benefits will be there which can be availed by one if it is interesting to choose this.
With this loan, you can easily manage your cash flow, invest in infrastructure and oversee the allocation of resources successfully.
How to Get an MSME loan?
Wondering how to get MSME loan or how to apply for MSME loan? Several financial institutions offer MSME loans in the country. However, you have to meet the eligibility criteria, i.e. you have to be the owner of a current micro/small/medium enterprise which is offering a service or manufacturing a product.
The lender will evaluate your loan requirements on the basis of your CIBIL score, business turnover, business plan and other factors. Make sure that you ask for a reasonable amount without going overboard and also check the eligibility criteria carefully in order to increase your chances of securing your MSME loan.
There are several MSME benefits that you can avail if you apply for a loan. Some of the MSME loan benefits include being able to arrange working capital and funds for expansion/consolidation/growth.
Benefits of Registration your Business in MSME Act
If an MSME company want to avail the benefits that government has launched for micro-service organizations, they will be required to register their company under MSME act, an act of developmental act, proposed by the Government of India in the year 2006.
The State Govt. and Union Territories have assembled their individual package of incentives. They designed these MSME benefits to provide the maximum support to such enterprises.
- Businesses get a reduced rate of interest.
- They can avail many excise exemption schemes.
- The enterprises also get an exception under the Direct Tax Laws.
- They are entitled to a Delayed Payments Act.
- Benefits like subsidies on tax and power tariffs are also included.
- Statutory support like a reservation is also available for them.
Moreover, if you are thinking about how you can get an MSME loan with a number of benefits then there are more banks and NBFCs to help you. Features like no collateral, swift processing cycle and access to online accounts let you finance your business growth easily.