msme

The MSME sector in India is the 2nd largest in the world, with more than 63.05 million micro and small companies in operation.

MSME full form is Micro, Small and Medium Enterprise, accounting for 45% of the total revenue generated by the Indian industrial sector.

Several government aids are being provided to further boost this sector, from easy loan disbursement to subsidy benefits and training workshops to generate a skilled workforce.

However, only registered companies can be eligible to enjoy these advantages. There are several reasons why you should register your start-up business as an MSME company can be listed as follows –

Easy disbursal of MSME loans for new business

MSME loans sponsored by the government come with subsidised lower interest rates than the prevailing market conditions. These credits tend are offered without any collateral or third-party guarantee, and the government assumes liability in case of defaults.

Any requirement of a start-up business from the working capital requirement to equipment financing can be done using this monetary source.

However, there are several limitations present when it comes to loans raised for equipment financing of a business. In case of a company registered in the manufacturing sector of India, loans of up to Rs. 25 Lakh can be availed by micro-enterprises.

The range is between Rs. 25 Lakh and Rs. 50 Lakh for small scale companies, while medium-sized firms can avail loans higher than Rs. 50 Lakh but lower than Rs, 100 Lakh.

In the case of companies providing services, the limit for micro-enterprises is Rs. 10 Lakh. Small firms can avail loans ranging from Rs. 10 Lakh to Rs. 20 Lakh, while the restrictions on medium enterprises are up to Rs. 50 Lakh.

Discounts on patent registration

Registering your product as an intellectual property requires substantial monetary deposits to be made with the Government of India.

However, to aid the booming MSME industry in India, a 50% patent subsidy is offered to encourage entrepreneurs to register their business in this sector.

Several exemptions on total charges incurred on ISO certification is also provided to all start-up MSME companies.

Overdraft interest benefit

Another benefit of MSME loans for new business is that interest exemptions on overdrafts are offered to all borrowers. Interest rates charged on such credits are 1% lower than the market rate charged by financial institutions.

Electricity bill concession

Several subsidies on monthly electricity bills are also provided to assist these companies financially. Higher revenue generation encourages these firms to avail new loans for further expansion of their business operations.

MSME registration( Udyog Aadhar registration )

MSME registration has zero implied costs and no hidden charges. Also known as Udyog Aadhar registration, this process is relatively hassle-free and requires the submission of the following documents –

  • KYC documents for identification of a potential borrower. Aadhaar card, PAN card, Voter ID card, driver’s licence, etc. can be deposited for the same.
  • Details of the business have to be submitted. For an existing company, you have to furnish details of commencement, a record of past and existing employees, memorandum and article of association, list of capital investments made, etc.
  • For start-up companies, a full-proof business plan segregating plan of actions and total capital raised has to be documented for verification purposes.

After successful verification of documents by the government, a virtual certificate validating a company’s nature as an MSME organisation is provided. This document can be shown while availing MSME loans for new business at any public sector unit.

Alternatively, a start-up can also finance its operations through business loan available at all financial institutions. Many NBFCs such as Bajaj Finserv provide the benefits of the Flexi-loan facility, and prepayment/foreclosure on total credit availed.

They also provide pre-approved offers that make availing loans quick and easy. Successful registration as an MSME company opens your business to a window of expansion opportunities.

This ensures a robust expansion of a budding organisation, ensuring massive wealth creation of entrepreneurs. This, in turn, has a positive impact on the economic development of India as well.

To get services (Like GST, Trademark etc) for MSME click here

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