Process to avail loan under MSME scheme

Introduction:

 

Micro, Small and Medium Enterprises (MSME) loans are generally offered to start-ups and small business enterprises. The repayment tenure varies from lender to lender for the MSME loans.

 

The significance of Micro, Small and Medium Enterprises (MSMEs) is due to its capacity of employment generation, low capital and technology requirement, use of traditional or inherited skill, use of local resources and exportability of products. The loans which are designed keeping in mind of the standards of a small or medium enterprise in order to meet the financial needs for various sectors of the business is what we call MSME loan.

SME plays an important role within the Indian economy as this is a sector where there's incredible employment opportunity, especially in rural areas. Thus, it's often called the sunshine sector and that's why the recognition of the SME loan is growing with every passing day. Most of the people have this question, Can I get MSME loan for a new business? the answer here is Yes; that is what SME loan services do.

Getting MSME loan for new business is a not that critical process and you can easily apply for that by just filling a form through online mode.

Now, under the Atmanirbhar Bharat Abhiyan, the govt revised the MSME classification by inserting composite criteria of both investment and annual turnover. The excellence between the manufacturing and therefore the services sectors under the MSME definition has been removed. This removal will create parity between the sectors and subsequently revises MSME classification, where the investment and annual turnover, both are to be considered for deciding an MSME.

 

 

 

 

 

How much loan can an MSME get?

 

Loan amount totally depends upon the bank you prefer to take your SME loan from and also on your monthly/yearly turnover because loan amount differs from bank to bank or the firm you choose to take a loan from.

As per the RBI regulations, banks are mandated to supply MSME loans of up to Rs.10 lakh without accepting collateral. Sometimes, counting on the financial position and diary of the MSME units, banks can increase this limit to Rs.25 lakh.

The loan amount for an MSME ranged between Rs. 1 lakh to Rs. 1 crore, may exceed depending upon business requirements. Above Rs. 1 crore MSMEs can avail secured commercial loan wherein they have to submit collateral or security with the bank or lender.

 

What type of business comes under MSME?

 

Any Micro or small enterprise having valid UAM can apply for the MSME loan scheme. The most common types of businesses that come under MSME include:

· food processing

· textile manufacturing

· clothing manufacturing etc.

· retail stores

· hotels & restaurants etc.

 

There are some industries which have been established under the MSME scheme. They are listed below:

· furniture & home furnishing

· stationery & stationery products

· auto parts and accessories shops etc.

· furniture & other related services

· real estate, office space, offices etc.

· furniture & equipment stores

· hotels & resorts etc.

 

Manufacturing enterprises are all about the commercial enterprise and in any sort of business they creates use of the components, elements or staple to form a final item. These finial items could also be sold to clients or to different manufacturing agencies that use them for creating a one of a sort of products.

There are numerous products under manufacturing enterprises like- Printing, Ayurvedic products, beedi/ cigarette manufacturing and other tobacco products.

 

The benefit of MSME Registration

 

The government of India has always been in favour of providing benefits to MSME so there are numerous benefits if you accompany in MSME. You are eligible for an industrial promotion subsidy that helps you in your new enterprises to encourage investment.

And it offers you up to 50% subsidy on patent registration, to avail this facility offered under the scheme you need to submit your registration application to respective ministry. You'll get concession in energy bills. And you'll also get collateral-free loans from banks which results in initiative guarantee funds to micro and small sector enterprises.

 

Which bank is best for MSME loan?

 

This thing majorly depends upon the market position of the bank. State Bank of India, Bank of Baroda, etc are some of the PSU banks which are offering MSME loans under Prime Minister’s Atma Nirbhar Bharat economic stimulus package. SBI has thus far cleared the maximum number of loans at 37,638 as of June 1. The Finance Ministry recently said that public sector undertaking (PSU) banks have sanctioned loans over Rs 10,000 crore to MSMEs under the government’s initiative to assist businesses to bridge over the coronavirus pandemic.

 

As per current market, SBI (State Bank of India), ICICI and PNB (Punjab National Bank) top the market with least interest rate as compared with other banks in the country.

The interest rates on a bank are subject to changes as per the time but these three banks are found to be most trustworthy having a track record of least interest rates as compared to the competition in amongst other banks.

 

Who is eligible for Mudra?

 

Any Indian having a start-up plan for a non-farm income-generating activity is eligible for a MUDRA loan. The terms and conditions of your lender would need to be followed for availing a loan under PMMY.

Anyone who runs small commercial enterprise is eligible to use the mudra loan scheme. Mudra yojana loans are given under three different categories, the primary category referred to as Shishu (for extremely small business units) covers loans up to ₹ 50,000. The second category referred to as Kishor (slightly bigger units) covers loans above ₹ 50,000 and up to ₹ 5 lakh. The third category referred to as Tarun (relatively bigger units) covers loans above ₹ 5 lakh and up to ₹ 10 lakh. Mudra operates a special refinance scheme for female entrepreneurs, which is named as Mahila Uddyami Scheme.

 

Who is eligible for MSME certificate?

 

MSME certificates act as evidence of MSME registration. Registering your enterprise through online or offline mode in the MSME scheme provides this certificate. The fees are going to be charged accordingly for the registration process. Each enterprise is going to be allotted with a private MSME certificate.

Proprietorships, Hindu Undivided Family, Partnership Firm, One Person Company, indebtedness Partnership, Private Ltd., Producer Company, any association of persons, co-operative societies or the other undertaking can obtain MSME registration in India.

 

How can I get a loan under MSME?

 

The NBFC’s (Non-Banking Financial Institutions) are one such institutes whereby these MSME loans could be availed through. These institutions provide SME loans to the companies meeting their eligibility criteria. MSME loan distribution is typically available online and maybe availed and managed completely online, with no branch visits.

So, if you own a small or medium-sized business and need to avail SME loan for your business, just visit the web site of your desired bank and complete the application process.

The Loan could be easily availed through online mode. Many Banks offers an easy process for a collateral-free SME loan. To start your application for the SME loan you'll either visit banks website and choose the loan you would like to avail.