Different Strokes For Business And MSME Loans!
by Radha Lakshmi BloggerThey may be small, as their name suggests,
but it is a very important segment for our economy. So much that, even the
Government of India accords high importance to the Micro, Small and Medium
Enterprises (MSME) sector enough that it oversees the sector through a separate
ministry. It gains prominence because of the immense impact it has on India’s
GDP and employment.
According to the numbers, as given by the ministry, the share of MSMEs in GDP hovers around 29%. There are 63.4 million
MSMEs in India equally divided between manufacturing, trade and services and
also between rural and urban areas. Not just that the MSME sector employs about
110 million people again equally divided between manufacturing, trade and
services. Thus, the predominant role of MSMEs in the Indian economy is there
for all to see.
The ministry marshals its resources and
interacts with other ministries to develop the MSME sector. A prime requirement
of the MSME sector is capital for starting an MSME enterprise or to expand and
grow an existing MSME. With a view to grow
the MSME sector, the government offers numerous types of business loan schemes
especially aimed at the sector by financial institutions like Tata Capital.
These schemes under business loans category cover a vast range of
manufacturing, trade and services enterprises across all sectors. These schemes
also provide special emphasis to the northeastern region, women and disabled
entrepreneurs.
The schemes target specific areas that
include
·
Providing credit and financial assistance
·
Skill development training
·
Infrastructure development
·
Marketing assistance
·
Technological and quality upgrades
·
Other Services
The schemes offer business loans and
various business loan schemes to all components of the MSME sector with
particular reference to the micro enterprises.
Credit Linked Capital Subsidy Scheme (CLCSS)
This scheme aims to help micro and small
enterprises (MSE) to upgrade its technology. The scheme offers a subsidy of 15%
on institutional finance availed by MSEs for upgrading technology. The scheme
limits the subsidy to a maximum f Rs 15 lakh, which means that business loans
up to Rs 1 crore can avail the maximum subsidy. The scheme covers approved
machinery/technology under 51 sectors and both new and existing enterprises are
eligible under the scheme. The scheme operates through 12 nodal banks/agencies.
Credit
Guarantee Trust Fund for MSEs (CGTMSE)
This is a scheme that enables new and
existing MSEs to avail collateral free credit facility for both term loans and
working capital loans up to a borrowing limit of Rs. 2 crores.
The guarantees apply based on the following
limits:
·
Micro enterprises -
85%of the amount in default subject to a maximum of Rs. 4.25 lakh
maximum extent of guarantee where credit facility is Rs 5 lakh; 75% of the
amount in default subject to a maximum of Rs. 37.5 lakh maximum extent of
guarantee where credit facility is between Rs 5 lakh and Rs 50 lakh; 75% of the amount in default subject to a maximum of Rs. 150 lakh maximum extent of
guarantee where credit facility is between Rs 50 lakh and Rs 200 lakh
·
Women entrepreneurs and units in the northeastern region - 80% of the amount in default subject to a
maximum of Rs. 40 lakh
·
MSE Retail Trade - 50% of the amount in default subject to a
maximum of Rs. 50 lakh where credit facility is between Rs. 10 lakh and Rs. 100
lakh
·
All other eligible category
of borrowers - 75% of the amount in default subject to a maximum of Rs. 150
lakh
The scheme is successful covering about 30
lakh entrepreneurs in the last 10 years.
Scheme
for Promotion of Innovation, Rural Industry & Entrepreneurship (ASPIRE)
Under the Skill Development and Training
program, the scheme promotes entrepreneurs to innovate, develop skills to make
trainees employable and to make the MSME sector more competitive. The scheme
envisages the setting up of livelihood business incubators (LBI) and technology
business incubators with assistance that include
·
Livelihood business incubators - LBIs get up to Rs 100 lakh
for setting up LBIs by NSIC, KVIC, Coir Board or any other Institution or
Agency of Govt. of India/State or Rs 50 lakh under PPP model for plant and
machinery purchases
·
Technology business incubators – Rs 30 lakh CapEx for existing incubators; Rs 100 lakh CapEx
for new incubators; Rs 3 lakh for each incubator idea
·
Creation of enterprise out of innovative ideas - seed capital
fund of Rs 100 lakh per incubator for enterprise creation at 50% of project
cost or 20 lakh per successful idea whichever is less
·
Accelerator workshop
Various NBFCs such as Tata Capital offer
some of the SME loan
and MSME loan schemes or variations thereof. MSMEs can visit the websites of
these institutions to learn about the SME loan and MSME loan schemes and use
the facilities such as the business loan EMI calculator to work out the
benefits under the schemes. If they are eligible, applying for an MSME loan is
actually simple.
With just the KYC documents of the owner
and the business, along with tax returns and balance sheet, you can apply for
an MSME loan. Make sure the business credit score of the company is also
attached with the application as it helps
in getting a good deal on interest rates.
Every business at some point needs funds and an MSME loan can be the answer to that!
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Created on Mar 17th 2019 01:56. Viewed 798 times.