Everything You Should Know About SME and MSME Schemes Launched for Small Business Enterprises

There are over 26 million MSMEs in India, employing a substantial number of people (over 60 million) across the country.

Given what are MSME and SME’s contribution to the economy, it can be said that these enterprises are responsible for generating a sustainable portion of the GDP in the economy.

Regardless, to sustain profits, both small and medium enterprise owners must find out everything they can about the sector and its opportunities.

What are MSME and SME?

The MSME full form is micro, small and medium enterprises while the SME full form stands for small and medium enterprises. As per the latest classifications, any business firm with an annual turnover that is less than or equal to Rs. 5 Crore is a micro-enterprise.

Similarly, any firm that has an annual turnover between Rs. 5 Crore and Rs. 75 Crore is termed as a small enterprise.

Government-sponsored schemes for SME and MSME

The government of India has formulated several credit-linked schemes for SME and MSMEs to help them increase their profitability and to emerge sustainably in the long run.

Here are some of the SME and MSME pro schemes which business owners should learn about in details –

  1. Prime Ministers Employment Generation Programme (PMEGP) – It is a credit-linked subsidy scheme that aims to generate sustainable employment by helping individuals to establish micro-enterprises in both urban and rural areas.Under this scheme, the Khadi and Village Industries Commission (KVIC) routes subsidy through identified financial institutions who in turn disburse the same to eligible entrepreneurs.
  2. Pradhan Mantri MUDRA Yojana (PMMY) – Depending on the size of operation and credit requirement, the MUDRA scheme extends collateral-free credit facility under three categories – Shishu, Kishore, and Tarun. This government initiative aims to provide necessary funding up to Rs. 10 Lakh to both non-farm and non-corporate sectors.
  3. Micro and Small Enterprises Cluster Development (MSE-CDP) – The said scheme has been formulated to enhance the productivity and competitiveness of micro and small enterprises. MSE-CDP is deemed more beneficial for clusters owned and operated by women, microenterprises and SC/ST units of North-eastern hilly regions.

To avail any of these government-sponsored credit schemes, entrepreneurs must meet some eligibility criteria. In case individuals fail to meet the same, business owners can apply for a business loan specially designed for MSME and SME.

Advantages of availing an SME and MSME business loan

Most financial institutions extend substantial financial assistance to MSMEs and SMEs in the form of tailor-made business loans to help them reach their full potential both in terms of production and profitability.

By availing an extensive business loan from a reputed financial institution, MSME and SME owners would be benefitted in several ways. For instance, firm owners can use the loan amount in the following ways –

  • To expand the firm’s operation.
  • To improve its infrastructure.
  • To upgrade or replace obsolete and existing machinery.

Regardless, before applying for a particular credit option individuals should learn about the benefits of MSME loans and SME loans to be better equipped for them.

Similarly, their choice of a lending institution also plays a key role in the same. For instance, availing credit from an institution like Bajaj Finserv which extends substantial loan value at an affordable rate of interest would prove effective for improving the quality of production significantly.

Besides these, enterprise owners should also be aware of the perks and challenges of GST and MSME registration. They should become aware of the ways in which GST impacts their business and also find out how they can make the most of the benefits extended by the policy.

To sum it up, small and medium business owners should gather necessary information about what is MSME and SME friendly government schemes and credit options and how to benefit from them.

Similarly, while opting for an external credit facility they should choose a financial institution that extends tailor-made loans at reasonable rates of interest for a flexible tenor.

Peter