The MSME Schemes Guide

Government keeps announcing various schemes for the betterment of MSMEs. Businessmen should make the best utilization of it to remain up to date, competitive and to improve their process. There are many schemes, incentives and support services to make one’s entrepreneurial journey better. There are solutions to resolve issues that may originate in any course of business.

We want to make it easier for MSMEs to access these solutions on a single platform. Hence, our webpage is completely dedicated to get entrepreneurs and businessmen closer to the current Government Schemes with key insights tried and tested by our experts.

MSME-BACKGROUND

  • Highly vibrant and dynamic sector
  • Fosters entrepreneurship and generates largest employment opportunities at lower capital cost.
  • Meet demands of domestic as well as global markets.
  • Provides support to existing enterprises by introducing cutting edge technologies.
  • Ministry of MSME runs various schemes aimed at financial assistance, technology assistance and upgradation, infrastructure development, skill development and training, enhancing competitiveness and market assistance of MSMEs.
  • Committed towards an agenda of inclusive development, and has taken various initiatives and measures to ensure that demographically as well as geographically weaker sections benefit from its work.

New Definition of MSME - Revised Classifications

    Classification Micro Small Medium
    Mfg. Enterprises & Services
    Investment in Plant & Machinery or Equipment
    Investment < Rs. 1Cr. Investment < Rs. 10Cr. Investment < Rs. 50Cr.
    Turnover < Rs. 5Cr. Turnover < Rs. 50Cr. Turnover < Rs. 250Cr.

INDIAN GOVERNMENT FISCAL STIMULUS

Government has unveiled a plethora of liquidity-driven measures to protect MSMEs, NBFCs and discoms.

Collateral Free Automatic Loan

Features:

  • 1. Collateral-free loan extension up to 20% of outstanding credit
  • 2. Borrowers with outstanding up to Rs. 25 Crore & turnover of up to Rs. 100 Crore will be eligible.
  • 3. The Cut Off date for outstanding balance is - Feb 29, 2020.
  • 4. Applicable to only business loans; vehicle or personal loans are not covered
  • 5. Loans to have 4-year tenor with moratorium of 12 months on Principal repayment
  • 6. Scheme can be availed till 31.10.2020

Benefits:

  • 1. No guarantee fee, No fresh collateral to be provided by borrower
  • 2. Interest rates are capped at 9.25% for bank and FI; 14% for NBFC 100%
  • 3. Credit guarantee provided by the Govt. (NCGTL) to banks on the condition of no interest rate spread.

Limitations:

  • 1. Package benefits only available to Existing Borrowers.
  • 2. No Fresh Disbursements under this scheme.

Subordinate Debt for Stressed MSMEs

Features:

  • 1. Govt. to facilitate provision of Rs. 20,000 Crore as Subordinate Debt to MSMEs which are stressed or have turned NPA
  • 2. Govt. will provide a support of Rs. 4,000 Crore to CGTMSE to banks under the scheme

Benefits:

  • 1. Promotors of stressed MSMEs will be given debt on their personal name against their personal assets/guarantee
  • 2. Functioning MSMEs which are NPA or Stressed will be eligible

Limitations:

  • 1. RBI criteria of NPA and Stressed assets shall applies.
  • 2. Promotor shall infuse this money in business as Equity to improve capital structure and facilitate business operations.

Document required for MSME Loan

Business Documents that are required

  • Duly filled Application form.
  • Identity Proof: Passport, driving licence, PAN card, Voter’s identity card.
  • Residence Proof: Passport, lease agreement, trade license, telephone and electricity bills, ration card and sales tax certificate.
  • Age Proof: Passport, Voter’s identity card, Photo PAN card.

Financial Documents that are required

  • Bank statement of last 12 months
  • Business registration proof
  • Proprietor(s) PAN Card Copy
  • Partnership deed copy
  • Company PAN card copy
  • P&L and balance sheet copy of last 2 years
  • Sales tax documents and Municipal tax document
  • Udyog Adhaar Number

Banks that are associated with GAC

  • 1. State Bank of India
  • 2. HDFC Bank
  • 3. Allahabad Bank
  • 4. Central Bank of India
  • 5. ICICI Bank
  • 6. Bajaj Finserv
  • 7. Oriental Bank of Commerce
  • 8. Union Bank of India Indian Bank

Steps to generate Udyog Aadhar No

  • Visit udyogaadhaar.gov.in website. This is a national portal for registration of Micro, Small & Medium Enterprises.
  • Fill information like Aadhaar number, Name of the Entrepreneur and once you enter these details, click on validate and generate OTP.
  • Finally, after following all the steps you will be registered under MSMEs.

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