MSME IN INDIA

PREFACE

Dear Professonals, as we all know, due to COVID-19 Impact, MSME Industries which are the backbone of the Indian Economy are facing Cash Crunch situation. The Government of India is taking steps to revive the Indian economy as soon as possible. To help the MSME Sector, the Government of India has saved them from Insolvency Bankruptcy Law and allocated a huge sum for Existing MSME Units as well as new Startup. Now, the main focus of Government is in making “Atamnirbhar Bharat” where government are taking initiatives to fueled up manufacturing sectors and second we are expecting to build India as Manufacturing same, as many announcements are made by our hon’ble Prime Minister like no global tender up to Rs.200 Crore for all fresh Government projects, etc.

Announcements are made by Government; however, the funds will be released through banking channel, which requires documents like basic KYC of Entrepreneur, Income Tax Return documents, good CIBIL Score, GST Records and the most important is Project report which describes how the projects will be started and how the funds raised from the bank will be refunded.

First: On 13th May 2020, Finance Minister Nirmala Sitharaman added the additional principle of turnover along with the investment.

Revised MSME Classification

now Composite Creteria based on Investment and Annual Turnover 

MIRCO: Investment upto 1 Cr. and turnover upto 5 Cr.

SMALL :Investment upto 10cr. and turnover upto 50 cr.

MEDIUM: Investment upto 20 Cr. and turnover upto 100 Cr.

And Second, On 1st June,2020 Monday, the Union Cabinet headed by Prime Minister Narendra Modi officially revised the MSME definition. The recent changes in the definition of micro, small, and medium-sized enterprises made as a part of the Atmanirbhar Bharat Abhiyaan relief package were approved.

The investment and turnover figures were changed to larger values, thereby resulting in a larger number of medium-sized enterprise.   

now Composite Creteria based on Investment and Annual Turnover 

MIRCO: Investment upto 1 Cr. and turnover upto 5 Cr.

SMALL :Investment upto 10cr. and turnover upto 50 cr.

MEDIUM: Investment upto 50 Cr. and turnover upto 250 Cr.

    

DOCUMENTS REQUIRED FOR MSME LOAN

• 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

• Last 12 months’ bank statement
• 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
• Municipal tax document

HOW TO APPLY FOR AN MSME LOAN ONLINE?

• Go to https://udyogaadhaar.gov.in/UA/UAM_Registration.aspx, which is the national portal for the registration of Micro, Small & Medium Enterprises.

Some banks that provide MSME loans

• State Bank of India
• HDFC Bank
• Allahabad Bank
• Central Bank of India
• ICICI Bank
• Bajaj Finserv
• Oriental Bank of Commerce
• Union Bank of India
• Indian Bank

Project Report for MSME loan

1. Introduction

2. Founders Complete Detail along with their experience

3. Techno Feasibility Report

4. SWOT Analysis of your products

5. Location of Project and facilities available

6. Manufacturing Process

7. Applicability of Licenses

8. Means of Financing

9. The financial cost of Project

10. Profitability Statement

MSME LOAN SCHEMES

• MUDRA LOAN

MUDRA (Micro Unit Development and Refinance Agency) was introduced to provide support to the small business owners. MUDRA yojana is further classified between three categories named as Shishu, Kishore and Tarun.

In the Shishu category, an MSME loan is provided up to Rs. 50,000 to a Start-Up enterprise. In the Kishore category, a loan of up to Rs. 5 lakh is provided to the companies that have been running for a while and want to get more established. In the Tarun category, the MSME loan is provided up to Rs. 10 lakh to companies that are established and are looking for expansion. The maximum repayment tenure is of 60 months for all Mudra loan categories.

• CGTMSE

CGTMSE (Credit Guarantee Funds Trust for Micro and Small Enterprises) was introduced to establish a strong credit relief system and promote a better credit flow for the MSME sector. Under the CGTMSE scheme, the loan is backed without any external collateral or third party guarantee.

Here, the MSME loan sanctioned by the Member Lending Institution (MLI) is backed by the scheme which provides the guarantee cover for a large portion of the loan amount. Under CGTMSE scheme, both new and existing medium, small, and micro enterprises, including service enterprises are eligible for a maximum credit cap of Rs. 2 crore.

CGTMSE also offers rehabilitation assistance to the units. Any MSME unit that is in a bad condition due to the factors beyond the control of management is supported by the CGTMSE rehabilitation assistance. The maximum credit cap of Rs. 1 crore is offered to the dilapidated MSME units.

CGTMSE scheme is offered to various institutions which are as follows:

·         Scheduled Commercial Banks

·         Regional Rural Banks (RRBs)

·         National Small Industries Corporation (NSIC)

·         North Eastern Development Finance Corporation (NEDFi)

·         Small Industries Development Bank of India (SIDBI)

• PMEGP

PMEGP is a credit linked subsidy program which was integrated with two other schemes, namely, Prime Minister’s Rojgar Yojana (PMRY) and the Rural Employment Generation Programme (REGP), to generate employment among the educated youth of the country. Under PMEGP scheme, the beneficiary has to invest close to 5-10% of the project cost while the government grants a subsidy of 15-35% of the project. The participating banks offer the rest of the funds as term loans to the business owners.

To avail PMEGP loan, individuals and organizations should meets certain criteria which are listed below:

·         Age Criteria: Min. 18 years & Education Qualification: 8th class passed for   individuals

·         Must be a part of Self-Help Group (SHG)

·         Societies that are registered under Societies Registration Act, 1860

·         Production Co-operative Societies

·         Charitable Trusts

Above mentioned points are mandatory points which must be explained in a project report. Many other points may be added according to the nature of the project. Our main focus is to give in detail the required information to the banker so that they can easily decide that they will get the return of their lend amount or not.

MSME Toll Free No: 18001237376

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 AUTHOR: - Adv. Parvindra Nautiyal

Managing Partner At A Biz Chancellor (Advocate, Company Secretary (Aspirant), B.COM Graduate, First Runner-up winner Moot Court Competition Organised by ICSI Noida Chapter)
Mobile No. 8882017384

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