MSME REGISTRATION AND MSME LOAN PROCESS UNDER SIDBI

SANJAY B TRIVEDI May 20, 2020 2859 0

MSME REGISTRATION AND MSME LOAN PROCESS UNDER SIDBI

INTRODUCTION:

Micro, Small and Medium sized enterprises in both the manufacturing and service sector can obtain MSME Registration under the MSMED Act. Though the MSME registration is not statutory, it is beneficial for business at it provides a range of benefits such as eligibility for lower rates of interest, excise exemption scheme, tax subsidies, power tariff subsidies, capital investment subsidies and other support.

REGISTRATION ELIGIBILITY AS PER NEW DEFINATION OF MSME:

MICRO ENTERPRISES:

A micro unit is one with INVESTMENT up to Rs 1 crore and TURNOVER less than Rs 5 crore.

SMALL ENTERPRISE:

The small unit has INVESTMENT up to Rs 10 crore and TURNOVER up to Rs 50 crore.

MEDIUM ENTERPRISE:

The medium-firm will be one with an INVESTMENT of up to Rs 20 crore and TURNOVER under Rs 100 crore.

WHO CAN APPLY FOR LOAN AND AMOUNT OF APPROVAL?

For manufacturing entities, however, land and building cannot be counted toward the total investment. Also, the original cost of the equipment and plant and machinery is taken into account; depreciation cannot be factored in. Any business entity may apply, be it a partnership or a company. Sole proprietors may also apply.
Business Loan In-principle approvals, with /without collateral, are currently provided for value from INR 1 Lac to INR 5 Crore. The Rate of
Interest starts from 8.5% onwards. The Platform is integrated with CGTMSE to check eligibility of borrowers.
Mudra Loan In-principle approvals are currently provided for value from INR 10,000 to INR 10 Lacs.
Personal Loan In-principle approvals are currently provided for value up to INR 20 Lacs,
Home Loan In principle approvals are currently provided for value up to INR 10 Crores and Auto Loan In-principle approvals are currently provided for value up to INR 1 Crore.

BENEFITS OF AN MSME REGISTRATION

BENEFITS FROM BANKS: All banks and other financial institutions recognise MSMEs and have created special schemes for them. This usually includes priority sector lending, which means that the likelihood of your business being sanctioned a loan is high, and lower bank interest rates. There may also be preferential treatment in case of delay in repayment.

TAX BENEFITS: Depending on your business, you may enjoy an excise exemption scheme as well as exemption from certain direct taxes in the initial years of your business.

BENEFITS FROM STATE GOVERNMENTS: Most states offer those who’ve registered under the MSMED Act subsidies on power, taxes and entry to state-run industrial estates. In particular, there is a sales tax exemption in most states and purchase preference on goods produced.

BENEFITS FROM CENTRAL GOVERNMENT: The central government, from time to time, announces schemes to benefit MSMEs, such as the credit guarantee scheme:

CREDIT GUARANTEE SCHEME (CGTMSE)
One of the major struggles that the small scale industries face is credit and input of income from various sources to support them.