India is quickly becoming a hotspot for many domestic businesses. An increasing number of aspiring entrepreneurs have found the courage to give life to their ambitions. This has given rise to a growing number of micro, small and medium enterprises (MSMEs) in the country. However, despite this, there are still many small business owners who have not identified their entrepreneurial ventures as MSMEs, and have not been registered under the MSME Act, 2006.
Registration under the MSME Act is not merely a formality. It can benefit micro, small and medium enterprises in many different ways, and make it easier to obtain business loans and MSME loans. But first, what are MSMEs, anyway? Let’s find out.
What are MSMEs?
Businesses can be classified as micro, small and medium enterprises based on their investment in equipment and in plant and machinery, and their annual turnover. Here’s how.
|Investment in plant and machinery and equipment|
|Manufacturing enterprises||Not more than Rs. 25 lakhs||Not more than Rs. 5 crores||Not more than Rs. 10 crores|
|Service enterprises||Not more than Rs. 10 lakhs||Not more than Rs. 2 crores||Not more than Rs. 5 crores|
|Investment in plant and machinery and equipment and annual turnover|
|Manufacturing enterprises and service enterprises
|Investment in plant and machinery and equipment not more than Rs. 1 crore
Annual turnover not more than Rs. 5 crores
|Investment in plant and machinery and equipment not more than Rs. 10 crores
Annual turnover not more than Rs. 50 crores
|Investment in plant and machinery and equipment not more than Rs. 50 crores
Annual turnover not more than Rs. 250 crores
How Does MSME Registration Benefit These Entities?
By registering as an MSME in India, these entities get to enjoy the following benefits.
1. Collateral-free Business Loans
MSME registration allows businesses to take advantage of the many initiatives introduced by the government of India to promote business development in the country. One such initiative is that registered MSMEs can obtain credit facilities without having to offer collateral.
2. Concession on Electricity Bills
Power consumption is vital to keep a business running. Unfortunately, since business establishments are charged higher rates in most states, electricity bills could be steep for such entities. To make it financially easier for MSMEs to run their business, existing laws allow these entities to avail a concession on their electricity bills, provided they are registered under the MSME Act.
3. MSME Loans at Affordable Interest Rates
In addition to the collateral-free credit solutions available to them, registered MSMEs can also avail MSME loans at very attractive rates of interest. This makes it possible for them to obtain funding at minimal costs.
4. Reimbursement of ISO Certification Charges
While accreditation is not compulsory, it certainly adds more credibility to a business. And in the case of registered MSMEs, any ISO certification charges incurred by them are reimbursed.
5. Eligibility for Various Subsidies
MSMEs also enjoy a 50% subsidy for any patents they register. They are also given subsidies for industrial promotion. An unregistered entity cannot enjoy these advantages.
So, you see how registering under the MSME Act, 2006 can be of great help if you run a micro, small, or medium entity. Once you’ve registered your business, you can check out the business loans and MSME loans available on Finserv MARKETS. With special benefits like quick online processing, zero collateral requirements, and high loan amount coupled with a longer repayment tenure, MSME loans on Finserv MARKETS can help your business thrive.