The MSME ecosystem in India has undergone exponential growth, especially in the post-demonetization era. Expanding the MSME full form, micro, small and medium enterprises contribute significantly to India’s economy in employment generation, GDP, innovation and exports.

• According to DGCIS (Directorate General of Commercial Intelligence and Statistics), MSME products have a share of 48.10% in the total exports during 2018 – 2019. 
• Under PMEGP, the micro-enterprises generated 5.87 Lakh employments in the years 2018 – 19.

The development of MSMEs signifies more job opportunities, effectively dealing with poverty and unemployment. Despite huge growth potential, MSMEs struggle to manage their finances and working capital. The Government of India, recognising their difficulties, introduced several schemes to help MSMEs receive adequate business funding.

As declared by the Department of MSME, 2.63 Lakh credit facilities were approved in the year 2017 – 18 while the number stood at 4.36 Lakh in 2018 – 19.

How are MSMEs receiving business funding?

One of the schemes offering financial assistance to micro, small and medium enterprises, the MSME full form, is the Micro Finance Programme.

Businesses that are into industrial activities can avail small loans from SIDBI for commercial needs. SIDBI provides these micro-credit facilities via NGOs and MFIs and keeps 10% of the loan amount as a security deposit.

However, NGOs and MFIs find it challenging to maintain the security deposits for several MSME loans owing to financial limitations. Therefore, the government collaborated with SIDBI to introduce Micro Finance Programme, which makes loans more affordable and easier.

Under this program, NGOs/MFIs need to pay only 2.5% as security from the loan amount. The remaining 7.5% is provided by the government-funded Portfolio Risk Fund. During the 10th Plan of Micro Finance Programme, Rs. 6 Crore was contributed to the Portfolio Risk Fund. Considering a loan of Rs. 5,000 per recipient, this contribution aided close to 1.6 Lakh beneficiaries as SIDBI provided a credit of Rs. 80 Crore to NGOs and MFIs.

Some other schemes for MSME funding

Besides the Micro Finance Programmes, MSMEs can receive financial assistance from the following schemes –

1. MUDRA loans.
2. CGTMSE or Credit Guarantee Fund Scheme for Micro and Small Enterprises.
3. Stand-up India.

MSMEs in India can also avail of business funding from various public and private financial institutions. Prominent lenders, Bajaj Finserv, offer tailored MSME loans with numerous benefits, viz. –

1. It is an unsecured loan. So, borrowers can avail the credit without any collateral or security.
2. Up to Rs. 30 Lakh is offered as SME / MSME finance to fulfil diverse requirements sufficiently.
3. Only 2 essential documents are needed to apply for the MSME loan. The lender provides doorstep document collection for customers’ convenience.
4. Being collateral-free, it takes minimum time to process the loan application. Borrowers can enjoy quick approval and disbursal.
5. Comparatively lower interest rate and flexible tenor of 12 months to 60 months make an MSME loan more affordable.
6. The application process is also simple with customized pre-approved offers.

While such schemes are primarily for existing customers, eligible borrowers can also apply for the credit via an online application form. MSME loans are an efficient financing solution with no end-usage restriction.

Owners can utilise the money for anything, like –

• Increase working capital.
• Purchase equipment.
• Open a branch.
• Penetrate new avenues.
• Stock up inventory.
• Introduce the latest technology.
• Pay for overhead costs and more.

Knowing the best time to search for small business loans is essential. Whichever funding scheme you avail, it is essential to prepare a business plan beforehand. It brings more clarity in the purpose and enables owners to make the loan’s best utilization. If you qualify for what the MSME full form expands to – micro, small and medium enterprise, get your business certified to enjoy the various financing benefits.