Micro, Small and Medium Enterprises (MSME), governed under the MSMED Act of 2006, are famously known as the ‘backbone’ of our country’s economy. In June 2020, the Union Cabinet officially revised the definition of MSMEs, increasing the investment and turnover slabs for qualification. This effectively brought more businesses under the ambit of the ‘MSME’ definition.
Let’s take a look at the new definition of ‘MSME’ and how it benefits your business.
Redefinition of the MSME Sector
According to the previous classification, a business with an investment of up to Rs. 25 lakhs was a micro business. Businesses with an investment of up to Rs. 5 crores and Rs. 10 crores fell into the ‘small’ and ‘medium’ categories, respectively.
According to the MSME new classification:
- Businesses with investments of up to Rs. 1 crore and a turnover below Rs. 5 crores will be considered micro enterprises
- Businesses with investments of up to Rs. 10 crores and a turnover below Rs. 50 crores will be considered small enterprises
- Businesses with investments of up to Rs. 50 crores and a turnover below Rs. 250 crores will be considered medium enterprises
This means that even with an increased turnover, many businesses will still be classified as MSMEs. Thus, the government subsidies and tax benefits that are available to MSMEs will now extend to more businesses in the country. But there’s more.
Additional Read: Best Way to Get an MSME Business Loan
Availability of MSME Loans
The new definition benefits all MSMEs looking for funding to expand their footprint. The government extends several benefits to such businesses looking for loans. There are quite a few government schemes that offer collateral-free loans, better business loan interest rates, and other loan subsidies.
For instance, as part of its Atmanirbhar Bharat Abhiyaan package in 2020, the government announced the following for MSMEs –
- Rs. 3 lakh crores collateral-free loans for MSMEs
- Rs. 20 crores subordinate debt for MSMEs
- Extension of the due date for filing the ITR
This is just one example of how MSMEs in India have much to gain, given their importance to our economy. To benefit from such schemes, you need to register your business with the government and get an MSME/Udyam certificate.
What’s more, many private and public lenders offer easy MSME loans to support growing businesses and their needs. Thus, if you fall under this category, you will get adequate financial support from several quarters.
Additional Read: Why Is MSME Loan the Perfect Finance for Small Business Owners?
Find Easy MSME Loans at Tata Capital
Tata Capital understands the importance of MSMEs for our economy. Thus, we extend easy business loans to help you expand your business and make the most of subsidy schemes available to MSMEs.
With an easy business loan eligibility criteria and competitive interest rates, you can find quick credit at Tata Capital. You can avail MSME loans ranging from Rs. 5 lakhs to Rs. 75 lakhs for a loan tenure between 12-36 months.
Enjoy customisable repayment schedules and a quick loan disbursal at Tata Capital. For more information on MSME loans, check out our website today.