Thinking about starting a small business in India? You must have heard the term: MSME. MSME stands for Micro, Small and Medium Enterprises and are known to be the lifeblood of the Indian economy.  

But navigating the world of MSME classification, loans, and registration can feel overwhelming. Fear not, entrepreneur! This blog is your one-stop guide to understanding the latest MSME classification system in India. 

What are MSMEs? And, why do they matter?

MSMEs are micro, small, and medium-level businesses that play a giant role in creating jobs and driving economic growth in India. To support these vital businesses, the Indian government offers special benefits and schemes.

Understanding the New and Simpler MSME Classification System

The MSME classification system has been streamlined for your ease. Now, it only considers two main criteria:

• Turnover: Your annual sales revenue.
• Investment in Plant & Machinery: The cost of equipment used in your business.

There are three main types of MSMEs. Here's a Breakdown - 

Key Features of MSME Classification System

• Simpler & Inclusive: This system is easier to understand and applies to both manufacturing and service-based businesses.
• Increased Limits: Higher turnover and investment caps allow more businesses to qualify as MSMEs and enjoy the benefits.
• Growth-Oriented: This system encourages businesses to expand without losing their MSME classification and its advantages.

Benefits of MSME Registration: Unlocking Resources for Your Business

It’s important for MSME owners to register their business on government’s portal, UDYAM. With UDYAM registration, you can explore many government schemes and benefits. 

Also Read: Government Schemes for Women-led Businesses/MSMEs in India: All You Need to Know

Other benefits of MSME registration are:

• Easier Access to Loans: You'll be eligible for special MSME loan schemes with from financial institutions.
• Government Support: Gain access to government subsidies and grants specifically designed to help MSMEs thrive.
• Exclusive Opportunities: Participate in government tenders reserved for MSMEs, opening doors for new business possibilities.

Hassle-Free MSME Registration

The MSME registration process is conveniently done online. You can register yourself and download MSME certificate. Another way is to seek professional assistance that can explain you how to register MSME and download MSME certificate.

What is MSME Certificate?

The Ministry of Micro, Small and Medium Enterprises issues an MSME certificate, which legally recognizes businesses falling under the micro, small, or medium enterprise categories. This certificate enables businesses to access a range of government incentives and schemes tailored to support their growth and development.

Also Read: Eligibility and Documents Required for MSME Certification 

How to Get Loan for Small Business?

One way to meet small business capital requirement is to apply for loans focused for MSME growth. Numerous financial institutions offer loans for small businesses or loans for MSMEs. With your MSME classification certificate in hand, you'll be eligible for these special MSME loan programs, providing the financial boost you need to grow business quickly.

At Godrej Capital, there are two types of MSME loans options that you can explore.

1. Secured loans: These small business loans accept a collateral in exchange for lower interest rate on loan. You can mortgage your property or land to get loan amount and fund your business. These types of loans (also called mortgage loans sometimes) have affordable interest rate and provide benefits like Flexible repayment options. Example of secured loans are Loan Against Property and Udyog Loan Against Property.
2. Unsecured loans: These types of loans do not need collateral. It is suitable for those who do not have a property to mortgage. At Godrej Capital, explore Business Loans for tailor-made loan solutions. With Business Loans, you can get small business funding and scale your business. 

   Some of the benefits of this loan type include flexible repayment options and BizRewards for timely repayment.

One of the distinct facility that Godrej Capital offers with its loans for business is Flexi Funds. Flexi Funds is an overdraft-like facility that gives you a pre-sanctioned limit. You can withdraw and repay funds as per your requirement. 

The best part of this facility is that the interest is charged only on the funds utilised. This facility lets you avoid loan process everytime you need funds. With this facility, you will be able to access funds anytime you face a business requirement.

Also Read: 8 Advantages of Business Loans for MSMEs

How to apply for MSME Loan?

Before applying for MSME loan, it’s paramount to choose a reputed and trusted lender. You can further enhance your research by exploring the benefits and loan features they provide, and by comparing loan tenure, loan amount, customer support, and other features. Nowadays, many lenders offer you the convenience to apply for a loan online.  

Godrej Capital provides hassle-free loan process with minimal paperwork and hands-on support. Click here to apply now for MSME loan.

Disclaimer:

The contents of this article are for information purposes only & not a financial advisory. For more details, please refer to the product or service document and/ or connect with our customer representative prior to making any financial decision. 

The information is subject to update, completion, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. 

Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

Financing through Godrej Finance/Godrej Housing Finance Limited. Product Terms & Conditions apply, for details visit https://www.godrejcapital.com