Do you own a business which can be classified as MSME? If so, you need to know certain information that will be extremely helpful in running the business. I am sharing this information for the benefit for entrepreneurs who run MSME business. I am reachable on firstname.lastname@example.org. In case, you have any issues, please write to me. I provide consultancy for MSME business and charge a nominal fee for consultancy. The ten important information that MSME entrepreneurs need to know are as follows:
1) There is a toll free helpline line for MSME started by government of India. This is knows as ,'Udaymi Helpline. This line was inaugurated for Manmohan Singh. The toll-free number 1800-180-6763, which would offer services between 6 a.m. to 10 p.m. throughout the year, would provide information on a wide range of subjects, including guidance on setting up units, access loans from banks, project profiles and about various MSME schemes. Please use this line to derive maximum benefit for your business.
2) Every MSME needs to know what the credit performance of MSME is. India has four credit bureau which provide credit details related to credit facility availed by MSME. It is suggested that you buy your report from CIBIL (Credit Information Bureau of India) and get an idea of credit history that you have as an MSME. This is critical for loan sanctioning. The report costs Rs.2500 .
3) It is important to get your MSME rated by a credit rating agency. Please note that CIBIL is a credit bureau, while there are credit rating agencies like CRISIL, ICRA, SMERA etc. which provide credit rating which gives an insight into the ability of an MSME to pay back credit obligations. NSIC provides reimbursement of credit rating fees subject to the following conditions:
Turn Over of SSI - Reimbursement of Fee through NSIC
Upto Rs 50 Lacs - 75% of the fee or Rs 25000/- (Whichever is less)
Above Rs 50 to 200 lacs - 75% of the fee or Rs 30000/- (Whichever is less)
More than Rs 200 lacs - 75% of the fee or Rs 40000/- (Whichever is less)
4) The entrepreneurs should be aware that in case they are dealing with a foreign client and want to know the credibility of foreign clients, the report on foreign clients can be obtained by paying a fee to Dun And Bradstreet which provides credit report of foreign and local clients. This will help them mitigate risk in foreign trade.
5) As an MSME, please prepare a business plan and keep it in a documented form. This helps in raising loan and gives an idea about the nature and type of business to outsiders.
6) There is a bill discounting scheme available for MSME and can be used effectively for meeting requirements of working capital. The scheme has following features (Source NSIC):
The Scheme covers purchase / discounting of bills arising out of genuine trade transactions i.e. purchase of supplies made by small scale units to reputed Public Limited Companies / State and Central Govt. Departments / Undertakings.
Small Scale Units
i) State and Central Govt. Departments / Undertakings
ii) Public Limited Companies
GRANT OF PURCHASER-WISE LIMITS
Bills drawn by small-scale units for the supplies made by them and duly accepted by the Purchaser will be financed against security of Bank Guarantee in favour of NSIC.
Purchaser unit(s) may approach NSIC for sanction of annual limits by furnishing information as per the prescribed application form.
GRANT OF SELLER-WISE LIMITS
Seller unit(s) may provide bank guarantee in favour of NSIC for availing financial assistance under the scheme. Bills drawn by them against their supplies made, duly accepted by the purchaser will be financed. Annual limits can be fixed for such units by obtaining information as per the prescribed application form.
PERIOD OF USANCE OF BILLS TO BE CONSIDERED FOR DISCOUNTING :
The maximum usance period of such bills should not exceed 90 days. The period of unexpired usance of the bill shall not exceed 90 days while the tenure of the bills shall not exceed 120 days.
Bank guarantees issued by banks approved by Head Office. The Bank Guarantee to be obtained should be equivalent to the value of assistance (including discounting charges and service charges for 90 days).
Bill of Exchange duly accepted by large corporate units of good financial standing with a turnover exceeding Rs 200 Crores and net-worth exceeding Rs 50 crores and which are profit making for the last three years.
Personal guarantee of proprietor, partners of firms and Directors of the company shall also be obtained.
RATE OF INTEREST :
a) Assistance against the security of BG/SDR/FDR :
Particulars Effective Rate of Interest
(i) Units having valid SE 1A rating under
NSIC's Rating Scheme 12.40%
(ii) Units having valid SE 2A rating under
NSIC's Rating Scheme 12.90%
(iii) Units having valid SE 1B rating under
NSIC's Rating Scheme 12.90%
(iv) Other Units 13.40%
7) As MSME unit, following benefits under Market Development schemes are available (Source MSME website):
A Market Development Assistance Scheme is currently operated by the Ministry of Commerce with a view to encourage exporters (including MSME exporters) to access and develop overseas markets. The scheme offers funding for participation in international fairs, study tours abroad, trade delegations, publicity, etc. Direct assistance under MDA for small- scale units is given for individual sales-cum-study tours, participation in fairs/exhibitions and publicity. SIDBI operates a scheme of direct assistance for financing activities relating to marketing of MSME products.
The Office of DC(MSME) has an existing scheme for participation in international fairs, whereby MSME entrepreneurs are encouraged to display their products at international exhibitions abroad. MSME-DO provides exhibition space and shipment of exhibits ex-Mumbai free of cost for this purpose.
As part of the comprehensive policy package for promotion and development of MSMEs announced on 30th August 2000, it was decided that the Small Industries Development Organisation should have a Market Development Assistance (MDA) scheme similar to the one obtaining in the Ministry of Commerce. It should be a Plan Scheme.
In pursuance of the above announcement and in recognition of the fact that (i) MSME exporters need to be encouraged in their efforts at tapping and developing overseas markets; and (ii) MSME-DO's participation in international fairs, if coupled with the presence of actual exporters, would lead to substantial increase in export business, it has been decided to operate a new scheme called MSME Exporters Market Development Assistance (MSME-MDA) Scheme .
The scheme to be operated in addition to the existing MSME-DO scheme for participation in international fairs will cover all activities for which direct assistance is given under the existing MDA scheme of the Ministry of Commerce. In addition, the scheme would also provide for financial assistance for commissioning market study reports and for initiating/contesting anti-dumping cases. The scheme came into operation w.e.f. 30-08-2001.
Market Development Assistance Scheme for Micro/ Small manufacturing enterprises/ Small and Micro exporters (MSME-MDA)
The scheme offers funding for:
1. Participation by manufacturing Small and Micro Enterprises in International Trade Fairs/ Exhibitions under MSME India stall.
2. Sector specific market studies by Industry Associations/ Export Promotion Councils/ Federation of Indian Export Organisation.
3. Initiating/ contesting anti-dumping cases by MSME Associations and
4. Reimbursement of 75% of one time registration fee (w.e.f. Ist January 2002) and 75% of annual fees (recurring) (w.e.f. Ist June 2007) paid to GSI (Formerly EAN India) by Small and Micro units for the first three years for bar code
8) Get your business ISO certified for international recognisition. The government of India offers incentives for ISO certification and there is a provision for reimbursement of expenses. The Scheme envisages reimbursement of charges of acquiring ISO-9000/ISO-14001/HACCP certifications to the extent of 75% of the expenditure subject to a maximum of Rs. 75,000/- in each case. The Scheme is valid upto 31st March'2012.
9) Keep your balance sheet and profit and loss account in place. This helps in faster sanctioning of loans.
10) Never misuse funds given under specific schemes or specific projects. This is not good for future business prospects.
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