A business entity registered under the Micro, Small and medium Enterprises Act, 2006 has a lot of benefits other than an entity like the following:
1. Marginally Cheaper bank loans
2. Preference policy for purchase
3. Upto 75% discounts on credit ratings from CRISIL.
4. Exhibitions reserved for MSME sector.
5. Protection by way of compulsory payments within a certain period of time and mandatory interest
6. Subsidy up to 75% on ISO registration Fees.
7. Support for participation in Global Trade fares
8. Issue of tender sets free of cost,
9. Exemption from payment of earnest money,
10. Waiver of Security Deposit to the monetary Limit for which the unit is registered.
11. Collateral Free Loans - Micro and Small Enterprises
12. Collateral Free Credit Guarantee Scheme up to 50 Lacs.
On September 21, 2007 banks were advised, vide our circular RPCD.PLNFS.No 3068/06.02.31/2007-08, that they may extend collateral-free loans upto Rs. 5 lakh, to all new loans sanctioned to the units of MSE sector (both manufacturing and services enterprises) as defined under MSMED Act,2006. Banks may extend collateral-free loans upto Rs.50 lakhs to all new loans to the MSE sector (both manufacturing and service enterprises).
Finance Minister Pranab Mukherjee , presenting the Union Budget 2009-10 on July 6, has given some respite to the MSME sector. Acknowledging that the slowdown in exports due to the global demand slump has hit small and micro units the hardest, the minister has proposed the formation of a special fund for the sector. The proposed fund, worth Rs 4,000 crore,will be formed out of the Rural Infrastructure Development Fund (RIDF) and provided to the Small Industries Development Bank of India (SIDBI).
Credit Guarantee Fund Scheme for Small Industries.
Credit Guarantee Fund Trust for Small Industries (CGTSI) has been set up by Govt. of India and Small Industries Development Bank of India (SIDBI) to facilitate flow of collateral free credit to eligible small scale entrepreneurs from formal banking sector. CGTSI is operating its guarantee scheme through a network of its 33 Member Lending Institutions (MLIs). .
CGTSI helps availability of collateral-free credit to the SSI sector by mitigating 75% of the credit risk of the eligible lenders viz. banks / institutions which are referred to as Member Lending Institutions (MLIs). These MLIs sanction credit to eligible borrowers based on the viability of the projects and seek guarantee cover from CGTSI against the payment of one time guarantee fee of 2.5% of sanctioned credit facility and thereafter, annual service fee of 1% on the outstanding credit. CGTSI guarantees up to 75% of the credit risk subject to loan cap of Rs.25 lakh and guarantee cap of Rs.18.75 lakh per borrower.
Benefit to exporters
The scheme offers funding for:
1.Participation by manufacturing Small & 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 & Micro units for the first three years for bar code.