Companies that have recently established themselves might initially find it challenging to get through the legal requirements if they are planning on running a bigger game and catching up with their competition. In many cases, most of them do not even know about the paperwork that it entails, and the forms and registrations they have to get through.
The MSME comes in place to assist all companies with various schemes and provide them with the information that they would need if they are planning on lasting in the long run. Additionally, it creates awareness about the vast amounts of paperwork they would have to handle. Companies that register under the MSME schemes are split into two broad categories, relating to whether they work on providing services and products.
Not only is the registration process for an MSME simple and easy to manage, but there are a lot of benefits that come with completing the registration. Here are some benefits establishments automatically receive post registering.
1. Collateral free bank loans
The Government of India has made collateral-free credit available to all small and micro-business sectors. The main intention of the Government was to guarantees funds to micro and small sector enterprises so they could get through the hurdles that come up along the way. Under this scheme, both old and new enterprises can claim benefits.
The Government Of India introduced a Trust named The Credit Guarantee Trust Fund Scheme, SIDBI (Small Industries Development Bank Of India), and the Ministry of Micro, Small and Medium Enterprise to implement the Credit Guarantee Scheme for all Micro and Small Enterprise.
2. Subsidy on Patent Registration
They also provide a massive 50% subsidy to the enterprises with an MSME provided certificate of registration. They can use the subsidies for patent registrations by giving applications to the respective ministries.
3. Overdraft Interest Rate Exemption
Businesses or enterprise registered under the MSME can avail of 1% on the Over Draft benefit as mentioned in a scheme, but the exact amount differs from bank to bank.
4. Industrial Promotion Subsidy Eligibility
Enterprises registered under MSME are also eligible for a subsidy for Industrial Promotion as suggested by the Government.
5. Protection against delayed payments
There are multiple instances when the buyers of services or products from the MSME’s or SSIs tend to delay making payment. The Ministry of Micro, Small and Medium Enterprise lend a helping hand to such enterprises by giving them the right to collect interest on delayed payments from the buyer’s side. They have to settle these disputes in as little time as possible through conciliation and arbitration.
In case any MSME registered enterprise supplies goods or services to a buyer, they have to make payments on or before the agreed payment date. If there was no mention of payment date, they should pay for it within 15 days from the day they accepted the goods and services from MSME, or SCI registered business.
If the buyer delays the payment for more than 45 days after accepting the products or services, they have to pay the compound interest, along with monthly interest on the agreed-upon amount. The interest rate was set to three times the rate notified by the Reserve Bank of India.
6. Fewer Electricity Bills
All Enterprises with the MSME Registration Certificate can provide an application to the electricity department, along with the certificate of registration by MSME.
7. ISO Certification Charges Reimbursement
The registered MSME enterprises can claim the reimbursement of the expenses spent on the ISO certification.