There can be many benefits for small businesses related to MSME (Micro Small & Medium enterprise) registration. These enterprises are the backbone of our economy. Therefore, there are many schemes offered by the Indian government to support them.
Although it is not mandatory, it is beneficial for every MSME owner to register their business to avail the advantages offered even if the company is a sole proprietorship, or an LLP, or a private company.
Here are some benefits of MSME registration for small businesses:
1. Subsidy on patent
If the MSME business owner wants to patent a new product or business model, high fees will be taken for it, but if the business is registered, a 50% subsidy can be availed on it, in whatever industry the business is. With the help of this subsidy, the small business owners can innovate and register their business.
2. Exemption of interest on an overdraft
MSMEs only with a good CIBIL score and credit history can avail an overdraft facility with the banks. The MSME owner can have an exemption of 1% on the interest which is beneficial for the MSMEs. But this facility is not provided by all; hence, the business owners have to first check with the lenders.
Lack of proper usage of technology can limit the MSMEs to use the resources to their highest potential.
The government has a scheme called Capital Aid for Technological Upgradation through which it helps the MSME s to upgrade their equipment and machinery by getting machinery loan at affordable interest rates.
4. Business loans without security
Another benefit of an MSME is taking unsecured loans from NBFCs or other institutions which provide online loans.
5. Reduction of delayed payments
When you register your MSME, the Ministry of MSME gives protection against any delayed payments from buyers and also right of interest on delayed payments through the settlement of dispute done at a faster pace. If the MSME is registered, the buyer has to make payments on the agreed dates, and if the payment is not made on the date agreed then the buyer should make payment within 15 days after taking the goods.
If the buyer fails to make the payment on time, there is a specific compound interest the buyer has to pay with the monthly interest rate on the amount. The penal interest chargeable for delayed payment to an MSME enterprise is three times of the bank rate notified by the Reserve Bank of India.
6. Can get a concession on the electricity bills
If your MSME is registered, you can get a concession on the electricity bill by writing an application to the electricity department with the registration certificate.
7. Can claim reimbursement of ISO certification charges
Reimbursement of ISO certification expenses can be claimed by applying to the respective authority only when the MSME is registered.
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