SMEs have become a large part of the economy in every emerging nation. India also has seen a surge in SMEs since liberalization and these organizations have grown in number, size and variety over the years. SMEs are equally active across the manufacturing and service sectors and several have emerged as formidable players in the export market.
Entrepreneurs consistently need funds to run a successful operation and regularly upgrade their business. The government and several nationalised banks and financial institutions have schemes and measures that are specifically focussed towards the promotion and development of small and medium enterprises. The public sector banks are the major source of financial assistance to the industrial sector. They extend credit support to the firms in the form of loans, advances, discounting bills, project financing, term loans, export finance, etc. Several banks provide a wide variety of financial products and services, such as
Working capital finance, extended to all segments of industries and services sector.
Corporate term loans to support capital expenditures for setting up new ventures as also for expansion, renovation, etc.
Deferred payment guarantees to support purchase of capital equipments.
Small and Medium Enterprise (SME) Loan Pack
Small Business Borrowers
Export & Import Finance
Advance against Shares
All banks do not provide all services and it best to check which scheme suits your business cycle and needs before going in for relationship. There are also banks that give specialized loans for specific small scale industries that are in any way involved in the agricultural sector.
Small scale industries need credit support on a continuous basis for running the enterprise as well as for its diversification and modernisation. The Government of India and several State Governments have formulated special policies and schemes to assist in the development and growth of SMEs. The two organisations that have been constituted for this purpose are:
Small Industries Development Organisation (SIDO) is an apex body for promotion and development of small scale industries in the country. It begins its work by advising the Government on formulation of policies and programmes for the small-scale industries.
It also helps in conducting periodical census/survey of the small scale industry and generating data/reports on various important parameters/indicators of growth and development of the sector. Maintaining close liaison with other Central Ministries, Planning Commission, State Governments, Financial Institutions and other organisations concerned with the development of small-scale industries is another important function of SIDO. The schemes that are available to SMEs through SIDO include:
- Credit Linked Capital Subsidy Scheme for Technology Upgradation
- Credit Guarantee Scheme
- ISO 9000/ISO 14001 Certification Reimbursement Scheme
- Integrated Infrastructure Development (IID Scheme)
- SSI MDA Scheme
- Assistance to Entrepreneurship Development Institutes
- Micro Finance Programme
National Small Industries Corporation Ltd (NSIC) has been established with the objective of promoting, aiding and fostering the growth of small scale industries in the country. It has been assisting small enterprises through a set of specially tailored schemes which facilitate marketing support, credit support, technology support and other support services.
NSIC schemes include:
- Credit support schemes such as Equipment finance and raw material procurement finance
- Financing for marketing activities
- Financing through syndication with banks
- Performance and credit rating scheme for small industries
- Technology support schemes
Several States have various State Financial Corporations (SFCs) which provide financial assistance to the industrial units. There are currently 18 such institutions that operate in various states in India. Some of the major schemes offered by these institutions include:-
- General Scheme For SSI Units
- General Scheme for SME Units
- National Equity Fund (Nef) Scheme
- Working Capital Finance
- Scheme for Assistance to Information Technology And Software Development Sector
- Financial Assistance for Infrastructure Projects
- Asset Credit
- Short Term Loan
- Loan Replenishment
- Public Issue Appraisal
- Corporate Advisory Services
If you are new SME and are looking for government help then there are 5 particular schemes that one should check out, they are – Credit Guarantee Fund Scheme for MSEs (CGMSE), Credit Link Capital Subsidy Scheme for Technology Upgradation, Mini tools room and training centre scheme, National Award scheme and Market Development Assistance Scheme for MSMEs.
All these schemes are listed on state government and the central government websites and can be easily tracked over the internet.