As a small and medium enterprises manufacturer, you need every help you can get your hands on to make that initial capital last as long as possible. From keeping costs low to cash flow management, there are so many things you have to take into consideration when running a business. However, it doesn’t end there; you need to think about the future of your business as well. How will your company continue growing? Where can you find more customers? If these questions seem daunting right now, don’t worry—we’ve got you covered! The Small and Medium Enterprises (Incorporation) Act comes as a godsend for manufacturers who want to start their own business without worrying about red tape. This article explains how SSI/MSME registration helps you get a loan from a bank and what benefits does it offer:
What is SSI/MSME Registration?
SSI stands for Small Scale Industries, and MSME stands for Micro, Small and Medium Enterprises. While both terms mean the same, you will see both terms being used interchangeably. This also means that if you are a small or a medium scale manufacturer, you can register your company as either SSI or MSME. The Small and Medium Enterprises (Incorporation) Act gives you the option to register as either SSI or MSME. Both of these certificate types offer several benefits when it comes to getting a bank loan, so it is important to understand the differences between the two.
Why Should You Register Your Company as an SSI or MSME?
There are a couple of important reasons why you should register your company as either SSI or MSME. First off, it is much easier to get a bank loan if your company is registered as an SSI or MSME. Banks have their own set of rules, and one of those is that they prefer manufacturing companies that have registered as SSI or MSME. Even though you might be able to get a loan from a bank as a private limited company, it is definitely an uphill task. Another reason why you should register your company as either SSI or MSME is that it comes with a bunch of other perks. Some of the major benefits you will receive after registering your company as either SSI or MSME include tax reduction, exemption from dividend tax, and most importantly, making your company compliant to be listed on the stock exchange.
How Does Bank Loan Benefit You After You Register As An SSI Or MSME?
The main reason why you should register your company as either SSI or MSME is that it makes it easier for you to get a bank loan. However, it also comes with so many more benefits, including many tax breaks and government assistance. Once your company has been registered successfully as either SSI or MSME, you will have access to special schemes by the government. You will be able to get assistance for marketing, research and development, and even funding for your projects. In addition, once you have registered your company as SSI or MSME, you will get a tax reduction on the profit of your company. All these benefits come with a single SSI/MSME registration, making it worthwhile to register your company under this act.
Things to Know Before You Apply For A Bank Loan
- The first thing you need to do before you apply for a bank loan is to make sure your company is registered as either SSI or MSME. If you haven’t done so yet, make sure you register your company under this act as soon as possible.
- The second thing you need to do before you apply for a bank loan is to make sure your company’s books are in order. This means that you need to have proper records of your business, including income and expenses, assets and liabilities. Once you have all the figures in place, you need to make sure that they are correct. If you are not sure about any of the figures in your books, it is best to seek help from someone who can assist you with calculating and analyzing these figures.
- The third thing you need to do before you apply for a bank loan is to make sure your company complies with all the government rules and regulations. This means that your company needs to be registered as either SSI or MSME.
Conclusion
SSI/MSME registration is one of the most effective ways of reducing the burden of start-up costs and increasing the probability of receiving bank financing. It is important to keep in mind that while registering under the SSI/MSME Act can help you obtain a loan more easily, it is not so simple as submitting the documents and getting approved. There is a process that needs to be followed, which you should keep in mind when applying for a loan. With these tips in mind, you should be well on your way towards a successful SSI/MSME registration and approval of your loan request.
Read more,
