MSME is the collective term for micro, medium and small enterprises, and there is a separate ministry for MSMEs within the government of India. MSMEs not only generate employment but account for 45% of the country’s manufacturing facilities and contribute 8% of the gross domestic Product (GDP) of the country. MSMEs have large export volumes and contribute 40% of the exports of the nation to other countries. MSMEs came into being with the formulation of the MSMED (micro, medium and small enterprises development act in 2006. Until then, MSMEs were mostly known as small and medium-scale industries, and the criteria for classifying industries into small and medium were also not clearly defined.
MSMEs have a regular need for loans, and there are several lenders available. The businesses can even try out the EMI calculator to first examine whether a loan and its calculated EMI are payable and fit into the monthly budget.
It is important to understand the different criteria on which micro, medium and small enterprises are classified to get an idea about the business loans they are eligible for. In addition to the criteria for classifying MSMEs by the MSMED act of 2006, a bill was introduced in 2018 that further classified MSMEs on the basis of their annual turnover. The criteria have been tabulated below as a ready reckoner.
The MSMEs have great potential for the economy of India. The 4.5 million MSMEs presently in India employ 120 million people, and both banks and financial institutions benefit from not only providing loans to these enterprises but from the cash generated from their turnover and sales.
MSMEs have a regular need for loans for the following purposes
Working capital loans can be further classified into
Term Loans are the second broad category of MSME loans, and they are further classified into
MSME loans are mostly business loans but with a difference in some facilities specially provided for MSME loans.
MSMEs must apply for business loans and have both their credit rating and their udyam registration.
Most of the site of lenders, including banks and financial institutions, have their own sites here. MSMEs can apply online for a business loan. One of the key features of the sites is the online loan EMI calculator, where MSMEs can determine the EMIs on the loan amount that they are eligible for those they are applying for.
An MSME loan EMI calculator is a popular app that allows applicants to try out various combinations of principal loan amounts, interest rates, and term of the loan. The program calculates and displays the EMI payable on the loan at the prevailing interest rate.
MSMEs can use the EMI calculator to try out different combinations of loan amounts. Tenures and interest to arrive at an affordable EMI and apply for the most suitable loan amount
MSMEs can plan their monthly budget once they know the exact EMI amount based on the loan that they are applying for.
For instance, if a business wishes to take a loan of Rs 5 lakhs at an interest of 12% per annum for a tenure of 5 years and feeds these details into the EMI calculator, The program will show an EMI of Rs 11122 per month, and the total amount repayable on a loan of Rs 5 lakhs will be Rs 6.67 lakhs.
The procedure for using the EMI calculator of the MSME loan provider is very simple and does not require the applicant to log into the site.
The EMI calculator is an app within a site that can be clicked to open. Once opened, there are boxes where the applicant will need to enter the loan amount, the tenure and the interest rate.
Once these details have been entered, the “submit” button gets activated and will need to be clicked. The calculated EMI will show up on the screen.
Interested applicants can repeat this step repeatedly until they arrive at a suitable EMI. They can now use the loan amount and tenure and go ahead and apply for the loan.