The Indian market is filled with the existing businesses and the emerging ones. In fact, one of the IBEF reports indicates that around 633.9 lakhs of MSME businesses are registered, of which more than 99% account for the Micro sector. Now, if you’re a part of that section or are going to be soon, you must know what cash flow is all about and how you can manage it.
Cash flow has always been an important part of any functioning MSME. When in abundance, it makes seizing growth opportunities easier. On the other hand, ineffective cash flow may raise a few hurdles. Well, considering this fact and funds accessibility, the Indian government has a few loan schemes in store for you.
Let’s discuss the PMEGP loan scheme, which has gained significant traction over the past few years, and understand its role in cash flow management.
What is the Purpose of Effective Cash Flow Management?
Cash flow management isn’t about restricting your spending. It’s about empowering your business, and by focusing on incoming and outgoing cash, you gain valuable insights. Here are a few reasons to manage your MSME’s cash flow, whether using Indian government loan schemes or a loan:
- Make Smarter Decisions: Knowing how much cash is flowing in and out of your business facilitates effective planning for upcoming expenses and potential investments. It also helps ensure you have the resources needed to seize profitable opportunities.
- Avoid Cash Shortages: Effective cash flow management helps you anticipate potential shortfalls and take proactive steps. Negotiating payment terms with suppliers or accelerating customer collections are two of the best examples. This is a great way to keep your business running smoothly and avoid disruptions.
- Boost Profitability: By optimising your cash flow using the Indian government loan schemes, you can identify areas for improvement. You might negotiate better payment terms with vendors, minimise unnecessary inventory holding costs, or collect payments from customers faster. All of these contribute to a healthier bottom line.
7 Benefits of the PMEGP Loan Scheme to Fuel Your Entrepreneurial Journey
The PMEGP loan scheme offers a compelling package of benefits specifically designed to empower aspiring entrepreneurs. Here are a few key advantages to consider:
- Reduced Financial Burden: PMEGP is one of the government subsidies that acts as a substantial financial injection. It lowers the upfront investment required to start a business, freeing up your own capital and making starting a business more accessible.
- Potentially Higher Loan Amounts: The combination of the Indian government loan schemes and bank loans can significantly increase the total funding available for your business venture. PMEGP allows you to invest in equipment, inventory, or marketing efforts easily, setting your business up for stronger growth potential.
- Simplified Loan Process: The PMEGP scheme aims to streamline the loan application process for new entrepreneurs. By working with designated financial institutions, you can leverage their expertise and guidance throughout the application journey to your advantage.
- Training and Development Opportunities: In some cases, the PMEGP loan scheme offers access to training programs related to entrepreneurship or specific industry skills. This valuable training equips you with the right knowledge and tools to handle the challenges of running a successful business.
- Improved Loan Eligibility: The PMEGP loan scheme can expand your eligibility for a loan compared to traditional bank loan requirements. This is particularly beneficial for women entrepreneurs who might face challenges securing funding through conventional channels.
- Flexibility for Various Businesses: The scheme caters to both manufacturing and service sectors, opening doors for a wide range of business ideas. Whether you envision a bakery, a clothing boutique, or an IT service company, the PMEGP loan scheme can support your vision.
- Government Backing and Credibility: Having the backing of a government scheme strengthens your business’s credibility, potentially developing trust with suppliers, investors, or potential customers. This can give your new venture a valuable edge in the marketplace.
Indian Government Schemes for MSMEs to Consider
While PMEGP has turned out to be a fruitful loan scheme for many MSMEs, the Indian government has not stepped down with just one loan scheme. Here are a few other ones that you can opt for:
- Credit Guarantee Fund Scheme (CGTMSE): This is a collateral-free loan government-backed scheme for micro and small enterprises (MSMEs). Loans can be borrowed only from authorised lending institutions (banks and financial institutions). This can be a great option since having collateral can be a little tricky in the initial years.
- MUDRA Loans: MUDRA stands for Micro Units Development & Refinance Agency. This scheme offers loans specifically targeted towards micro-enterprises. The loan amount under this scheme ranges from ₹50,000 to ₹10 lakh. It caters to small businesses in the manufacturing, trading, and service sectors.
- Stand-Up India Scheme: Like others, this Indian government loan scheme aims to promote entrepreneurship among all communities. It facilitates loans between ₹10 lakh and ₹1 crore for setting up a greenfield business (a new business venture).
Managing Cash Flow with Government Loan Schemes
PMEGP loan scheme is just a glimpse of many government-backed programs available for MSMEs today. While you can apply for them through the government website, it is also essential to find an authorised MSME banking partner like HDFC Bank. They are one of the private sector scheduled commercial banks, which makes them a credible source of financial backing.
You can borrow loans from them for a variety of business reasons using your PMEGP loan scheme certificate. Besides, they have amazing support channels to guide you through the whole loan application process.
Visit HDFC Bank’s official website and learn more about how this collaboration can take your MSME business to new heights today!
