MSMEs are known as the backbone of the Indian ecosystem due to their strategic role in nation-building through wealth generation, creation of employment opportunities, and harnessing of local talents which in turn plays a pivotal role in contributing to the GDP of the Company.
India is home to more than 65000 start-ups registered to date. The Indian start-up ecosystem is producing unicorns at a way faster speed than any time before receiving huge sums of investments from global investors and celebrating renowned exits such as the $16 bn Walmart-Flipkart acquisitions at the same time. Further, the micro, small, and medium enterprises (MSME) sector of India comprising 577 Cr companies is beating all difficulties coming on its way related to setting up and establishing a consumer base for itself. However, an entrepreneurial idea remains a mere idea, if it fails to be supported with the requisite working capital on time.
According to reports, less than 5% of MSMEs have access to formal credit and thus rely on informal sources to access funds for their businesses. Similarly, where there a large number of private equity and debt funding options are available, it is challenging to get funding at an early stage with a mere idea.
Therefore, as a much-needed move to address the problem of financing for businesses, the Govt. of India has rolled-out several schemes and initiatives offering business loans to start-ups and MSMEs through authorized channels. Various government start-up loan facilities have been introduced in these recent years for entrepreneurs that have lower eligibility criteria, flexibility in collateral, and lower interest rates which would not be available otherwise. The article presents a thorough description of Mudra Loans for MSMEs and other schemes which could be helpful for an entrepreneur looking for funds to support his business in Bhubaneswar, Odisha-
Odisha is formerly known as Orissa till 2011. It is located in the Eastern part of our country. 1st April is observed as Odisha Day. It is the 8th largest state in terms of area and the 11th largest state in terms of population. Odisha is the 3rd largest in terms of scheduled tribes, and population in India. This state shares its boundaries with West Bengal and Jharkhand in the north, Chhattisgarh in the west, Andhra Pradesh in the south, and the Bay of Bengal (2nd largest subdivision of India after the Arabian Sea) in the east. The region is also popularly known as Utkala (Ancient name), and this name also has its imprint on India’s national anthem,” Jana Gana Mana”. Demographically, various languages are spoken in this state, but amongst them, Odia is majorly spoken by the native people.
Odisha is an attractive tourist destination of various architectural wonders. Odisha is infamous for its historical heritage sites and enchanting views. From beaches to pilgrimage and monuments, Odisha offers a plethora of enthralling endeavors to travelers who visit from all over the world. There are a ton of places to attract tourists like Puri (one of the char-dhams or four holy places for Hindus), Bhubaneshwar (the temple city of India), Chilika lake in puri (India’s largest brackish water lagoon), Jaganath Temple in puri (World famous chariot festival in the month of June-July), Konark Temple (UNESCO World Heritage Site), Rourkela (steel city of Odisha) and many more.
According to the survey conducted by Forest India in 2012, Odisha comprises 31.41% of the state’s total area. Due to the favorable climate conditions, Odisha’s moist and evergreen tropical forests are suitable ecosystems for wild orchids. Odisha consists of various national parks, wildlife sanctuaries, and bio reserves such as Simlipal National Park (the highest tiger population in the state), Chandaka Elephant Sanctuary, and Bhitarkanika National Park, etc. The backbone of Odisha lies in the villages and farmers. The state government initiated various innovative schemes to increase farm productivity like the Jeebika scheme, Digital Mandi Yojana, Mobile Veterinary Unit (1st state to organize animal health camps), Biju Krushak Yojana, and many more. During the crisis times, the state government sponsored the Indian hockey team, which led to remarkable achievements for the country through their spectacular performance in the Tokyo Olympics.
Capital- Bhubaneswar
Top Business Idea in Odisha
Odisha’s main economy relies on agricultural-based products, production, and cultivation. However, by the collaborative efforts of inhabitants and government, State is transiting into business strata. Odisha is becoming the best place for entrepreneurs as the government is providing the ease of doing business and other essential facilities. The main realms in which lucrative business models can be set up are tourism, hotels, restaurants, transport, communication, insurance services, and other financial profiles. Given below is the list of feasible and profitable business ideas with less investment that can be commenced on a small scale.
Candle-making business
This is the most affordable business with mere investment; investors or entrepreneurs can initiate this business model. To fulfill the high requirement of candles in the state candle making business is a good startup idea. Moreover, there are different types of candles available such as traditional white, decorative, scented, and many other types. Even the raw materials used for the candle-making process are easily available in the market.
At the initial stage, you can start making candles at your home and sell them locally. After that, get in touch with the wholesalers, grocery stores, vendors, and many other places where the demand is high. There is already a huge market for decorative candles as a gift item. Once you have started making good connections in the local market, This small investment that you have made will gradually lead you to a massive profit.
Cashew nut processing business
The cashew nut processing business is a profitable and cost-effective business that can be initiated with a small investment. As we know, Orissa is a famous state for cashew nut production, so there is a high demand for cashew nuts in Odisha. First, let’s understand the market before starting the business. Cashew nuts need proper processing and finishing it is necessary as people do not consume raw cashew nuts. Day by day, people are getting more health-conscious, so they demand proper process cashews which contain multiple health benefits. But as per the demand for the cashew nuts, the supply of cashew nuts is not up to the mark. Therefore, before starting the business of cashew nuts, choose a preferred location where you can get raw materials. The small-scale business in providing a handsome salary.
Jute bag-making business
If you want to open a small-scale business, then preferably, a jute bag-making business is the best. Odisha is popular for jute production. Jute has significance in our daily lives, such as in the form of jute bags, chairs, tables, and many more. Hence has always been an integral part of our daily life. It can be a productive and cost-effective business if the raw materials are used effectively. From the business perspective, it requires a small investment, but you can earn a lot of money through its outcome. You can quickly start this business in Odisha as jute has been an integral part of our daily lives and is easily available all over the state.
Startup Ecosystem in Odisha
Over the past few years, several initiatives have been implemented by the Government of Odisha, and these Initiatives have majorly impacted the ease of doing business in Odisha. TheDepartment for Promotion of Industry and Internal Trade (DPIIT) has ensured that the state has a vibrant startup ex. Startup Odisha is the state’s prominent initiative to create a favorable ecosystem for the startup to aspire and flourish.
State provides the firm financial support for the investors or entrepreneurs for establishing both public and private institutions. Even the state has extended its support to the universities by conducting various training programs for the faculties to equip them in the region of entrepreneurship and innovation. The state has also planned to create an annual campaign named the startup Odisha Yatra. The main aim of this platform is to inspire and educate the students, innovators, and entrepreneurs of remote areas to realize the importance of entrepreneur goals which will be encouraging for the future of our state.
Let’s talk about the financial aid provided to the startups. The Odisha youth innovation award gives an amount of ₹ 50000/- for thinking of an innovative business idea, ₹ 1 lakh at the prototype stage, and INR 3 lakh at the scale-up stage to a large number of startups every year.
I. Pradhan Mantri Mudra Yojana(PMMY Scheme) in Bhubaneswar, Odisha
The Pradhan Mantri Mudra Yojana (PMMY)scheme was initiated in the year 2015. Where MUDRA is the acronym for Micro Units Development and Refinance Agency Ltd (MUDRA), and it is an institution established by the government with the purpose to offer funds for income-generating activities to micro and small enterprises in the non-farming and non-corporate sectors to meet the requirements across various business sectors as well as business/entrepreneur segments.
Mudra operates through refinancing banks, NBFCs, or microfinance institutions (MFI) based on the specific Mudra loan eligibility criteria suited for their requirement, compliance with the terms and conditions, and avail of the financed amount.
The total amount of funds offered to MSMEs through this scheme is up to Rs. 10 Lakh collateral-free loans with a repayment tenure from one year to five years. Any applicant MSME who wishes to seek a loan under this scheme may approach any lending bank or financial institution or under the PSB (59 minutes portal).
What is the eligibility for Mudra Loan Application in Bhubaneswar, Odisha?
It is to be understood that the business entities and enterprises following under this category will be eligible to avail of loans under the MUDRA scheme in Bhubaneswar, Odisha-
i. Every non-corporate & non-farm business organizations;
ii. Businesses primarily engaged in the business of revenue generation through trading, services, and manufacturing activities.
iii. Where the credit requirement of a business is maximum up to ten lakh rupees or lower and
iv. Businesses involved in allied agriculture services since April 1, 2016.
Purposes of Mudra Loans in Bhubaneswar, Odisha–
MUDRA loans in Bhubaneswar, Odisha could be applied and availed by businesses for the following purposes-
- Business Growth & expansion
- Purchase of Business Assets
- Working Capital Needs
- Infrastructure Development
- Technology Upgrade
- Scaling Operations
- Product/Services Expansion
- Business Diversifications.
MUDRA incentives offered through these interventions in Bhubaneswar, Odisha–
PMMY provides loans under three categories – Shishu, Kishor, and Tarun loans depending upon the stage of development of the MSME business. Besides, within these interventions, MUDRA ensures to meet the requirements of different sectors/business activities as well as business/entrepreneur segments as provided below-
| S.No. | Applicable Stage of Development | Eligible Loan Limit |
|
|
Shishu | Up to Rs. 50,000 |
| ii. | Kishor | Above Rs 50,000 – 5 Lakh |
| iii. | Tarun | Above Rs. 5 Lakh –Rs. 10 Lakh |
Benefits of Mudra Loans under PMMY Scheme in Bhubaneswar, Odisha
i. The Mudra loan essentially offers term loans and working capital loans facilities to New and existing MSME units engaged in the business of manufacturing, trading, and service sector activities.
ii. MUDRA loans come with the flexibility of no security or collateral-free loans and could be availed without payment of any processing charges, however, the rate of interest may vary for each type of loan and bank to bank.
iii. The credit facilities extended under the PMMY scheme could be used for various purposes such as term loans, overdraft facilities, or to apply for letters of credit and bank guarantees.
iv. Entrepreneurs/Businessmen from SC/ST backgrounds may avail of special concessions on their interest rates on availing loans under the PMYY facility.
v. Like the flexibility of collateral, there is flexibility in the repayment period which could be anywhere between three to five years.
vi. The process of availing of loans could be easily completed within minutes using the portal through the Mudra cards.
II. Other MSME Loans in Bhubaneswar, Odisha Include-
i. Credit Guarantee Fund Scheme in Bhubaneswar, Odisha
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is the online scheme established by the Ministry of Micro, Small & Medium Enterprises (MSME), Government of India, with the primary objective to ensure the availability of credit facilities to MSMEs and entrepreneurs to set-up their MSME business unit, without any hassles of arranging collateral or third-party guarantee while seeking loans from banks or financial institutions. It seeks to reassure the lender to offer loan facilities on the viability of the business of the MSME unit and in the event of failure on the part of the borrower MSME to discharge its liabilities to the lender, the CGTMSE would make good the loss so incurred by the lender up to 50-85% percent of the credit facility.
The CGTMSE introduced the scheme with a “hybrid security” model that allows guarantee cover to the lender for the portion of credit facility not covered by collateral security.
Additionally, the scheme ensures that the lender availing guarantee facility should endeavor to provide composite credit facility to the borrowers to enable them to seek and obtain term loan and working capital facilities from a single agency respectively.
Eligibility Criteria for Credit Guarantee Fund Scheme in Bhubaneswar, Odisha–
The scheme applies to all new and existing MSMEs involved in manufacturing or service activities, except that engaged in-
- Educational Institutions,
- Agriculture,
- Self-Help Groups (SHGs) And,
- Training Institutions, etc.
Fiscal incentives under the scheme in Bhubaneswar, Odisha–
The CGTMSE scheme for entrepreneurs comes with a whole lot of benefits as mentioned below-
i. Availability of credit facilities with term loans and/or working capital loan facility up to INR 200 Lakh per
ii. Guarantee Cover facility through CGSTMSE to lending institutions as provided below-
- Typically the guarantee cover provided is up to 75% of the credit facility up to Rs. 150 Lakhs.
- For Micro Units, the guarantee cover will be available up to 85% of the credit facility for loans up to a total amount of Rs.5 Lakh.
- For MSMEs owned/operated by women and all loans to NER including Sikkim, up to 80% of the credit facility shall be available.
- For MSMEs in Retail trade, the guarantee cover applicable will be 50% of the amount in default subject to a maximum of Rs. 50 Lakh.
The credit guarantee will begin from the date of payment of the guarantee fee and will run throughout the agreed tenure of the credit facility in case of term loans/composite loans for five years where only working capital facilities have been availed by MSME or for such longer period as specified by the CGTMSE.
ii. MSME Business Loans in 59 Minutes in Credit Guarantee Fund Scheme in Bhubaneswar, Odisha
The MSME Business Loans for Start-ups in 59 Minutes was launched in September 2018 and is administered by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) of India. Such a scheme supports MSMEs by not only helping them to raise funds for their business requirements but also simplifying the decision-making process for credit managers.
The scheme aims at the automation of several processes related to loan appraisal in a manner to fasten and ease the process of obtaining an eligibility letter & in-principle approval within 59 minutes from the bank of choice of the borrower MSMEs.
Eligibility Criteria for MSME Business Loans in 59 Minutes in Credit Guarantee Fund Scheme in Bhubaneswar, Odisha–
i. Any applicant who wishes to avail of the MSME Business Loans in 59 Minutes should meet the following eligibility criteria in Bhubaneswar, Odisha-
- The applicant should be a running micro, small or medium business entity as per the definition prescribed under the MSMED Act, 2006.
- The business should be registered under GST and should be GST compliant.
- The applicant must submit cash flow statements to the lender for verification purposes.
ii. Further, the loan eligibility for each applicant business shall be determined based on factors such as-
- Periodical Income/ Revenue of the business;
- Capacity of repayment
- Existing credit facilities availed by the business
- Any other factors as set by the lender (if applicable).
Fiscal Incentives under the scheme in Bhubaneswar, Odisha–
The MSME Business Loans for Start-ups in 59 Minutes scheme offers contactless business loans to start-ups for value between Rs.1 Lakh up to Rs 1 Cr with an interest rate up to 8% onwards.
iii. The 4E End to End Energy Efficiency Scheme in Bhubaneswar, Odisha–
The 4E (End to End Energy Efficiency) Scheme was launched in September 2016 under the administration of the Small Industries Development Bank of India (SIDBI). This MSME scheme has been introduced jointly by the India SME Technology Services Ltd (ISTSL) in association with World Bank with the primary objective to implement energy efficiency measures across Indian industries on an end-to-end basis and support start-ups &MSMEs for financing purchases of second-hand machinery/equipment.
The business loans for start-ups under this scheme shall be provided to fund costs related to –
- Capital expenditures, including those required to purchase machinery, installation costs, civil works, etc.
- Any other similar expenditures are required to be fulfilled provided these are not more than 50% of total capital expenditure.
Eligibility Criteria for 4E End to End Energy Efficiency Scheme in Bhubaneswar, Odisha–
- MSME start-ups engaged in either manufacturing or services sector have been in existence for at least three years and have earned cash profits in the last two years.
- Such MSME unit should have undertaken a process of a detailed energy audit (DEA) under a technical agency/consultant which is a Bureau of Energy Efficiency (BEE)-certified energy auditor.
- The detailed project report (DPR) prepared by the Bureau of Energy Efficiency (BEE)-a certified energy auditor should be scrutinized by the Energy Efficiency Cell (EEC), SIDBI.
- Such MSME units should not have availed of a performance-linked grant under the World Bank-Global Environment Facility (WB-GEF) Project previously for the proposed energy efficiency (EE) Project and should have complied with the Environment and Social Management Framework
Fiscal incentives under the scheme in Bhubaneswar, Odisha–
- Under the 4E Scheme, the MSME unit shall only be required to pay Rs.30, 000 as the remaining fee to be paid by SIDBI to the energy auditor.
- The eligible MSME start-up will be eligible to seek loans up to 90% of the project cost with a minimum loan value of Rs. 10 Lakh which could go up to Rs. 150 Lakh under this scheme. The eligible loan amount shall not exceed Rs. one-fifth of the total turnover of the applicant unit.
- The repayment period along with the initial moratorium period which could be a maximum of up to six months should not be more than 36 months (3years) for loans up to Rs. 100 Lakh and 60 (5 years) months for loans above Rs. 100 Lakh.
iv. Credit Linked Capital Subsidy Funds Scheme in Bhubaneswar, Odisha
The Credit Linked Capital Subsidy Scheme (CLCSS) was launched on 1st October 2000 with the primary objective to boost the competitiveness through technological up-gradation of MSMEs under the administration of the Development Commissioner appointed by the Ministry of MSMEs. These business loans are offered to enable technological upgradations to MSMEs through upfront capital subsidies to small-scale industrial units comprising khadi, village, and coir industrial units on the institutional credit facilities availed by them for modernization of their production equipment and techniques.
Eligibility Criteria Credit Linked Capital Subsidy Funds Scheme in Bhubaneswar, Odisha–
- All Existing small-scale industries (SSI)registered with the State Directorate of Industries have advanced their existing equipment with state-of-the-art technology either with or without expansion.
- New small-scale units registered with the State Directorate of Industries tend to use the appropriate and proven technologies duly approved by the Governing and Technology Approval Board (GTAB)/Technical Subcommittee (TSC).
Fiscal incentives under the scheme in Bhubaneswar, Odisha–
The ceiling on business loans for MSME start-ups under this scheme could go up to Rs. one crore with a subsidy rate of 15%.
v. SIDBI Make in India Soft Loan Funds Scheme in Bhubaneswar, Odisha
The SIDBI Make in India Soft Loan Fund for MSMEs or SMILE scheme was launched in August 2015 under the direction of the Small Industries Development Bank of India (SIDBI) with the basic intent to offer soft loans to MSMEs which are in nature quasi-equity and term loans on comparatively soft terms to MSMEs to meet the required debt-equity ratio in the establishment of newer MSMEs to enable their development and growth.
Eligibility Criteria Stand-up India Scheme in Bhubaneswar, Odisha–
All new MSME enterprises functioning in the manufacturing as well as the services sector shall be eligible to apply for this scheme in Bhubaneswar, Odisha.
All existing enterprises seeking either expansion, modernization, technology upgrades, or other projects to meet the growing needs of their businesses would be eligible to avail of this scheme in Bhubaneswar, Odisha.
Fiscal incentives under the scheme in Bhubaneswar, Odisha–
- For applicants belonging to the general category, the loan amount could be 10% of the project cost, subject to an upper limit of Rs. 20 Lakhs.
- For MSME enterprises promoted by Scheduled Caste (SC) /Scheduled Tribe (ST) / Persons with Disabilities (PwD), and women the loan amount could be15% of the cost of the project subject to an upper limit of Rs. 30 Lakh
- However, the persons belonging to these categories must hold a controlling stake in the business which must be either 51% or higher.
On the expiry of a term of three years from the date of the first disbursement of the outstanding soft loan along with any outstanding dues, the amount shall be converted into a secured term loan and the entire loan shall carry an applicable rate of interest as per internal rating of the borrower MSME. The repayment period shall be generally up to a maximum period of seven years including a moratorium period of one-and-a-half years in case of term loans and up to two years in case of soft loans.
vi. Stand-up India Scheme in Bhubaneswar, Odisha
The Stand–up India scheme was launched in April 2016 under the control & guidance of the Small Industries Development Bank of India (SIDBI). The basic objective of the Stand-up India scheme is to promote the spirit of entrepreneurship among women and people from SC/ST backgrounds.
The business loans so offered are like composite loans (includes both term loans and working capital). The scheme proposes to offer assistance in setting up a new business enterprise in either manufacturing, trading, or services sector by the eligible applicants to encourage participation in the business industry.
Apart from the primary security, loans may be either secured through either collateral or under the guarantee cover provided under the Credit Guarantee Fund Scheme for Stand-Up India Loans (CGFSIL) as per the decision of the lender bank/financial institution.
Eligibility Criteria for Stand-up India Scheme in Bhubaneswar, Odisha–
- Applicants belonging to SC/ST and/or woman entrepreneurs above the age of 18 years.
- Loans under the scheme shall only be approved for the greenfield project, which indicates the first-time business venture of the beneficiary in either manufacturing or services, or the trading sector.
- In the case of non-individual enterprises, at least 51% of the controlling stake must be held by either any person from SC/ST background and/or by any Women Entrepreneur.
- Borrower should not have committed any default in the repayment of any payments to any bank/financial institution.
Fiscal Initiatives under the scheme in Bhubaneswar, Odisha–
- Composite loan up to the 75% costs of the projects including the term loan as well as the working capital.
- The condition related to the loan to cover upto75% of the project cost shall not apply if the borrower’s contribution including convergence support from any other schemes is above 25% of the costs of the project.
- The repayment period of loans shall be a maximum of up to seven years with a maximum moratorium period of 18 months.
Therefore, in recent years the Government of India has realized the importance of strengthening MSMEs in India to promote growth & development of the economy and resolve the problem of unemployment in the nation. Meanwhile, it is generally at the initial stages of a business, when they tend to struggle to raise finances or arrange funds to expand or grow their business, all the above-mentioned schemes help small business owners to meet their capital needs and operating costs through financing schemes.
It is also noteworthy to mention the fact that since the launch of the Start-up India Scheme in 2016 and the setting of a Funds of Funds corpus of Rs.10 thousand crores, more than fifty government schemes have been launched to support early-stage start-ups. These business loan schemes are a handful of the numerous initiatives taken by the Indian government to enhance the ease of doing business in the country. In the year 2018 itself, India ranked 77thon the World Bank matrix in ease of doing business policies.
All these efforts made by the Government of India and the related government agencies have made the process of applying, getting in-principle approval, and transfer of funds has been made even simpler, faster, and more efficient. It is tirelessly working towards the promotion of MSME businesses by encouraging entrepreneurship and opening up international start-up corridors between India and the world on a macro –level as well as offering the necessary assistance to start-ups and MSMEs on a micro-level which will ultimately make India a leader in the business industry and entrepreneurship for the world to look up to it.
