Q&A library

I have 20 years of experience in teaching and now I am planning to start my own business. I would like to start a recycling boutique or home-made food take away service. Please guide on how and when to start this business and how to get financial support?
Questioned by Shakeela Banu, Karnataka
If you are willing to start the business of homemade food take away, it’s a good idea. In a time as this, people are preferring homemade food over restaurant food. First of all, try to know about the food habits of target customers. Accordingly, try to create the food menu and ensure all the sanitation and safety guidelines by health ministry is followed and also try to promote it through social media so that people will have an idea of the food preparation as well as know the safety measures that are followed. The government has introduced schemes for start-ups to provide financial support. The MSME schemes as Collateral-free loan, Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE), MUDRA Loans, Stand-Up India, Emergency Credit Line Guarantee Scheme (ECLGS) etc. can be considered as an option. The SIDBI Make in India Soft Loan Fund for Micro Small and Medium Enterprises (SMILE) is also another possibility for receiving financial support. Muthoot Fincorp Ltd. has launched a special Gold Loan Scheme for businesses known as “Restart India - Interest Free Gold Loan" and "Restart India Pradhan Gold Loan". Since your starting out, it would be ideal to start with a small capital funding which can be obtained through loans which are quick and easy. Also, there are many other schemes provided by other financial institutions as well.

We are running an e-commerce business. Post lockdown we have a golden opportunity to grow our business but due to capital shortage, we are unable to grow the business. We tried to apply for 8 lac through MUDRA loan but couldn’t get any approval. Kindly suggest what can be done.
Questioned by Bhuwan Joshi, Delhi
MUDRA which stands for Micro Units Development and Refinance Agency Ltd is a refinance agency and not a direct lending institution. MUDRA loan is available through Banks/NBFCs/MFIs. Non-Corporate Small Business Segment (NCSB) comprising of proprietorship / partnership firms running as small manufacturing units, service sector units, shopkeepers and others, in rural and urban areas are eligible for assistance from MUDRA. Different banks / NBFCs may have slightly different application procedures. It is advisable to start with the bank/NBFC where you already have an account/loan to get the approval easily. Loans are categorised into Shishu, Kishore and Tarun.Loans beyond 5 lakh and up to 10 lakh comes under the 'Tarun' category.Generally, loans up to Rs.10 lakh issued by banks under Micro Small Enterprises is given without collaterals. You can avail assistance under the 'Tarun' category through any banks/NBFCs/ MFIs operating in your area for setting up your business / enterprise. The terms and conditions of the lending agency may have to be followed for availing loans. Any complaint on MUDRA loan against any bank branch can be registered with the Zonal Office/Head office of the respective bank. (Source:MUDRA does not lend directly to the micro entrepreneurs / individuals. Mudra loans under Pradhan Mantri Mudra Yojana (PMMY) can be availed of from nearby branch office of a bank, NBFC, MFIs etc. Borrowers can also now file online application for MUDRA loans on Udyamimitra portal (www.udyamimitra.in).Note: There are no agents or middleman engaged by MUDRA for availing of Mudra Loans. Borrowers are advised to keep away from persons posing as Agents/ facilitators of MUDRA/PMMY.www.mudra.org.in

I am having a business organisation with a turnover of 15-18cr per annum and I want some financial assistance for my business (other than emergency lending and cash credit). In what way can I be benefited in any of the government schemes?
Questioned by Goutam Bibhuprasad Sahu, Odisha
If you are a trader, there are no special schemes available under the government schemes as of now. It will be beneficial if you can do a business value and try out an equity partner to get financial assistance.

I am struggling with funds. I have alot of orders on hand, but after corona crisis there's no credit available in the market. Every purchase is on same day payment terms. Due to shortage of funds on hand, my business had come to a halt. Please help my business survival by extending financial support.
Questioned by Sunny Sharma, PUNJAB
Various financial institutions are funding for business at this time of the COVID-19 pandemic. ECGLS(Emergency Credit Line Guarantee Scheme) is provided to those MSMEs severely affected by COVID-19. MUDRA loan is available through Banks/NBFCs/MFIs. Generally, loans up to Rs.10 lakh issued by banks under Micro Small Enterprises are given without collaterals. You can visit your nearest public-sector bank / NBFC for opting suitable loan and scheme as per your requirements. You can also consider few easy and simple options such as "Ashwas Dinam Gold Loan" and “Restart India Pradhan Gold Loan” provided by Muthoot Fincorp Ltd for immediate funding. https://bit.ly/MuthootFincorpADGL

My credit score was 691 in February, 2019. I had taken a Mudra loan in December 2018, its outstanding overdue was Rs.1018 in March 2020. I regularised my account in March 2020 and my credit score showed 739. But when I rechecked it in July, the score showed as 691 and it’s not updated till now. Can you advise me on why that may be?
Questioned by Mohan kumari B V, Karnataka
There can be multiple reasons why the credit score is not getting improved or not getting updated.• Payment history is the most important ingredient in credit scoring, and even one missed payment can have a negative impact on your score. So please double check and ensure that no more payments are pending.• Make sure all your details are correct in the report as that could have been erroneously entered.• Errors in payment date, account status (paid, defaulted, settled, disputed), closure date, etc. if not corrected, can also impact your credit score• Another vital factor is the credit utilization ratio. This ratio looks at how much of the available credit is utilized and can give a snapshot of how reliant you are on non-cash funds. Using more than 30% of the available credit may give a negative impact. Also, the number of credit accounts you've recently opened, as well as the number of hard inquiries lenders make when you apply for credit can influence the credit score.•Some credit Institutions generally submit the data within a span of 30-45 days, so if we happen to check the score within 45 days of the last payment of dues, it may not be updated. It may take one month or more to correct a credit report, so make sure all your dues are cleared. However, please check with your financial lender helpdesk to get an update regarding the credit score.Sourced from Economic times article dated 16 Dec 2017 and Business Today article dated October 2013

The bank has denied to give me loan as economic package declared by Central govt. As per UCO bank, from the last day of February to preceding 60days there should be no irregularity to pay the loan instalments. How I can restart my business without availing Covid loan or emergency loan. Please guide.
Questioned by DHANI RAM SHUKLA, Himachal Pradesh
It will be better to try to contact other NBFC's and banks for the financial support. Also if you have some collateral, you can consider collateral based funding such as gold loans.

I want to register my accounting firm on udyam portal but it is asking for mandatory GST No. which I don’t have as my business is less than GST no. requirement. Obtaining GST No. means compliance cost and higher charges to unregistered clients. Please sort out my problem.
For the following conditions, there is GST exemption:1. Annual Turnover not exceeding 20 lacs. (I.e. below 20 lacs)2. Services not to be provided outside the Registered State.3. Individual invoice amount not exceeding Rs.5000/-4. Not registered under previous tax laws (i.e. VAT, Excise, Service Tax etc)But aside from the GST exemptions there might be other rules and regulations to take care of.

I'm running a two wheeler workshop in Pathanamthitta Kerala...I'm a Muthoot Fincorp MSME customer. In this time our business working area is in containment zone. Can't sustain the EMI payments for the gold loans and other equipment loan payments. We are not running the business in these last 14 days. How can I overcome this situation?
Questioned by Jogy antony, Kerala
One option you can avail is the moratorium which is available until August 31 2020.Aside from that, Muthoot Fincorp Ltd. has launched a special Gold Loan Scheme for businesses called Ashwas Dinam Gold Loan.The features are:•Maximum loan value against gold• Steady interest rate for 180 days• 24x7 online repayment options• Reducing interest on daily payments.Also, available at Muthoot Fincorp is the Super Value Gold Loan. The features are:•Maximum LTV greater than current LTV•No processing fee•Two months steady period interest slab•Preclosure option•Simple interest on daily diminishing principal balance basis•Rewards for digital repayments and good credit behaviour

Which types of businesses are apt for these difficult times?
Questioned by Radhika k, Kerala
Any business that you can start with minimal capital, have a passion for and a knowledge of can be successful. Without these three elements, any business in the current circumstances will not survive. So introspect about that and then decide. It will also depend on the SWOT of your business - Strengths, Weaknesses, Opportunities and Threats. You need to do this before you identify what you want to pursue.

We run a start-up in Bangalore and we have a pending invoice of 1.5 Cr. We would like to apply for Distressed Asset Fund - Subordinated Debt for Stressed MSME to avail 75 lakhs. Kindly suggest.
Questioned by Vikas Srivastava, Karnataka
The "Distressed Asset Fund - Subordinated Debt for Stressed MSMEs" is a scheme framed by Ministry of MSME for infusing the same as equity/quasi equity/ sub-debt in the unit. CREDIT GUARANTEE SCHEME FOR SUBORDINATE DEBT (CGSSD)Eligibility for CGSSD -• Promoters of MSME units which are stressed, viz. SMA-2, and NPA accounts as on 30.04.2020 and can become commercially viable as per the assessment of the lending institutions are eligible.• MSME units such as Individuals / Proprietorship, LLP, Partnership, Private Limited Company or registered company are eligible to be covered under thescheme.• The Scheme is applicable for those MSMEs whose accounts have been standard as on 31.03.2018 and have been in regular operations, either as standard accounts, or as NPA accounts during financial year 2018-19 and financial year 2019-20. Fraud accounts and wilful defaulters will not be considered under the proposed scheme.• Under this arrangement, promoter(s) of the MSME unit will be given credit equal to 15 % of his/her stake (equity plus debt) or Rs 75 lakh whichever is lower. The financial assistance provided as part of the scheme is to be operated as a separate loan account and the promoter needs to infuse the sub-debt / loan amount as promoter's contribution in the form of equity (including sub-debt or quasi equity) into MSME entity. For availing this sub-debt, the unit must be in running condition and operational.All Scheduled Commercial Banks are eligible as Member Lending Institutions (MLI)s.For more details, visit the Resources section of our website <https://restartindia.in/assets/pages/resources/attachments/Distressed_Assets_Fund_Subordinate_Debt_for_Stressed_MSMEs-df932c7f07920f40ab7f380d31cf46d2f4909b20ab447ae154c0400530e4dac3.pdf>

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