5 Ways through which Government Schemes have impacted Businesses

22 July, 2024

Synopsis:

• Government schemes have made it easy for businesses, particularly MSMEs, to access funds.

• Businesses have been able to obtain loans at a nominal interest rate.

• Government schemes have helped companies integrate technology, expand funds and boost skills.
  
  

In the past few years, the Government of India (GoI) has launched several schemes to boost businesses, especially micro, small and medium enterprises (MSMEs). MSMEs are the growth drivers of the economy. These schemes have transformed businesses in a major way. How? Read on to find out.

Business transformation through government schemes
Some popular government schemes for MSMEs include the Agriculture Infrastructure Fund Scheme (AIF), Credit Guarantee Scheme for Startups (CGSS), Pradhan Mantri Mudra Yojana, etc. Some ways through which they have brought business transformation are:

• Solving problems related to access to funds

Government schemes for MSMEs have solved problems related to funds. For a long time, obtaining funds was a problem for businesses, particularly MSMEs. Since they operated on a small scale, they often didn’t have the resources to get loans by pledging collateral. However, several government schemes have made sure that MSMEs don’t face issues in availing funds due to a lack of collateral.

Thanks to these schemes, businesses, including MSMEs, can quickly obtain funds without pledging security as collateral. For instance, under CGSS, companies can avail of collateral-free funding up to ₹ 10 crores. Similarly, under the Pradhan Mantri Mudra Yojana, you can obtain loans under three categories - Shishu (up to ₹ 50,000), Kishor (up to ₹ 5 lakhs) and Tarun (up to ₹ 10 lakhs).

• Minimal interest rate ensures the right cash flow for businesses

This is another way of business transformation through government schemes for MSMEs. The government schemes offering loans to MSMEs are available at a nominal interest rate. This ensures businesses don’t face the burden of high Equated Monthly Instalments (EMIs). High EMIs can affect cash flow significantly and strain working capital. While established business entities can absorb it, it becomes difficult for MSMEs to do the same.

However, things are different with government schemes. Low interest rates ensure that EMIs are not high. This allows businesses to meet their requirements easily, focus on areas of business development and not be concerned about high-interest outgo towards loan payment. In other words, it allows for freeing up working capital to meet day-to-day requirements.

Also, the long loan payment tenure ensures that businesses can easily repay the loans taken without affecting their cash flow. For instance, the AIF scheme offers a moratorium period of 6 to 24 months for loans taken under it.

• Enhance skill development to boost competitiveness

In today’s competitive business landscape, having the right skills to succeed is essential. Without proper skills, businesses can’t go the distance. Government schemes have allowed firms to increase their skills, which can positively impact bottom lines. With quality training programmes, companies have been able to give their workforce a competitive edge and take their business to new heights, competing with more established counterparts.

By staying updated with the latest trends, businesses, particularly MSMEs, have better adapted themselves to the market and contribute to the economy's growth.

• Integrate technology and expand infrastructure

Technological superiority is important for success. Easy access to funds means businesses can use technology to improve productivity and increase revenues. Whether buying new equipment or boosting cyber security, companies have taken advantage of technology to improve their output by several notches. That’s not all.

They have also been able to expand their infrastructure, which has increased their competitiveness. In other words, they have been able to increase their clients and revenues in the process.

• Capitalise on market opportunities

Government schemes for MSMEs have helped them capitalise on market opportunities. Easy access to funds has ensured that they no longer have to take a backseat. Whether fulfilling a large order or serving the needs of international clients, businesses have the resources they need to take a giant leap.

Summing it up

With the Indian economy showing promise in the face of several challenges, the initiatives undertaken by the Indian government for businesses, particularly MSMEs, have boosted their growth significantly.

If you want to transform your business and seek a loan for the same, you can approach HDFC Bank. HDFC Bank allows you to find the government scheme you need to boost your business and avail msme loan under it. Click here to know more.

Disclaimer: *Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.