Finance Minister Nirmala Sitharaman recently announced 16 measures under Prime Minister’s Atmanirbhar Bharat Abhiyan. Out of the 16, 6 were targeted for MSMEs ranging from providing more funding to small businesses, to timely payment of dues by government enterprises. As promising as this scheme might appear but this leaves out tech ventures from it.
The scheme allows businesses to take credit from banks and non-banks up to 20% of their outstanding credit as of February 29. The catch in the scheme is that startups having up to Rs 25 crore in outstanding loans and up to Rs 100 crore in turnover can only avail the benefits. Startups have it hard when it comes to getting credit and that is why they raise equity to fund working capital. This implies that most of the startups haven’t had the chance to raise a line of credit to qualify this scheme.
Startups have always found it difficult to get loans from the government as their priority was businesses that can be profitable for them. This will make the startups to restructure themselves as MSMEs. Though turnover isn’t the only thing that will make them qualified for the scheme. However, manufacturing and ancillary services startups can define themselves as MSMEs. The companies are even asking their portfolio enterprises to be recognized as MSMEs under Udyog Aadhar Scheme. The startups are awaiting more news from Finance Minister in the coming days to help the situation.