A positive news for businesses having MSME Registration as the Government extends ECLGS Scheme. To help Covid-affected MSMEs even more, the Centre announced on Wednesday an extension of its Emergency Credit Line Guarantee Scheme (ECLGS). This article discusses all the details of the latest notification by the government on ECLGS Scheme.
What is MSME Registration?
MSME stands for Micro, Small, and Medium Enterprises, and it promotes the development and promotion of businesses through a variety of incentives and programmes.
As small businesses are an important aspect of every country’s economic development. The Government of India has developed a number of programmes to assist small and medium scale enterprises in growing in order to stimulate new and current industries.
To take benefit of all of these advantageous programmes, you must first get MSME Registration.
Important Note: The Udyam Registration is another name for the MSME registration.
What is ECLGS?
- ECLGS stands for Emergency Credit Line Guarantee Scheme.
- The Finance Ministry of India launched this scheme in May 2020.
- The main purpose behind the scheme is to help revive the Indian Economy through providing loans to MSMEs.
- Banks and other lending institutions can give emergency credit facilities to firms with MSME Registration that have suffered as a result of the pandemic under this government-funded scheme.
- Borrowers can take out term loans without putting up any collateral under the emergency credit line guarantee scheme. Furthermore, The Emergency Credit Line Guarantee Scheme interest rate is minimal, while unsecured loans are available at a 14 percent p.a.
Government extends ECLGS scheme for MSMEs Registration to further extend helping hand
- To help Covid-affected MSMEs even more, the government has extended its Emergency Credit Line Guarantee Program (ECLGS) until March 31, 2022, or until guarantees totaling Rs. 4.5 lakh crore is delivered under the ECLGS, whichever comes first.
- The deadline of distribution under the plan has also been modified to 30 June 2022, according to the Ministry of Finance.
- Existing borrowers under ECLGS 1.0 and 2.0 would be eligible for extra credit assistance of up to 10% of total credit outstanding as of 29.02.2020 or 31.03.2021, whichever is greater.
- Businesses who have not received ECLGS help (ECLGS 1.0 or 2.0) may be eligible for credit support of up to 30% of their credit outstanding as of 31.03.2021.
- Businesses in ECLGS 3.0 sectors that have never used ECLGS before can get credit assistance up to 40% of their credit due as of 31.03.2021, up to a limit of Rs.200 crore per debtor.
- Existing ECLGS borrowers whose eligibility advanced due to the change in cut-off date to 31.03.2021 from 29.02.2020 can get additional funding within these limitations.
- As a result, borrowers who have received ECLGS help and whose credit outstanding as of 31.03.2021 (without ECLGS support) is greater than that on 29.02.2020 will qualify for continuous support up to the ECLGS 1.0, 2.0, or 3.0 limit.
In conclusion, this scheme is helpful for businesses having MSME Registration or Udyam Registration in multiple ways. The rise in the credit assistance threshold as a proportion of credit facilities is also a significant benefit for suffering MSMEs. MSMEs account for more than 33% of India’s production, and the financial backing will enhance general economic momentum.
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