Under the Prime Minister’s Employment Generation Programme (PMEGP), the government asked banks to disburse loans so as to meet its target of financing 59,714 projects in the current fiscal year. The margin money assistance is Rs 836 crore and this should help in generation of employment for 5.97 lakh persons.

Since the PMEGP launch in 2008, one lakh projects have been sanctioned and 10 lakh people employed. Out of the total loans sanctions, 15 percent is for SC, 7.5 per cent for ST, 27 per cent for OBCs, 5 percent for minorities and 30 percent for women. The general category entrepreneurs can find a subsidy of 15 percent and 25 percent on the project cost. The weaker sections of society can avail 25 per cent and 35 per cent subsidy.

Dinsha Patel, minister of state for MSME, has urged CMD of banks to issue policy circulars to all financing branches so as to fulfill the allocated targets. He said that the disbursements this year has been just 10 percent of the target. What is important now is that Khadi and Village Industries Commission (KVIC) should reach every village. The KVIC is the nodal agency for the implementation of PMEGP .

The Union Bank of India and KVIC signed an agreement for a ‘one bank, one nodal branch’ formula. This concept shall enable a single nodal branch to be used to coordinate with all other branches of the bank spread in the entire country.

Tags: Banks, financing branches, Khadi and Village Industries Commission (KVIC), MSMEs, MSMEs under PMEGP, one bank & one nodal branch formula, Union Bank of India
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Managing an SME can be a difficult task as it involves a lot of challenges to keep the company going. The key aspects to manage are like production, staffing, logistics and finance. Besides, ‘sale and marketing’ has to be dealt with business acumen and planning. Real success comes from finding more clients and the ability to market product and services. The need to discover more effective marketing systems is growing everyday.

Resorting to traditional marketing systems is good but then they have their own niches and a limited access to customers. TV, radio, newspapers, magazines, direct mail, and yellow pages are all confined in their own boundaries and can meet the demands of finding just a limited number of customers. Advertising in these Social media is good for SMEs publicity but won’t always add large no. of customers. So, SME owners need to depend on Online Social media that can really generate increased traffic flow and shape their future.

SMEs are, nowadays, getting more interested to use ‘online social media channels’. It has taken the advertisement world by storm for large no. of customer additions and its immense reach. This serves multiple purpose like Lead Generation, Brand Awareness, Online Reputation Management, Customer Relations and Customer Retention.

Online Social media marketing has the potential to increase your net profit without raising the costs. There are several means to improve its effectiveness. The social media tools has proved effective in recent times. Blogging, for example, is used by businesses to make their online presence felt and to connect directly with customers with updates about products, deals, news and services. With blogging, SMEs will always find groups of people who would love to know more about their products and with whom they can form a community. Relying on Social networking websites like Twitter, Facebook and YouTube can also be very fruitful as they are a window to connect and interact with customers directly. It is not just that one shares information, but it also give an opportunity to post photos, videos and messages to promote a business. Facebook gives the option to create mini web pages for the growth of business. Youtube is valuable for posting videos. So, SMEs can use ‘Online Social media’ to attract huge traffic.

Tags: online social media, online social media channels, online social media marketing, SME, social media tools
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Exim Bank today stated that it is raising USD 100 million from the Asian Development Bank (ADB) to provide funds to eligible SMEs.

The USD 100 million will be help Exim to focus on cluster development  for small and medium enterprises in states like Assam, Madhya Pradesh, Orissa, Uttar Pradesh, Chhattisgarh, Jharkhand, Rajasthan and Uttarakhand,” a senior exim official stated.

The bank intended to extend loans through the development of clusters in different sectors.

The foreign trade development bank had also raised 150 million euros from the European Investment Bank to promote green energy and projects that reduce greenhouse gas emissions.

Tags: Asian Development Bank, Assam, Chhattisgarh, Exim Bank, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, SME, Uttar Pradesh, Uttarakhand
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One of the major issues for start ups in India is to raise debt financing for the start ups. While the equity financing for the start ups in terms of angel groups and early stage  VC funds in the country is gathering pace , the scene on the debt side is still pretty low. Even the schemes under Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) has funded less than 5% of the start ups in it total loan portfolio.

While start up funding has always been a tricky business in the world , some lessons can be learnt from the Small Business Administration ( SBA) program of the US. The SBA express program which caters to start ups and businesses less than 2 years has been a success in US over last 30 years. Companies like Ben & Jerry have been prime example of getting start up debt financing form local banks to grow into multi million businesses over next 30 years.

Separate Product Class: One key lesson is to have a separate program for the start ups like what SBA has  with clearly defined amount and term limits as well as kind of startups which can be funded. A major  chunk of SBA Express program goes towards franchisee financing which is a lower risk business compared to nor mall start up financing. SBA has put a franchisee registry which grades franchises based on their credit performance over a  period of time and help banks to access the risks better. This also help them to define the loan to value ratios (LTV) as well as price the loans better for the secondary market.

Create Secondary Market: Based on these ratings by SBA, the loans can be priced in a transparent manner thus making it easier for the banks to securitize the loans as well as a fee based income on the  yield spreads. This encourages more banks to participate in the program  as well as keep the defaults at the lowest  as otherwise down the line the spreads will be lower as investors will term these loan papers as higher risk.

Co Sharing of the Risks: SBA and banks share the default risk in 50: 50 ratio. This helps SBA to keep the default rate lower as banks have skin in the game, help them to delegate the approval process of the loans to the specified banks as well as keep guarantee fee percentage lower compared to SBA 7 (a) loans.

Tags: debt side, loan portfolio, loan to value, Micro and Small Enterprises, SBA express program, Small Business Administration, VC funds
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Blaming the complex system of flow of money to the micro, small and medium enterprises, T K A Nair, Prinicpal Secretary to the Prime Minister and chairman of the task force on MSMEs, which presented its detailed report to the PM on January 30, said the government would remove all major roadblocks in the growth of MSMEs by introducing the recommended reforms in the sector soon.

In an interactive session organised by the Central for Research in Rural and Industrial Development (CRRID) on MSMEs, Nair headed the interactive session with representatives of different MSMEs.

Tags: flow of money, force on MSMEs, representatives of different MSMEs, Research in Rural and Industrial Development
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Gaining access to pass-outs, or graduates, of the country’s premier business schools such as the Indian Institutes of Management (IIMs) just got a little more affordable. IIMs has waived the recruitment fee to enable participation from more companies in the hiring process. That means top-tier graduates can now be hired at much lower packages than they used to get when the global economy was booming — good news for small and medium companies.

Tags: Indian Institutes of Management, recruitment fee
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The Confederation of Indian Industry (CII) recommended that the Reserve Bank of India (RBI) take additional measures to step up bank credit to help the MSME sector. The point was made on the basis that credit to MSMEs has been particularly weak, reducing the ability to handle issues like elongated payment cycles. The need was for RBI to step up bank credit and consider setting up a sub-target under priority sector lending.

The suggestion was presented at the CII meeting with banks and economic secretaries.

Tags: bank credit, Confederation of Indian Industry, credit to MSMEs, Reserve Bank of India
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The challenges facing micro, small and medium enterprises (MSMEs) are being taken up in the party manifesto of the CPI party as a special package planned for protection and development of small scale industries, cottage industries and craft of artisans.

The party is also seeking the deferred recovery of small business loans until the economic slowdown improves.

Tags: micro small and medium enterprises, party manifesto, Small Business Loans
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On behalf of several small business associations and industry players, the Finance Ministry has asked the RBIs to increase the mandatory lending limit to micro, small and medium enterprises in India from 12 percent to 15 percent.

Earlier the RBI had asked public sector banks to increase credit flow to the small business sector.

Tags: Finance Ministry, micro, small and medium enterprises in India, small business sector
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A US study has named the “Buy American” provision in the $800 billion economic stimulus bill as “bad for jobs, worse for reputation.” Making a formal request to the US Congress to remove the provision, the study warned that “the negative job impact of foreign retaliation against Buy American provisions could easily outweigh the positive effect of the measures on jobs in the US iron and steel sector and other industries.” Additionally, the study indicated that the provision may encourage key suppliers like China, India, and Brazil to retaliate.

Tags: India, US iron and steel sector
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