It’s a Great Time to Start a Business. Here’s Why
The pandemic led to significant changes in the economy, like many industries, businesses had to adapt their business operations based on the social distancing protocols and stay afloat during the economic crisis. Many people might think it impossible to start a business in such uncertain times, but doing so might not be such a bad idea. A company has the potential to survive during a global pandemic. However, there are specific challenges that one might face in launching a business right now; the opportunity is also ripe to launch a new business. Let’s have a look at some of the tips to start a business during the pandemic.
- Choosing a low-investment business to start.
- Start small with a home-based business.
- Buying second-hand equipment, virtual meetings instead of travelling
- A steady flow of income by keeping your job and start a part-time business
- Hire freelancers/independent contractors to save money.
- Opt for free/low-cost marketing via social media.
- Look for quick and easy paying projects to build cash flow.
The tips mentioned above can help you start a business with ease. However, if you require financial assistance, you can opt for a loan. Government loan for startup schemes have been introduced in India in the past few years. Let’s have a look at some of the government loan schemes that offer loans for startups and MSMEs in India.
Government Loan Scheme
1. Credit Guarantee Scheme (CGS)
New and existing small businesses that are in the manufacturing or service activities can apply for Credit Guarantee Scheme (CGS). The CGS was launched by the government to strengthen the credit delivery system and to facilitate financing to the MSME sector. This CGS scheme for entrepreneurs comes with several benefits, that includes term loans and working capital loan facility of up to Rs. 100 Lakhs per borrowing unit.
2. Pradhan Mantri Mudra Yojana (PMMY)
The Micro Units Development and Refinance Agency (MUDRA) aims at offering loans to all kinds of manufacturing, trading, and service sector activities. The Pradhan Mantri Mudra Yojana (PMMY) provides loans under three categories – Shishu, Kishor, and Tarun loan. Mudra Yojana can be availed by machine operators, shopkeepers, vegetable sellers, artisans, etc.
MUDRA loan scheme offers incentives through these interventions:
Shishu: Loans up to Rs. 50,000
Kishor: Loans above Rs. 50,000 and up to Rs. 5 Lakhs
Tarun: Loans above Rs. 5 Lakhs and up to Rs. 10 Lakhs
3. Standup Scheme
Businesses that fall under the trading, manufacturing, or service industry are eligible to apply for the standup scheme. For non-individual enterprises, at least 51% of the shareholding needs to be a woman entrepreneur or an individual belonging to the SC/ST category. The borrower must have a good credit history with no previous defaults in making payments with any financial institution. The Stand Up India scheme offers loans ranging from Rs 10 Lakh to Rs 1 Cr to SC or ST individuals and at least one woman applicant per bank branch.
4. Coir Udyami Yojana
The Coir Udyami Yojana aims to support the establishment of coir units. Banks and the financial institution will offer finance capital expenditure in the form of a term loan. All coir processing MSME startups registered under the Coir Industry (Registration) Rules, 2008, are eligible for this scheme. Banks will Finance projects that cost up to Rs 10 Lakh one cycle of working capital, which should not exceed 25% of the total project cost. This amount should be exclusive of the Rs 10 Lakh limit, and the credit amount will be 55% of the total project cost after deducting 40% margin money and the owner’s contribution of 5% from beneficiaries.
5. Bank Credit Facilitation Scheme
The National Small Industries Corporation (NSIC) is targeted at fulfilling the credit requirements of MSME units. The NSIC has entered into an MoU (Memorandum of understanding) with various national as well as private sector banks. Through syndication with these banks, the NSIC arranges for credit support without any cost to MSMEs. The repayment tenure of loan ranges between 5 years and 7 years; it can be extended up to 11 years.
Many businesses are changing their business models to adapt to the demands of the pandemic like sanitization businesses, masks, PPE kit supply, etc. Smart business owners understand the ability to adapt to continually changing consumers and their demands. Small business has the flexibility to adapt to such changes as more prominent companies cannot necessarily fill in the gaps.
A budding entrepreneur like Deep Patel can start almost anything, as consumers today are more open to new ideas and concepts. Moreover, most consumers are less likely to spend money, with the pandemic and economic fallout. Some people are still willing to shop around and engage with businesses that cater to their needs. Therefore, this is an ideal time to reach customers who shop solely from the brands and companies they are aware of and are now exploring new brands.