What can MSME Business Owners Look Forward to with the latest Budget Highlights in 2024?

A few days ago, the first budget of the current government was presented. As experts in the business finance consulting services sector, we are here to shed light on what this budget may mean for business owners.

Budget highlights for Manufacturing and Services

The government formulated a package covering finance, tech support, and regulatory changes for MSMEs. The measures announced included:

• Banks will use new methods to decide if small businesses qualify for loans. So, instead of looking at how much money a business makes, they will now consider online information about the business.
• Small businesses facing temporary financial difficulties will be able to get loans more easily. This will help them stay afloat during tough times.?
• The government will give more money to small businesses to help them buy new equipment.
• There will be more places where small businesses can get loans directly.
• The government will make it easier for small businesses to sell their products online. This includes creating special zones for online businesses.
• Small businesses that make food will get help to improve their products and safety standards.
• The government will build industrial areas with all the necessary facilities to help small businesses grow.
• The government will make it easier for small businesses if they need to.
• Certain changes will be implemented to make it easier for businesses to recover money owed to them.
• The government will invest in building better cities to create more opportunities for businesses.

What is the next step for business owners?

We recommend you seek professional advice from financial consultants, industry experts, and chartered accountants. As one of the Top Management Consulting Firms in Chennai , we offer the following steps as well:

• Understand the eligibility criteria and documentation required for the credit guarantee scheme.
• Consider refinancing existing loans to take advantage of lower interest or longer repayment terms.
• Build a strong credit history to enhance your chances of securing loans at favourable terms.
• Implement systems to track inventory levels closely and minimise holding costs.
• Adopt measures to reduce the average collection period, such as offering early payment discounts or using factoring services.
• Negotiate extended payment terms with suppliers to improve cash flow.
• Enhance your online presence through a user-friendly website and active social media engagement.
• Explore opportunities to sell your products or services online to reach a wider customer base.
• Adopt digital payment options to cater to the growing preference for cashless transactions.
• Invest in training and development programs to sharpen the skills of your workforce.?
• Explore government-sponsored skill development programs to support employee training.
• Identify potential export markets for your products or services.
• Utilise the e-commerce export hubs to facilitate your export business.
• Understand and comply with export-related documentation and procedures.
• Develop a long-term business plan aligned with the government’s vision for the MSME sector. Opt for corporate finance consulting services to help you with a foolproof plan for scaling your business.
• Identify potential risks and develop contingency plans to mitigate their impact.
• Create detailed financial projections to assess the impact of the budget on your business’s profitability.

By taking proactive steps and staying informed about the budget’s implementation, SMEs can position themselves for realistic growth and success.

FAQs

1. How can my SME benefit from the new credit assessment model?

The new credit assessment model is a game-changer for MSMEs. Apart from traditional lending methods by banks, the shift towards digital footprints means lenders will evaluate your business’s overall performance. This would include online transactions, payment history, and supply chain relationships. This will open up credit opportunities for businesses with limited tangible assets. To maximise benefits, ensure your digital presence is strong, maintain accurate financial records, and consider adopting digital payment systems.

2. What steps should I take to avail the credit support scheme during stress periods?

The credit support scheme is a safety net for MSMEs facing temporary setbacks. To be eligible, you need to demonstrate that the stress is beyond your control. Maintain detailed records of the challenges your business is facing. Proactive engagement with your bank is crucial and early communication about potential difficulties can help you secure the necessary credit facilities. It’s also advisable to explore other funding options like government schemes or private equity to diversify your funding sources.