Starved of funds, startups line up to register as MSMEs – Livemint

MUMBAI: Shashank Moddhia, chief executive officer (CEO) of The Renal Project, a startup that runs a chain of dialysis centres across suburbs in Mumbai and Pune, is working overtime to get a micro small and medium enterprise (MSME) registration for his business since the government announced a special package for small businesses impacted by the coronavirus-led lockdown.

“We need to ensure that we have access to funds. We have applied for MSME registration so that we can avail collateral free loans at a time when it is even more critical for us to obtain expensive medical equipment to keep the centres running,” said Moddhia.

Financial distress has prompted startups across sectors to register as MSMEs as traditional sources of funding dry up. The government has introduced a number of relief measures for MSMEs, giving them access to credit.

“With the Atmanirbhar package, MSME registration for many startups has almost become a necessity, which apart from easier access to liquidity also allows through benefit from measures such MSME incubators ,” said Sanjay Mehta, founder and partner of 100X.VC and board member, TiE Mumbai, which has started programs to guide startups to register as MSMEs.

Though there are stringent rules, based on revenue and investments, for businesses that qualify as MSMEs, industry experts believe that registering as MSMEs may help startups tide over the current crisis.

The Centre has approved the creation of a 50,000-crore fund of funds to help select high-growth MSMEs with a good track record. Commerce Minister Piyush Goyal said most startups will be eligible for additional liquidity from credit support schemes for MSMEs under the Aatmanirbhar Bharat Abhiyan package.



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