In this Part-2 of this article, we will share with you various initiatives & schemes of Government and SBI for small businessmen told by Mr. Parveen Kumar Gupta Managing Director of State Bank of India (SBI). And you will know the Benefits of GST and Digital Technology in Business.

Benefits of GST and Digital Technology in Business Part-2

We covered the some important points in Part-1 of this article. This is the Part-2 of this article. And you must read Part-1 from here 👇

Benefits of GST and Digital Technology in Business Part-1

MSME Samadhan for Businessmen Selling on Credit

In India, there is an act for small businessmen named as, MSME Act 2006. According to this act, MSMEs should give maximum credit period of 45 days.

However, sometimes, small businessmen have to extend the credit period; maybe because they are not able to negotiate good terms.

You can deal with such situations in the following ways:

• TREDS platform: It is launched by RBI. Three companies in India run TREDS platform. Under TREDS, you need to make your bill accepted by the buyer and upload it in the TREDS. From TREDS platform any bank can pick up this bill to discount.

So, normally, the MSME who is giving 12-14% interest rate to bank for a bill, the same MSME will pay 8-9% interest rate on the same bill in the TREDS platform, any bank can pick up this bill to discount.

This reduces the cost of the MSME and you will get the money on upfront as you will get the TREDS platform.

• Government e Marketplace (GeM): This is a portal launched by the government. So, all the government procurement is done through this portal only. It is easy to register in this portal.

So, all the small businessmen should register in GeM.

Benefits of GST Implementation

• GST has replaced all the acts. If you properly implement GST, then you will get various benefits and get rid of all the chaos.
• When you implement GST, all the business transactions you are doing will be recorded in the books of accounts.
• It helps in maintaining transaction history that will helps you in taking a loan from banks and raise equity from the market to expand your business.

On the other hand, if you are doing business in cash, then you will not be having any transaction history and nobody knows how much business you have done. As a result, you will neither be able to take a loan from the bank nor to be able to raise equity.

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Benefits of Startup India Scheme

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Digital Loan

If a small businessman needs to take a loan, then three are various digital portals like 59 minutes loan portal and portals of different banks. You can easily apply for loan on these portals.

Recently, SBI has launched a Mobile Application, “yono (you need only one)”. In this single App, you will get all the banking, investment, shopping facilities, etc.

On this App, SBI also provided pre-approved loans to its customers based on their 6 months or 1 year transaction history.

The customer will be notified about the pre-approved loan along with the loan amount with the help of SMS.

If the customer wants to take the loan, then he just needs to click the button and the loan will be transferred to the customer’s account. The customer needs not to visit the branch for it.

How to Avoid Debt Trap?

People are not able to repay the debt to the following two reasons:

• Failure or loss in business: Some businessmen fail under the debt trap because of the failure or loss in business. This happens because:
• Excess loan: These people get into a debt trap because sometimes they take loan much more than what they should have taken. The interest rate keeps on increasing and principal amount remain as it is, and it becomes difficult to repay the loan.
• Non-planned Expansion: When a small business starts growing then sometimes the businessman gets into the expansion phase and they expand much more than their actual capacity. They are not able to handle the expansion and unable to repay loans and their loan accounts become Non-Performing Assets (NPA) for the banks.
• Taking out money from business: If the business works well, then some businessmen take out money from their business. As a result, there will be a shortage of money in the business that directly affects their loan repayment.
• Unwillingness to pay the loan: You intentionally do not want to pay the loan even when you have money as well as means. For such people, there are various RBI defaulters and bankruptcy court is also there for taking actions.

So, small businessmen should take only that amount of loan from which they can generate income. If they take more loan then the amount of income they can generate, then it will be difficult for them to repay the loan.

These 5 Lessons Learned from the article

• Do not fear in formalization your business. Use GST and digital channels more.
• Take only that amount of loan that you need and can repay easily. Do not take excess loan.
• Only take out the required amount of money from the business. Do not take out excess money from your business.
• Do not fear from banks as they also want to do business and they also want to give loan to you. If you approach a bank with the required data and documents, then banks will definitely provide loan to you.
• Don’t do needless expansion. First, establish your existing business properly and then grow it slowly.

 

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How a Best Website Grow Your Business Part-1

How a Best Website Grow Your Business Part-2