India has the second largest micro, small, and medium scale enterprise industry in the world. It is a vital source of economic growth in the country, contributing 8% of the total GDP, and 40% of the total exports of the nation. The MSME industry is the source of employment for more than 15 million people across India, acting as a second largest source of occupation in the country.
The MSME industry has the potential for tremendous growth as it does not require hefty amounts of investment and generates mass employment opportunities. However, adequate working capital and a steady flow of credit is needed for the smooth functioning of this sector. Thankfully, financing from various lenders in the form of MSME loans have allowed businesses to boost, and maintain their different types of working capital, fuelling a steady 10% growth of the MSME and SME industry.
Business financing in India
Trade finance is one of the most crucial monetary aspects of any business. In the case of the MSME sector, trade finance was generally funded by informal sources. This mainly happened because most of the people in rural areas do not have perfect knowledge of the various financial institutions providing MSME loans.
This financial illiteracy and scarcity of funds in the MSME sector had held back the industry from realising its actual growth potential. Today, Government institutions like MUDRA (Micro Units Development and Refinance Agency), and CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) have promoted the inception and growth of the nation’s MSME sector.
There are various types of loans you can apply for to raise finance for your business. A smooth flow of capital would increase an organisation’s total production capacity, and enable it to reach its maximum potential.
Types of credit
Today, several financial institutions offer credit to businesses to promote their growth. Both Government-backed and non-banking financial institutions offer secured and unsecured credit to organisations of various scale.
Loans are given without collateral are unsecured loans, while the ones which require collateral guarantee form secured loans. Financial institutions such as Bajaj Finserv provide such MSME loans at nominal interest rates and various borrower-friendly features and benefits to help a borrower utilise the amount and repay the dues without straining their finances.
They also provide pre-approved offers. The offers make availing loans quick and easy. These are available on numerous financial products including unsecured loans like business loans and personal loans as well as secured advances like home loans, etc. You can take a look at your pre-approved offerby sharing your name and phone number.
Business loans offer several advantages over other types of secured or unsecured credits. Let’s take a look at some of them.
Businesses can access a large amount of sum, up to Rs. 30 Lakh, from credits like business loans. Business owners can apply for a business loan at affordable interest rates, which allows businesses to repay the debt without straining their finances.
Unsecured business loans come with easy to meet eligibility criteria and minimum documentation. It simplifies the application process and allows the lender to verify and approve the credit within 24 hours only. Businesses can meet their urgent financial requirements with such quick credit disbursement.
Collateral free credits ensure that a business owner does not have to mortgage any personal or business asset to avail the finances. Moreover, it quickens of documentation and verification process as it eliminates the requirement of appraisal or background checking.
Since the MSME industry is primarily based in the unorganized sector of India, the development of this industry leads to inclusive growth, creating mass employment opportunities and reducing poverty. MSME loan is an efficient financing solution allowsbusinesses to increase their productivity and in turn, expand the reach of their company in the long run.