The MSME sector contributes above 29% to the GDP and 40% of India’s total export. Moreover, it is anticipated to rebound at a rate of 15% to 17% in terms of revenues in FY2, and the budget allocated for these sectors has escalated to Rs.15,700 crore in FY22 from Rs.7,572 crore in FY21.
The robust growth rates of these sectors make it ideal for entrepreneurs to roll out their ventures. Despite being vital to the Indian economy, these sectors face financial challenges and are shut within a few years of launch. To ensure steady functioning, business professionals are returning on MSME loans, helping get a quick influx of working capital.
Know why an MSME loan is the perfect choice for small business owners
There are several reasons why availing of an MSME loan proves beneficial:
- Rapid loan processing: As MSME loan is an unsecured credit option, borrowers do not have to go through appraisal of assets and tedious documentation process, enabling them to enjoy the short processing time and instant disbursal of loan principal. Thereby aiding the equitable economic enhancement.
- Easy accessibility: Fluctuations of cash flow is very common in a business. Hence, business professionals need to rely on a credit option that is easily accessible. This is where the MSME loan comes in and proves to be the ideal credit option.
Under MSME loans, borrowers get instant disbursal for loan principal by submitting minimal documents. Moreover, borrowers can track their loan statuses online.
- Collateral-free loan: Medium, small and micro-sized enterprises can avail of considerable loan amounts without pledging any collateral, helping those who want to avoid the risk of exposing their assets. Moreover, it helps budding entrepreneurs who do not possess any assets to provide security to the lender.
- Affordable MSME loan interest rate: Business professionals can avail of MSME loans at a competitive MSME loan interest rate. A nominal interest rate lowers the EMI burden. It reduces the overall loan expenditure, helping individuals save on expenses and boosting the working capital that can later be used for other business requirements.
- Flexible loan tenor: One of the notable reasons why MSME business loan is the most sought-after loan option is that borrowers are bestowed with an extended repayment tenor of up to 84 months.
This helps business professionals repay the EMI pay-outs comfortably without defaulting, helping them manage finances and make the most of the available resources. Hence, MSME loans are considered efficient financing solutions for MSMEs.
- Flexi loan facility: Business entrepreneurs can opt for the Flexi loan facility and lower the EMI burden. It is the ideal way to meet working capital, allowing individuals to withdraw funds from the approved loan limit and pay interest only on the withdrawn amount and not on the entire loan limit.
- Entire access over business: MSME business loan helps individuals gain control over their businesses and avoid liquidation. Individuals can use the fund to boost capital, procure inventory or equipment, pay vendors, etc.
However, to make the borrowing rewarding, individuals must know the mistakes to avoid while availing of a business loan.
Furthermore, business owners can streamline the application process by looking out for the pre-approved offers extended by leading financial institutions like Bajaj Finserv. These offers are available on various financial products like business loans, personal loans, credit cards, etc. Intending individuals can check their pre-approved offers by submitting their names and contact details.
In summary, MSME loan extends robust financial assistance to small business owners, helping maintain stable cash flow and ensure working capital availability. Moreover, realising its impact on the Indian economy, the government of India has launched several MSME loan schemes.