Micro, Small, and Medium Enterprises (MSMEs) are emerging as important pillars of the Indian economy. These enterprises contribute significantly to employment generation, along with 45% of the total exports in the country. Given these solid statistics, it is safe to say that MSMEs are the backbone of the Indian economy. 

As various MSMEs and SMEs are cropping up across the corners of the country, the demand for MSME Business Loans has increased considerably. Taking the rising demand into account, lending institutions, traditional banks, and Non-Banking Financial Companies (NBFCs) have curated a portfolio of MSME Business Loans. 

What are MSME Business Loans? 

MSME Loans are unsecured credit instruments that are offered to entrepreneurs, small business owners, and sole proprietors to cover various business-related expenses. Small business owners and entrepreneurs can avail of funds to cover their working capital requirements, for hiring trained staff, and for covering other unexpected expenses. 

If you are a small business owner, you can get a Business Loan from banks, NBFCs, lending institutions, and even under certain government schemes. As the availability of credit instruments for MSMEs increases, the cash flow within the MSME sector will remain consistent, creating a conducive environment for small and micro businesses. 

Benefits of MSME Loans for your organization 

  • Ideal for covering high-ticket expenses: An MSME Business Loan can be used for covering a wide range of business-related expenses. These expenses can be related to working capital, asset acquisition, or other big-ticket expenses. Leading financial institutions have kept the MSME loan interest rate lower with simple eligibility criteria to help small business owners get the required funds.  
  • Faster processing time: Since most lending institutions are offering online applications for MSME Business Loans, the disbursal process of loans has become faster. This can also be attributed to rapid digitization across the Indian financial sector. The loan application processes have been renewed to help customers gain funds faster. Hence, MSME Business Loans are also being disbursed at a faster rate as compared to earlier times. 
  • Competitive interest rates: Lenders understand the value of small business financing, hence they are offering lower MSME loan interest rates to facilitate financially conscious borrowing. Before applying for any kind of loan, it is important to compare the interest rates offered by different lenders. In some cases, a high-interest rate on Business Loans restricts small business owners to invest in assets and working capital as higher EMIs disrupt their monthly budgets anyway. This defeats the purpose of MSME Business Loans. Therefore, carefully research the interest rates offered by different lenders. 
  • Favorable terms and conditions: Business Loans are carefully curated to suit the unique needs of different types of business owners. Lenders are offering flexible repayment tenures and no charges on part-payment or foreclosure of loans. This is beneficial for small business owners as they can safeguard themselves from frequent economical changes that might disrupt their finances. Flexible terms and conditions help small business owners to stay afloat in times of crisis. 
  • Maximum control: Getting an MSME Business Loan allows entrepreneurs and small business owners to gain full control over their business’s finances. Business owners lose a part of their equity and control when they get funds from venture capitalists and angel investors, they cannot gain full control over their finances. MSME Business Loans allow business owners to retain their control. 

Moving Forward

Businesses encounter numerous challenges when they are in their growth stage. These challenges can disrupt their finances, leading to bankruptcy and insolvency. To help small business owners gain financial assistance, lending institutions, banks, and NBFCs are offering tailor-made MSME Business Loans. 

These loans are unsecured credit instruments that can be availed at lower interest rates. The repayment tenure is also flexible, and the loan application process is simple and seamless. Due to the digital application process, there is no need to gather hefty paperwork. You only have to submit soft copies of the documents required for Business Loans. 

If you have a high bureau score, you will be able to get approval for your loan request faster. Lenders accept a bureau score above 700 to approve your loan request. In addition to this, you can use an online EMI calculator to determine your monthly payments to plan your finances in a better manner.