Micro, small and medium enterprises need funds to purchase equipment, expand business operations, increase capital in-flow and more for efficient functioning. For easy access to these funds, financial lenders offer MSME loans. The MSME sector is an integral part of the Indian economy, providing employment opportunities for the citizens.
According to the announcement in the Union Budget 2021-2022, the finance minister has made a provision of Rs.15,700 crore for the MSME sector. While fund allocation to the sector has been sizable, an MSME loan for new business or an existing one can be a viable option to finance essential needs.
Here are some of the ways in which these loans can boost a new business.
- Collateral-free loans – MSME loans are unsecured loans for which business owners do not need to pledge security. These loans increase business productivity and act as an ideal source of funds.
- Low-interest rate – A low MSME loan interest rate reduces a business owner’s EMI burden substantially. Upon seeking a loan with a lower interest rate, a borrower saves money from paying lower EMI. The money saved can, in turn, be used to finance other business expenses. Therefore, it is vital to conduct thorough market research and check the eligibility set by various financial lenders before procuring an MSME loan for a new business.
- Easy access – Be it a start-up business or an old one, every business has its highs and lows. There are times when there is a surplus of funds, and sometimes there is a dearth. In the latter case, securing business loans for MSMEs is an ideal way to source funds for a business urgently. This is primarily because of the credit’s hassle-free application and quick processing. With minimal documentation, the loan amount disbursal takes place within a short period.
NBFCs like Bajaj Finserv approve the loan within 24 hours to their customers. They also provide pre-approved offers that facilitate a seamless application procedure. These offers are available on various financial products, including business loans, personal loans, etc. You can check your pre-approved offer by providing your phone number and name.
- Avoiding relinquishing control – With MSME loans, business owners can have full control over their business. Generally, angel investors and venture capitalists will take ownership of part of an individual’s business by providing funds. However, by procuring MSME loans, a business owner does not need to relinquish control of his/her business operations.
- Purpose-free loans– Another benefit of an MSME loan is that it does not come with a pre-determined purpose. This makes it easy for a business owner to use the loan amount to meet any financial need as per his/her requirement.
- Flexibility – An individual seeks an MSME loan for a new business to meet his/her short-term requirements. The speciality of these loans is that they do not come with a stringent long-term commitment. This makes it a flexible option for business owners. Therefore, in time of urgent need for funds, MSME loans act as an excellent source to boost a business.
Considering all the above points, one can conclude that MSME loans are an efficient financing solution for any business, including MSMEs and start-ups.
In addition to this, business owners should also know when to opt for an MSME loan. Under certain circumstances, like purchasing business equipment and raw materials, considering business expansion, buying land to start a new business, improving warehouse efficiency or refurbishing an existing organisation, owners must seek MSME loans to reduce the financial burden.
Needless to say, an MSME loan for a new business is an ideal way to boost business operations. By availing of these loans, one can secure funds, save working capital, and effectively bolster a business’s growth.