Getting credit and financing has never been easy for MSMEs. High processing costs for MSME loans compared to the loan size, lengthy loan processing methods, lack of technical understanding, and other issues are among the major challenges faced by MSMEs.
The MSME sector has been hit badly by the Covid-19 pandemic induced crisis around the world. However, even before the crisis, despite established growth records, the sector was underserved due to a lack of timely access to credit.
NBFCs have emerged to bridge this gap and make financing easily accessible for MSMEs. Credit is like lifeblood for small businesses; it is necessary for businesses to run smoothly. Therefore, NBFCs provide different kinds of MSME loan schemes to cater to different requirements.
Here’s how you can increase your revenue by availing of MSME loan schemes.
- Taking a loan to invest in new machinery will increase the quality of your product output. As a result, you’ll be able to generate a huge number of items in a short period of time, which will have a major impact on your sales.
- You may be able to generate a higher quantity of products for your company with the help of new or upgraded machinery. Customers can place larger orders with you.
- You can apply for export licences and build a strong supply chain management system by upgrading existing office or factory space.
- You can maintain the working capital to avoid seasonal fluctuations.
- You can spend on online commerce platforms, marketing and ads.
- You can take part in trade shows and networking events.
- Increase the quality of your product or service by hiring a skilled task force.
- Implement growth strategies to serve more clients in more areas.
- Increase sales by diversifying into related products or services.
- Upgrade your office software or buy new computers and software.
How to check if you are eligible for an MSME loan scheme?
- The turnover and investment details of your business should be applicable as per the revised MSME act 2020.
- Make sure you have the essential documents before you apply for the MSME loan scheme (different NBFCs have different requirements).
- NBFCs will verify your personal and business KYC documents.
- Be ready with your income verification documents too and if all the above-mentioned documents are ready, you are good to go.
Types of MSME loan schemes:
- Working Capital Loan
- Asset Purchase Loans
A working capital loan is utilized to fund a business’s day-to-day operations. These loans are used to provide operating capital to meet a company’s short-term operational needs rather than to purchase long-term assets or investments.
Expenses you can fund with a working capital loan include payroll, rent, machine repair, renovation and many other operation expenditures. Working capital loans are essentially used to fund the day-to-day operations of a business.
A machinery/equipment loan is a form of business loan that assists business owners in obtaining the necessary financing to purchase the machinery or equipment needed to streamline their operations and scale up production. Increased production will result in increased performance, which will lead to an increase in sales and revenue.
If you operate a business, you know how critical it is to upgrade or replace the machinery required to complete your daily responsibilities on a budget. Any difficulties generated by inefficient machinery will be removed by purchasing new equipment or replacing outdated ones. Purchasing equipment entirely, on the other hand, can put pressure on your cash flow. The easiest solution to this problem is to take a machinery loan for financial support, which will allow you to keep your firm running smoothly to meet increased demand.
Responsible credit repayment behaviour helps to represent you as a trustworthy businessperson while also speeding up the application process and loan approval. So, keep these factors in mind and be responsible with your credit practices. Keep in mind that any funds disbursed for the company must be used solely for the company’s expenses.
You should always be well aware of the details of the NBFC from which you want to get the loan. Only get loans from trusted and reputed NBFCs like Kinara Capital. Their updated financial technology and assistance in a regional language is helping many entrepreneurs start their dream business. Visit their website today.