How Can You Grow Your Revenue With An MSME Business Loan?

Any product you place in your grocery bag or even order online is a part of the Micro, Small and Medium Enterprises (MSME) ecosystem. MSMEs are accelerants to a growing and economically sufficient India. These small businesses are significant contributors to economic growth. There are times when MSMEs run into financial trouble and during these times, it is essential for business owners to have access to MSME business loans or other startup business loans to help them build their businesses. This article explores the features and benefits of MSME business loans and other startup business loans.

What Are MSME Loans?

MSME loans are usually unsecured loans of a special nature that provide start-ups, small business owners, female-lead companies and more with the means to finance themselves. MSME loans may also be given to department stores, salons, restaurants, clothing and similar businesses. 

MSMEs can go through financial issues during certain unforeseen circumstances and the aim during these times is to get access to finances to grow and expand. MSME loans are multi-purpose loans that borrowers can utilise for various purposes including procuring inventory and buying or renting property for business purposes.

Features of MSME Loans

In the matter of exports and imports, MSMEs are big mechanisms and contribute to 50% of India’s revenue. They are starting points for newcomers who are entering any profession and are an opportunity for them to flourish. Considering all this, MSMEs not only accelerate development in the urban sector but also integrate development in the rural sector as well.

However, with all these developments, including being the country’s reason for sustainable development, MSMEs face several dangers and challenges to survive. The lack of sufficient funding is the main issue. Newer technology, better infrastructure and talent acquisition can be a hassle. For that reason, an MSME business loan is a great way to increase revenue and propel businesses to success. 

The Government of India has created an innovative framework for MSMEs to get business loans easily. These MSME business loans have been a constant propellant for new MSME businesses. Small businesses during the pandemic and other difficult times can take advantage of these finances to generate revenue and propel the growth of their MSMEs.

Different MSME Business Loan Programmes

The different types of MSME business loan programmes include:

• Pradhan Mantri Mudra YojanaThis is an MSME business loan that offers small and non-farm micro-enterprises with the possibility of availing loans of Rs. 10 lakh. The loans are offered by banks, micro-finance lenders, MFIs and NBFCs.
• Prime Minister’s Employment Generation Programme LoanThis unique loan is a credit-linked subsidy program. This specific loan is provided to groups that have covered 15% to 35% of the project’s total cost.

Advantages of an MSME Business Loan

There are many advantages of an MSME business loan including:

• You can get an MSME business loan with no collateral.
• Your company or organization can receive income tax exemptions, industrial promotional subsidies, safety from late payments, reimbursements for ISO certifications and also concessions on electric costs.
• MSME business loans are quickly approved through online portals and the loan amount is quickly and easily sent. 
• MSME business loans are easy to manage from the banking websites of the business’s financial service providers.

Ways To Grow Your Revenue With MSME Business Loans

These are the following ways in which MSME business loans can help you grow your revenue:

• MSME business loans are usually disbursed quickly and lenders do not take more than a week to disburse the loan amount. They are also collateral free and do not have a lengthy verification or inspection process. 
• MSME loans can help in tackling cash flow issues when running a business. In off seasons when sales are down, businesses suffer. During those times, MSME business loans can be of great assistance, and interest will only be charged for the amount utilised. 
• MSME entrepreneurs do not have the means to keep investing their savings into their businesses. Getting startup business loans is one of the best ways to build and expand their business.
• MSME business loans are ideal sources of funds to meet the requirements of borrowers for business growth. They can utilize these funds for a range of activities that are related to the growth of their business revenue. 
• MSME business loans can be utilised to meet working capital, buy raw materials or inventory, purchase fixed assets, and equipment, adopt newer technology and importantly, invest in marketing. 

Eligibility Requirments For MSME Loans

These are the eligibility requirements for MSME loans:

• Credit ScoresFor a business to be eligible for MSME business loans, the credit score is important. If borrowers default on loans, then lenders face credit risks. The lender will assess the applicant’s credit history and credit score. A great credit score such as 750-800 and above helps a business get startup business loans easily and also helps the borrower negotiate a better interest rate.
• RegistrationLenders will grant MSME business loans to registered businesses. Businesses must also obtain a unique number from the relevant tax authorities.
• Business PlanLenders who provide MSME business loans assess business plans for future growth. These business plans offer a realistic view of the business’s future.

Conclusion

MSMEs are the lifeblood of the Indian economy and provide a large portion of the country’s growth. Many businesses, in their initial stages, face trouble with stable cash flows and profits to invest in their businesses. Hence, MSME business loans are an important form of financial assistance. MSME loan programmes create several unique opportunities to help in the growth of emerging companies in India.

Significant features of MSME business loans include quick division of amounts, flexible repayment tenure and good interest rates. These features make MSME business loans attractive to businesses that want to grow and expand. For more information on MSME business loans and other startup business loans, visit Piramal Finance to read more articles and receive guidance on how to grow your revenue.