December 7, 2022

How MSMEs are The Efficient Financing Solution for new Business

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Every new business requires a steady capital strain for growth and expansion. This is where a small business loan arrives to provide them with the much-needed financial assistance. Meant for micro, small and medium enterprises, these loans allow new businesses to move up their growth curve. You may avail of an MSME loan for various reasons, like managing business operations, upgrading equipment, purchasing inventory, hiring or training employees, business marketing, etc.

To maintain a steady cash flow and run your business operations efficiently, you may resort to taking an MSME loan for new business. It gives you access to the required funds without any collateral, thereby giving you a chance to grow your business. They are an efficient financial solution for new businesses due to various reasons. Let us look at them.

Reasons why MSME Loan is a Better Solution:

  • Multiple Use Prospects: You may use a business loan for any business-related expense you want to cover. Whether you want to purchase inventory, buy new machinery or equipment, hire new employees, invest in marketing, or build working capital, you can use your loan amount to fund them all. Identify the weak areas of your business and invest money in them to improve them and grow your business.

  • Competitive Interest Rates: Due to the increasing number of NBFCs in India, you may avail of an MSMEs loan at competitive interest rates. Lower MSME loan interest rate ensures reduced amount you have to spend towards the principal loan amount and interest cost. Reduced interest rates also allow you to borrow more money with more manageable repayment terms. With more cash in hand, you may take more risks for your business and expand your offerings to dominate the market.

  • Ample Loan Amount: Many NBFCs offer ample loan amounts to small businesses looking for urgent funds. This means you have easy access to the money to fulfil your urgent cash requirements. However, lenders look at several factors to determine your loan eligibility, including your age, business vintage, business type, financial documents, credit score, etc.

  • Easy Accessibility: There might be times when you need urgent funds for your business. Most lenders support online loan applications and approve MSME loans quickly to give you instant access to cash. You may complete the entire loan application procedure from your home through the lender’s website or app. Once approved, you receive the loan amount directly into your bank account within a few hours. Therefore, the online application procedure gives you easy access to the required funds without any physical contact.

  • Collateral Not Required: MSME loan is unsecured, which means you do not need to put your home or company as collateral to avail it. NBFCs know that MSMEs do not have a broad bandwidth of multiple pieces of equipment, assets, and other precious resources. Putting them at risk negatively impacts your company’s reputation, productivity, and growth prospects. Therefore, an MSME loan is an excellent funding source that gives you cash influx without putting your asset at risk.

  • Flexible Repayment: Most NBFCs offer business loans with flexible repayment terms. This means that they do not force you to repay the borrowed amount within a short period. Depending on your repayment capacity, they allow you to select your loan term from a few months to a few years. A business loan EMI calculator is an excellent tool, using which you can choose a loan tenure with EMIs you can conveniently pay each month.

  • Stay in Control: Small businesses need to address their financial requirements on a regular basis. If you turn to a venture capitalist to gain the required funds, you will share your company’s control and benefits. On the other hand, by opting for an MSMEs loan for new business, you retain control over your business without liquidating your assets.

  • Fast Approval: Earlier, business owners resisted applying for a business loan due to their complicated application procedures and lengthy approval times. However, with hundreds of NBFCs coming up these days, loan application and approval procedures have become much easier and faster than before. Log on to the lender’s website or download their app to complete the application within minutes. Once you apply for a loan and submit your documents, you get instant confirmation about your approval or rejection.

  • Minimal Processing Fee: You need to pay a loan processing fee to apply for a business loan and receive the loan amount. However, NBFCs charge minimal processing fees to make loans more easily accessible to the borrowers and reduce their loan costs.

To conclude, MSMEs loans are the ideal funding resource for small businesses. They intend to offer you the required funds at the right time without stressing your finances. They are versatile, collateral-free, and scalable, helping business owners to manage their business operations with ease. Assess your business funding requirement now and apply for an MSME loan for new business without putting an asset at stake.

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