The Indian Government is determined to encourage MSME sectors to ensure comprehensive growth and self-reliance as it contributes approximately 30% of the country’s GDP. It employs around 11 crore citizens and accounts for nearly 40% of overall exports. As per reports, most MSMEs cannot avail of secured loans with competitive interest rates due to the shortage of high-value assets, forcing them to depend on unsecured loans with higher interest rates.
Therefore, the Indian Government is providing them with various schemes, incentives and funding opportunities to address this issue. Read on to know how this credit facility helps businesses expand and grow successfully.
How to expand businesses in India with MSME loans?
An MSME loan is primarily a business loan, exclusively designed for small businesses by keeping their requirements in mind. Such credit facility does not demand any collateral and comes with affordable interest rates, thereby allowing small businesses to establish or expand in India.
Here are some ways to use MSME funding for the benefit of business:
- Investing in infrastructural maintenance
Small business owners can use unsecured MSME business loans to negate the cost of purchasing advanced equipment. Since purchasing state-of-the-art equipment and machinery involves a considerable amount, a high-value MSME loan can allow business owners to expand their businesses on a large scale without exhausting their cash reserves.
- Managing stocks
Managing inventory is essential for a small business’s volume of sales to ensure substantial revenue. An overwhelming 31% of businesses avail business loans to purchase inventory. To manage inventory, borrowers must know how to protect their inventory supply chains by utilising the acquired funds. Moreover, entrepreneurs can manage seasonal dips, restore current stock and purchase advanced product samples for sale by availing inventory or small business loans.
- Ensuring working capital
A working capital denotes the amount of money a business requires to run daily operations. Provision of finances for weekly and monthly operational expenditures falls under the spectrum of working capital management. This working capital management allows businesses to function optimally with suppliers and customers. Therefore, to efficiently manage cash flow and working capital, small or medium business may need additional financing support.
- Investing in marketing
Efficient marketing always helps expand a company’s reach. There are primarily two things that can be achieved with an effective marketing strategy. Firstly, it includes strengthening the trust and loyalty of existing customers. Secondly, acquiring new customers.
However, marketing is expensive and all-inclusive offline and online marketing campaigns require substantial investment. In this regard, MSME loans can provide necessary financial support for such campaigns and benefit businesses significantly.
- Consolidating business debt
One of the best benefits of business loans is that it allows borrowers to merge smaller debts and make them into a single EMI. This not only alleviates a borrower’s monthly obligation but also helps align debt repayment with the invoice schedule. Moreover, by combining business debt, borrowers can also minimise the amount that one is currently paying for varied debts as now they have the opportunity to expand their repayment schedules.
One of the essential things to know when availing of such a financing option is that all MSME sectors must provide the necessary information about their mergers and acquisitions through the MSME databank to the Government.
Availing MSME loans from leading financiers like Bajaj Finserv will provide the benefit of pre-approved offers on a wide range of financial products, such as business loans, personal loans, credit cards, etc. These offers significantly eliminate the hassle of lengthy documentation and accelerate the loaning process. Existing borrowers can check their pre-approved offers by mentioning their names and contact details.
To sum it up, availing of such exclusive MSME loans allow borrowers to acquire quick funds and expand their businesses conveniently. Furthermore, it encourages more entrepreneurs to enter this space and flourish their businesses.