Empowering Small Businesses with MSME Loans

Medium and long-term financing is hard to come by for all but the more established, larger enterprises. While the expansion of microfinance has begun to serve low-income households and micro enterprises, a segment of business owners remain underserved. Often the term “missing middle” refers to such a segment of our population facing lack of adequate access to low-cost capital. India’s relatively high cost of doing business and its complicated compliance ecosystem act as an impediment to their growth. Below we’re listing the commonly faced challenges MSMEs face, especially nano and micro businesses.?

Challenges faced by Small Businesses in India

?1)? Limited Business Capital?

Access to MSME finance is a significant hurdle for nano and micro businesses, with only 16% receiving timely finance. This forces them to rely on their resources, hindering their growth prospects. Even larger firms struggle to access cheaper credit from formal banks.

2)? ? Financial Literacy Gap?

Small businesses often struggle in understanding the nuances of business finance. There is a glaring gap and a need to spread financial awareness and conduct financial literacy workshops for such businesses apprising them about the fundamentals of finance such as Credit Score, ITR, cash flow management etc.??

3)? ? Lack of Exposure to Innovative Technology

Small business owners often rely on outdated technologies and lack entrepreneurial spirit to embrace new tools and technologies. This hampers their productivity and limits market linkage opportunities.?

What are MSME Loans and How They Can Help?

MSME loans are lines of credit extended to small businesses helping them utilize the funds as a working capital in a bid to grow their business and improve their lives and livelihood. Below are the listed insights on how MSME loans can be a game-changer in the lives of small business owners:?

• Easier Access to Credit: MSME loans commonly have a simple collateral requirement or in some cases no collateral is required as compared to standard loans, making them widely available to small businesses.?
• Competitive Interest Rates: MSME loans like small business loans notably have lesser interest rates as compared to the credit facility from informal lenders.
• Government-Backed Subsidies and Guarantees: The government too provides several MSME financing schemes tailored for the needs of the small businesses.?

Applying for MSME Loans: A Step-by-Step Guide

Here's a step-by-step guide to apply for a business loan provided by ARTH:?

Step 1: Go to the application form to show your interest in either a business loan or a housing loan. Here’s the link to the application form: https://rb.gy/mvm0y1 ?

Step 2: Once you’ve submitted the form our customer engagement team will reach out to you to understand your requirements and do a quick eligibility check.?

Step three: If you fall under our eligibility criteria, you will again receive a phone call from our customer engagement team informing you about one of your team members you’ll visit your business shop to fill up the complete application form.?

Step three: If you fall under our eligibility criteria, you will again receive a phone call from our customer engagement team informing you about one of your team members you’ll visit your business shop to fill up the complete application form.?

Step four: You’ll be required to visit our nearest Business Centre with a few documents to complete the process after which the loan amount will be disbursed within 1-2 days into your bank account.?

Conclusion?

MSME loans are more than just a form of capital; if used prudently they can play a greater role in helping businesses scale up and grow. Moreover, fintech companies focused on technological innovations further increase access to finance for small businesses, making it easier to get a loan, among other financial services.?