In the past two decades, India’s Micro, Small and Medium Enterprises or MSMEs have witnessed unprecedented growth.
A study suggests the sector contributes approximately 40% to the country’s GDP. This growth has been bolstered substantially with the easy availability of financing from various sources, which has fulfilled the businesses’ demand for capital to quite an extent.
- The total number of MSMEs in 2020 has increased to 25.13 lakh from 21.21 lakh in the Financial Year 2019.
- The number of registered MSMEs in India in the last five years stood at 90.19 lakh.
This increase in the number of small businesses in India has been largely possible due to boosted accessibility of financing options like Mudra loans and the likes.
Following is, thus, a look at the financing options that small business owners can easily avail to leverage the productivity of their entrepreneurial pursuits and drive business growth.
Financing avenues for businesses
A critical requirement to create a growth plan for a small business is to see to its initial and intermittent needs for capital infusion.
Thankfully, the government and various financial institutions across the country have introduced funding options that business owners can avail to meet various funding requirements of their enterprise.
Among the government schemes introduced to meet the financing needs of MSMEs, perhaps the most popular one is the Mudra loan.
- As many as 622,37,981 loans were sanctioned under the Mudra scheme in the financial year 2019-2020.
The Mudra scheme, offered under the aegis of Pradhan Mantri Mudra Yojana or PMMY extends financing through three lending categories, namely, Shishu, Kishor and Tarun.
Each of these is suited to meet the specific requirements of business owners at different stages.
One can avail up to Rs.10 lakh as Mudra loan to meet variegated funding needs of micro and small enterprises belonging to the non-farming and non-corporate sector.
- PMMY has disbursed Rs.3,29,684.63 crore as financial aid for business owners belonging to the above-mentioned segment.
Now, while these loans have laid the foundation for aspirants to be a successful small business owner, their adjoined eligibility criteria remain a remarkable deterrent.
Furthermore, the maximum amount available under the loans can also be insufficient in effectively meeting business funding requirements for boosted growth and productivity.
In this case, individuals can look to avail business loans provided by various other lending institutions to fulfil the funding requirements of their venture with ease.
What are the benefits of availing loans as business finance?
Loans for businesses availed as a substitute to Mudra loans can be typically beneficial due to several reasons.
For starters, these unsecured advances come with unrestricted end-use, thus allowing business owners to utilise them for diverse funding requirements.
From expanding operations to infrastructural improvement; from purchasing the latest machinery to maintaining inventory and a steady flow of working capital, these loans can be used as convenient funding options for a range of purposes.
Few other benefits that accompany these business loans offered by financial institutions are as follows –
- A high loan value
Business owners can avail up to Rs.30 lakh under these loans, which can allow them to expand the scope of operations.
Attractive interest rates also make them affordable. Leveraging the productivity of any small-scale business can be simplified to quite an extent with short and intermediate-term loans.
- Ease of accessibility
Available in under 24 hours against easy-to-meet eligibility criteria and minimal document requirements, these loans are easily accessible to borrowers. Bajaj Finserv is one such lender extending accessible business finance to both urban and rural areas.
Furthermore, with perks like pre-approved offers provided by them, availing these loans becomes faster and convenient.
Such offers are available on several financial products, including business loans and personal loans. One can check the pre-approved offer easily by providing their name and contact number.
Apart from these, the no-collateral clause of these loans is certainly an advantage for individuals looking to finance their business’ growth.
Thus, irrespective of the financing options, be it Mudra loans or other loans options, one can corroborate the growth and productivity of their business with minimum hassles.