According to a report, the micro, small and medium enterprises will achieve the export target of USD 400 billion in 2021 and reach $1 trillion by 2027. This data shows a plausible time for MSME owners to expand their business or start a new one. Hence, it is time for small businesses to know how to apply for an MSME loan to facilitate growth. Also, entrepreneurs can consider alternative credit options to boost their business.
Ways to avail Loan and expand an MSME in India
To help expand an MSME in India, the availability of substantial funds is one of the key components. Entrepreneurs looking for how to apply for MSME loan can resort to any of the mentioned funding options:
Angel Investor
Angel investors possess surplus funds. These individuals are interested in investing in companies showing potential growth. An individual planning to expand his/her business can connect with them for financial support.
However, an angel investor can demand higher returns to profit against funds. Individuals with a small startup or MSME should read the terms and conditions before signing a deal.
Crowdfunding
This is a smart way of collecting funds from multiple investors via social networking platforms. One can find crowdfunding sites that connect multiple investors with entrepreneurs. This concept helps raise funds for MSMEs or novice business owners.
Moreover, it supports social and cultural causes. It is recommended to evaluate the hidden costs involved in running a business to make an informed decision. This will help you get the exact amount needed, not the excess.
- Government schemes
The best way to get funding for an MSME is to check out the Government schemes. These schemes offer loans against simple terms to support the MSMEs, startups, and SMEs. It also promotes socio-economic growth, talented youths, women entrepreneurs, etc.
Pradhan Mantri Mudra Yojana, Stand-up India, Credit Guarantee Fund Trust for Micro and Small Enterprises, Make in India, etc., are some schemes new business owners can check.
- Self-financing
Using one’s savings can be a way to support the business expansion dreams. An individual can invest the fund in starting a product line or purchase a unit. Individuals can gradually work for brand name and recognition.
This would aid in gaining funds from different investors without hassle or questioning. However, self-financing can be quite risky without any proper financial backup.
- Peer-to-peer lending
It includes borrowing funds without the involvement of intermediaries. This is a two-way deal. Lenders invest in a business, and borrowers get the desired amount.
Lenders are at a profit since the interest rate levied is quite high, unlike traditional loans. The RBI regulates peer-to-peer lending institutions for the betterment of both lenders and borrowers.
MSME Business loans
The easiest way to get funds for MSME expansion is by availing a business loan. The credit form extends substantial funds against simple parameters to credible borrowers.
The interest rate levied by lending institutions is quite feasible. Additionally, applicants with a good credit score and repayment history can convince lenders to lower the levied interest rate.
These are some of the creative ways of raising funds for small businesses and MSMEs. However, an applicant should be clear with what is MSME and its variables before making an application.
Business credit cards
These credit cards are personalised for startups and small businesses. Entrepreneurs can use the fund in the initial stages of business or make a big-scale transaction. However, they need to maintain a timely repayment structure to avoid incurring debt.
How to apply for an MSME loan?
1: Visit a lending institution’s website and select MSME loan
2: Fill in the MSME online application form
3: Wait for a representative to contact
4: Submit the documents for verification.
Borrowers can get the loan after clearing the verification. The amount is disbursed into the borrower’s account.
Borrowers can also gain personalized services and benefits. For example, popular Indian NBFCs like Bajaj Finserv aid in hassle-free applications through pre-approved offers available on financial products, such as business loans, personal loans, etc. Check your pre-approved offer by entering your name and contact information.
Hence, individuals planning to boost their business sales and achieve growth should know how to apply for an MSME loan. However, if they want to opt for unconventional funding options, checking the above-discussed pointers would be beneficial.
Additional Read: Powerful 7 Pillars of Business to Survive
