Business scalability is impossible without a steady strain of capital, which is why every small business needs financial assistance at some point in time. MSME loans provide Micro, Small and Medium Enterprises with funds that allow them to move up the growth curve. Small business loans can be availed for a host of reasons like purchasing equipment, meeting operation costs, updating infrastructure, R&D, etc. 

Benefits of MSME Loans

SME or MSME loans offer several significant benefits. If you are looking for a small business loan, keep reading this article to understand the benefits of availing one.

Multifarious uses

MSME loans are the single source for meeting all financial needs of a small or medium business venture. Small business loans can be used for meeting unexpected financial crunches, hiring more skilled staff, purchasing advanced machinery or equipment, and stocking up on raw materials; there are no limitations imposed by lenders on the usage of small business loans.

Great accessibility

There are times when your business needs funds urgently. MSME loans are sanctioned fast, and the disbursed amount starts reflecting in your account within a day or two. Lending institutions may approve small business loans within as low as 24 hours. You can also gain online access that lets you scan your loan account statements on the go.

Retain control 

A small business enterprise needs to address financial requirements daily. Turning to venture capitalists for funding means sharing the control of your company. If you do not want investors calling the shots, opt for an MSME loan. Here you have full control over all your business decisions. Small business loans save you from the liquidating control. 

Collateral not needed

MSME loans are unsecured, meaning you don’t need to keep your company or home collateral to take this loan. Lending institutions are aware that smaller enterprises do not have the bandwidth to keep their assets, equipment or other valuable resources as collateral as that can negatively impact the company’s productivity. Therefore, SME loan is an ideal funding source where you gain cash influx without the risk of losing an asset.

Competitive ROIs

MSME loans are sanctioned at affordable interest rates. This benefit ensures that only a minimum sum is spent towards principal and interest repayment of the SME loan while the rest of it is available for pressing business needs. More money in hand allows small businesses to take more risks and expand their offerings to capture the market. 

Shorter tenures

MSME loans are usually availed for short-term requirements by small or medium enterprises. This awards a certain level of flexibility to the borrower, as there is no longer a set commitment required on the MSMEs part. A short-term commitment allows businesses to allocate funds more efficiently and keep a close check on the cash flow.

Documents Required to Apply for an MSME Loan

  • PAN card
  • Aadhaar card
  • Credit (CIBIL) score
  • Business-related KYC documents (company PAN card, certificate of incorporation, etc.)
  • Last six months’ bank statements
  • Address proof

The Bottom Line

Before applying for an MSME loan, use Tata Capital’s easy-to-use business loan EMI calculator. This calculator will allow you to reach an optimal EMI based on your loan amount and tenure. We at Tata Capital are fully equipped to assist you with all your business finance needs. Get in touch with us today if you need an MSME loan urgently!

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