According to a February 2021 report by IBEF, the MSME sector contributes to almost 29% of India’s GDP annually. However, even with that kind of a share in the pie, the technological integration in terms of digital financing that this sector has adapted, is far lesser than other verticals of the economy.
Nonetheless, with the new crop of GenZ entrepreneurs taking over the reigns– this situation is gradually changing now.
Changing the face of SME funding
To put it in perspective, digital financial services has not only helped revolutionizing the way SMEs approached external financing, but also made them more aware of the options that were available to them. Making them more open to the idea of accepting financing models that are hybrid or different but more customized towards their specific objectives.
1. Simple and Accessible:
From filling booklets of application forms to getting a one click approval, digital financial institutions have truly helped changed the game for SME entrepreneurs. Digital loan applications and disbursals have not only saved time and resources for these owners, but also made the entire journey easy to understand and error free. Moreover, with the help of digital portals and mediums, financial services can also be availed completely remote without having to visit a physical branch even once!
2. Minimum documentation:
Since an applicant’s digital footprint is easily available on demand, assessing the credit worthiness does not require submission of a pile of documents anymore. A simple online KYC is enough for loan verification, thus making it quick and hassle free to get the disbursal amount.
3. Repository for statements:
Lastly, with the help of these specialized financing portals – getting statements and documents do not require physical visits anymore. You can simply access the online repository on your account and get the documents of your choice on demand – thus saving you a considerable amount of time that can be apportioned to other important tasks.
Enabling SMEs to be able to obtain loans and benefits through on click financing has resulted in more gains than were anticipated. Not only did it introduce the idea of digital transactions to the sector, but also reinstated their faith in technology that helping them incorporate it in other business functions as well. Hence, making the MSME sector more mobile and sustainable to face challenges of the post pandemic new normal.