Business owners are always on the lookout for business loans or MSME loans that will help them fulfil their business obligations.
An MSME loan will help a business in many ways. Be it expansion, debt restructuring or inventory management, an MSME loan will be able to fund all of them. However, one of the dilemmas that most business owners suffer from is whether to take the plunge or not. An MSME loan or a business loan is an expense most would abhor adding to their liabilities.
Here's why an MSME loan is the best choice for business owners.
Plenty of Options
There are plenty of options to choose an MSME loan from. From government-aided schemes to NBFCs, every financial institution offers great MSME loans to help the sector grow. Government schemes like Stand-Up India, Pradhan Mantri Mudra Yojana (PMMY), MSME business loans in 59 minutes are some of the popular schemes that the Government has set up for the MSME sector.
There are a large number of schemes that the NBFCs have too. The greater the number of options, the more competition that will lead to better service. This will help the consumer get the best interest rates.
Unlike a business loan, where the eligibility criterion is a long list of items, the same for an MSME loan is minimal. Business loan eligibility depends on the credit score, the turnover, the risk factor et al. There is also a lot of paperwork that is needed to satisfy the loan approving agency.
An MSME loan eligibility depends on minimal criteria and less paperwork. The idea to provide an MSME loan is to assist the business owner to grow and compete globally. The government is keen on improving the lives of the MSME sector so that they increase their percentage in the overall GDP.
Taking an MSME loan does have tax benefits. The Government schemes give a certain amount of tax relief to the benefactors. This may not be the case for all business loans. Tax relief for the business owner is a god sent opportunity. MSME loans do have such provisions.
A business loan is generally considered to be discriminatory. Each industry qualifies under separate criteria when applying for a business loan. However, for an MSME loan, the criteria are all the same. There is equality when it comes to MSME loan.
The only qualifying point is that the business needs to be under the MSME sector along with a few other rudimentary documentations. This is again one of the best features of the MSME loan since no business owner in dire need of a loan will have their application rejected if their business falls under the MSME sector.
The bare minimum qualifying factor for the Government schemes is that the business needs to have a turnover of INR 90000 in the previous 3 months.
MSME loans can be used for any kind of business activity related to that particular company. It is generally provided for capital growth and to assist the business owner tide over the immediate financial crisis. MSME loans are meant to give a kick start to a particular company and help it attain a level of efficiency.
MSME loans are in that case far more flexible than business loans and should be used by MSME business owners.
Lastly, MSME loans are some of the most sought after loans for MSME business owners. The above-mentioned features are the reason why MSME business loans need to be availed since they are designed to help the business to grow and become competitive.