2 min read
25 May 2021

Every small business needs financial assistance at some point. Most Micro, Small and Medium Enterprises (MSMEs) usually require financial assistance when moving up the growth curve. The money may be needed for purchasing essential equipment, up-gradation of infrastructure or for meeting operating expenses. Where the money comes from is the discretion of the owner and their priorities. Many different businesses have the option of procuring financing from various borrowing instruments.

But, when it comes to MSMEs, the preferred route taken to address financial needs is an MSME loan in India.

Let us look at the factors which have made MSME loans so popular among small businesses in India.


Running a business in the Indian economic scenario can be challenging. There can be a surplus of funds due to the seasonality of demands and various other factors, while sometimes every penny can make a difference. When the latter situation arrives, funds will be required to be deployed on an urgent basis.

Availing of an MSME loan is easy and hassle-free. There is not much time taken to disburse the loan amount, and documentation is also minimal. The processing time is rapid; companies like Bajaj Finserv have approval times as low as 24 hours. There is also online account access, which lets you access your account statement and loan details on the go.

Additional Read: The MSME loan, efficient financing solution for MSMEs

Full control

A small business will also need to address the company's financial requirements in the course of doing business. Finance is not easy to procure, and other loan sources such as angel investors and venture capitalists offer finance and seek to control part of the company in return.

A small business owner may not look forward to relinquishing control of the business. MSME loans are specifically designed to meet such requirements of small businesses. They are an excellent source of finance for business owners who wants to avoid liquidation of control.

Reduced interest rates

In a business environment, the more money one has on hand; the better-positioned one is to take on the risks that come along the way. With their competitive interest rates, MSME loans ensure that only the minimum amount is spent in repayment of the loan, and the rest is available for other business needs.

No strings attached

MSME loans do not require collateral from companies to be eligible for it.
The nature of small businesses is such that they are ‘asset light’ and can’t afford to keep their equipment as collateral.

Small businesses cannot pledge their valuable resources to banks for cash, as this can adversely impact on their productivity if something goes wrong. MSME loans, thus, turn out to be an ideal source of funds when the need arises.

Short-term commitment

MSME loans are mainly utilised for short-term requirements by small businesses. This arrangement provides a certain amount of flexibility to the borrower, as there is no long-term commitment required on their part. A short-term commitment also allows the management room to manage the cash flow and efficiently allocate available resources.

MSME loans come with great benefits for small businesses, like no collateral, fast processing cycle and online account access, that meet the exact needs of small businesses at any stage of their growth.

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