Particularly for Micro, Small, and Medium Enterprises (MSMEs) in India, misconceptions abound regarding the accessibility and affordability of business loans.
This article aims to debunk common myths surrounding MSME funding and illuminate the path for entrepreneurs to secure the financial support their businesses deserve.
- Myth 1: Business Loans are Hard to Get for MSMEs: Far from being the case, unsecured small business loans are not as difficult to obtain as most people tend to think. There has been a change in the financial ecosystem that has given birth to non-banking financial companies (NBFCs), fintech platforms and government schemes like the Pradhan Mantri Mudra Yojana (PMMY) dedicated to supporting MSMEs with easier loan options.
- Myth 2: Prohibitive Interest Rates: High interest rates are a real concern, but lenders offer competitive terms on MSME business loans. The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) by the government is another convenience since it provides unsecured small business loans for MSMEs at reasonable rates.
- Myth 3: Loans are Only for Established Businesses: The lending environment of today is friendly to early-stage businesses and startups. Even businesses at their infancy can be funded based on potential and innovative ideas thanks to alternative credit assessment methods used by fintech companies.
- Myth 4: Collateral is Mandatory: One of the biggest myths out there is that you need collateral when applying for any kind of loan. The Unsecured Business loan for MSME market is expanding, e.g., CGTMSE offering collateral-free credits or online performance-focused fintech lenders who ignore physical assets.
- Myth 5: Lengthy and Complicated Application Processes: The world of lending platforms has become digitalised, making the application of MSME loans easier than before. The myth about lengthy loan processes is shattered due to online applications, minimum documentation and quick processing that have now become norms.
- Myth 6: No Hope for Businesses with Poor Credit: Having an imperfect credit score does not disqualify you from obtaining a loan. Several factors are considered by most lenders, like the market potential and business plans. Peer-to-peer lending among others provides a way for businesses to access financing regardless of credit challenges.
- Myth 7: Loan Usage Restrictions: Unsecured Business loan for MSME can be used in various ways from working capital to growth efforts. The flexibility of funds allocation is usually allowed by lenders enabling firms to deploy the same where they need them most.
- Myth 8: Government Schemes are Inaccessible: Though accessing government funding schemes can be intimidating, there are plenty of resources available as support. Websites and consultants specialising in MSME funding offer guidance, making government-backed financial support more accessible than ever.
- Myths 9: Limited Loan Options and Amounts: There is a wide range of MSME financing options that go from small unsecured loans to huge borrowing packages targeting different types of enterprises. It is all about finding a suitable option for your business.
Unsecured Business Loans with Dealplexus
There are unusual challenges and opportunities in securing MSME financing, which Dealplexus has capitalised on by working with more than 20 banks and financial institutions. Therefore, we have formulated our loans to suit your business’s specific needs as a team.
Conclusion
Knowing the reality of MSME financing can help entrepreneurs be courageous enough to guarantee their businesses’ future survival. Thus, getting rid of these fallacies and having alternatives like customized funding solutions from Dealplexus paves the way for more people to easily get unsecured business loan for MSME. So go ahead and secure capital for your business that will take it to new heights.
