business loan

Everything You Need to Know About MSME Business Loans

Business Finance

MSMEs generate jobs, drive innovation, drive economic growth, and augment overall economic activity globally. Approximately 111 million people are employed by 63 million units in this sector in India. About 30 percent of the country’s GDP is made up of MSMEs.

In short, it is fair to state that financing MSMEs could fuel India’s growth since they are one of the most powerful engines of the economy. However, the lack of access to a quality credit line discourages MSMEs from investing in their businesses and expanding. This can derail the entrepreneurs from their vision.

SMEs and self-employed professionals can use instant business loans to expand their businesses and meet daily operational needs to realise their vision. They can approach financial institutions and NBFCs who offer collateral-free loans up to Rs. 50 Lakh with a three-year repayment period. The interest rate on MSME loans may vary between NBFCs and depends on your business requirements.

Collateral-free MSME Business Loans

You can use an MSME Business Loan to meet working capital requirements and expand your business. A business loan for a new business is often unsecured without collateral. The NBFC’s website can provide you with all the information you need to get an MSME Business Loan for your business.

You can avail of the MSME working capital loan without collateral at a low-interest rate and repay through EMIs over time. The repayment period of such Business Loans is usually 12 months and can be extended up to 36 months. For self-employed professionals, the repayment term can go up to 48 months. Loan amounts are determined based on the applicant’s profile, creditworthiness, ability to repay the loan, and financial stability. 

What can an MSME Business Loan be used for?

MSMEs account for a large share of India’s labour force and industrial output. As per studies, around 45% of industrial production comes from MSMEs. In addition, they contribute 40% to Indian exports. Thus, this industry requires more corporate financing. But the lack of on-time funding is a major impediment to the expansion of MSMEs in India.

Here’s how you can use an MSME Business Loan: 

Buy machinery

You can use unsecured business loans to buy new equipment. You can grow your business without depleting your cash flow by getting a loan of up to 50 Lakh to invest in equipment and machinery. 

Company debt consolidation

Short-term MSME Business Loans offer the advantage of combining smaller payments into a single EMI. As a result, not only your monthly budget is relieved, but debt payback schedules are matched accordingly. Extending the repayment plan up to a year may also allow you to lower the amount you pay for various loans by consolidating company debt. 

Stock management

Sales volume determines small businesses’ revenue, so inventory management is imperative. You can use MSME loans to manage your inventory. MSME inventory loans are useful for managing seasonal dips, replenishing stock, and buying new product samples. 


You can expand your business’s reach through marketing. A good marketing strategy can reaffirm your clients’ faith in your business and maintain their commitment to you. It can also help you acquire new clients in existing or new markets. However, a comprehensive marketing strategy, both online and offline, requires sufficient funding. You can raise funds for such a campaign through an MSME Business Loan.

Working capital management

Working capital refers to a company’s cash to conduct its everyday operations. Finance provisioning for operational expenditures on a weekly or monthly basis is included in this working capital management. Let your company function independently by managing your working capital efficiently. You may need a Business Loan to manage working capital and cash flow effectively. 


There is great potential for Indian businesses to expand globally. Entrepreneurs need proper funding and encouragement to succeed, along with a favorable environment and supportive government policies. MSME Business Loans are a terrific way to fund businesses in the country. So, evaluate your business needs and apply for a Business Loan to take your business to the next level. 

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