Entrepreneurs now consider business finance loans for Micro Small and Mediums Enterprises as the best financial option to obtain immediate funding for their companies and utilize these funds towards growing their business in a sustainable manner. Small and medium-sized business owners, individuals, and startups can all benefit from the MSME loan options available in the market at user-friendly terms. MSME loans are hence attractive, convenient and easy for business owners across the spectrum.  

MSME loans particularly Unsecured Business Loans are the preferred choice for entrepreneurs to finance their business. The funds raised can be used to expand the company’s operations, address cash flow issues, or buy new production equipment, among other things. 

According to the Government of India, the nation now has the third-largest startup ecosystem globally and anticipates YoY growth at a steady 12–15% annual rate. India has achieved a significant milestone by surpassing 100,000 registered startups in 2023.

Startups within a certain size and revenue limit can access MSME Loans to fund their business growth. There are a host of options available in the market for Startups to choose from. Here we look at some of the top reasons why Startups should apply for MSME loans. 

Interest Rates

Since Startups and MSMEs are essential to the expansion of the economy, lenders offer business loans to them at the most attractive and reasonable interest rates. MSME business finance loans have lower interest rates than other types of loans, which lessens the possibility of the borrower facing financial hardships to repay the loan. 

Accessibility

Securing funding for a new venture, the development, or the maintenance of an existing company can be among the most difficult tasks involved in managing a company. It is simple and hassle-free to apply for an MSME loan. The loan amount is disbursed quickly & promptly, and there is minimal documentation required. When you need money quickly and urgently, this can be helpful.

Collateral-free loans

Collateral is not required for most MSME loans, so you can apply for them without having to provide any security like mortgaging your home or office. This take away the stress and reduces the long and tedious paperwork, so that businesses can get a loan quickly, simply based on a few criteria related to their business. Thus, MSME loans are a perfect way to raise money.

Business Control

Funding your business often comes at a heavy price for Startup owners. If you strive to raise moneym through venture capitalists or investors, you might have to give up an interest or stake in the company, and lose control on how the company should be controlled and run. In such a scenario, a strong cash flow from an MSME loan can guarantee that you get the required money at the right moment and also maintain control over your company.

Small & Short-Term Loans

A lot of traditional business loans are of a large amount and long tenure. MSME Loans on the other hand can be small in size and quick to repay. Borrowers can take small loans based on their immediate short-term fund requirement and also repay the loan quickly and in flexible terms. Thus, MSME loans can provide a company with the short-term money it needs without requiring the borrower to make any long-term financial commitments. Since there are no long-term debt obligations, it also guarantees efficient cash flow management.

How Arth is transforming MSME Funding

Arth as an inclusive Fintech in MSME finance offers multiple finance options customized to different business needs. Arth understands that Startups and MSMEs play a major role in the expansion and development of the Indian economy. However, their growth potential is constrained by a number of issues. As a responsible and evolved Fintech, Arth offers a range of financial solutions to Startups and MSMEs that includes MSME Business Loans, Insurance, Affordable Housing Loans, Payment solutions, and Welfare assistance that go a long way in helping them establish themselves. Arth is a platform that is crucial in revolutionizing the MSME Fintech sector in India and advancing the development of a fairer and more sustainable economic structure.