Small and medium scale enterprises are an integral part of the economy. Their contribution to the country’s manufacturing quotient is high and significant. Running a small business is no small feat and it requires plenty of funds, which is why availing the right type of loan is crucial. If you own an MSME, it is advisable to consider an MSME loan for the purchase of new equipment, setup, and to meet the operational demands from time to time. Let us take a look at the features and benefits of an MSME loan to decide whether it is suitable for you.
Features of an MSME loan:
High loan amount– Irrespective of the purpose of borrowing, you can enjoy a high loan amount. You can purchase new equipment, upgrade the premises or hire more workers with a loan amount as high as 50 lakh.
Flexible repayment tenure– In an MSME loan, the repayment tenure is flexible and you can repay the amount as per your preferred schedule and convenience. You can pay off the loan as per the cash flow in your business.
No hidden costs– The overall cost of borrowing will not increase because there are no hidden charges. The processing fees will have to be paid upfront and you will be informed about it at the time of application. There are no other charges associated with the loan.
Minimal documentation– You do not need to worry about the tedious documentation. MSME loan has minimal documentation and quick approval.
Benefits of an MSME loan:
Collateral free– The biggest benefit of an MSME loan is that there is no requirement of collateral. This means the risk associated with the loan is minimal. You can apply for the loan even when you do not own any assets. Since there is no hypothecation of the asset, the documentation is less and the loan is processed in no time.
Low-interest rate– In order to promote the growth of MSMEs in the country, lenders offer the loan at a low-interest rate. With a low rate of interest, the EMI amount will be low and you will be able to make the loan repayment in time. It will not put a strain on the cash flow and will ensure that there is no default.
Available for the short term– The loan is suitable for those who need immediate access to funds. It is available for the short term and will fulfill your immediate requirements. Hence, if you need funds to make the most of a business opportunity, this loan is ideal for you.
Considering the features and benefits of an MSME loan,it can be rightly said that it is suitable for all small and medium enterprises that are looking to grow and expand. You can turn your aspirations into a reality with the loan. With a low rate of interest and quick approval, the loan will help fulfill the business needs. It is one of the most preferred and most convenient forms of borrowing in the country. Identify your needs and purpose of borrowing before you approach a lender. With quick processing and instant disbursal, you will have the funds in no time.