Micro, Small, & Medium Enterprises play a vital role in the progress of the Indian economy. It contributes to more than 45% of the total industrial output, 40% of the goods that get exported, and produce more than 8000 different types of products for the Indian and international markets. MSMEs employ more than 60 million people around the country and create almost 1.3 million jobs each year.
Despite the enormous contribution towards national economy, MSMEs face several challenges, especially in the economic and infrastructure development sector. Many financial institutions provide easy to avail business loans to help with MSME financing and void the fiscal gap.
If you own a business, here are the common problems you might face, along with the solutions to help you tackle the hurdle.
- A shortage of available finance –
MSMEs in the Indian market face a major financial deficit every fiscal year. These industries, especially the Micro enterprises, generally start with less investment capital. This exposes them to the danger of bankruptcy if fallen into a credit deficit situation. In that case, one can opt for funds from CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) or go for an unsecured business loan.
In the recent year, Indian firms obtained around 25% from their MSME financing from financial institutions. More and more lenders are competing against each other to cater to the growing need. This helps business owners obtain larger credits on easy to meet terms. You can avail up to Rs. 30 Lakh as a collateral free business loan from lenders like Bajaj Finserv.
Bajaj Finserv offers large capitals in the form of short-term, intermediate-term and long-term Business Loans. These financial products come with pre-approved offers and require minimum documents required for MSME loan, which make the process of availing finance easy and time-saving. They also provide these offers on other financial services and products like personal loans and home loans. It only requires you to share a few necessary details online to check out your pre-approved offer.
- Issues related to raw materials –
The problems related to raw materials can be differentiated into three categories.
- The poor quality of raw material.
- A scarcity of products.
- High cost related to transporting and importing goods.
A business owner can choose to import good quality materials from foreign countries. However, that involves paying in foreign currency along with paying customs duty. To manage this cost, one can avail credit in the form of personal loans for business.
- Unavailability of suitable technology –
Technology can improve the efficiency of any business manifolds. Increasing MSME financing options will help them avail modern and business-specific technology. With modern equipment, the quality of the products will improve, increasing the market value and demand in both domestic and international markets.
Utilising modern equipment will also increase the volume of production. Today, Indian MSMEs suffer a significant supply and demand deficit compared to their foreign competitors. This gap can be bridged with both quality and volume.
Collateral free credits can help them buy the latest machinery from the manufacturer without worrying about their assets getting seized if they fail to repay the amount in time.
- Lack of infrastructure –
MSME financing can be well utilised for improving necessary infrastructure to help the business venture. While one of the most significant issues is the absence of uninterrupted and unregulated electricity, other concerns can be –
- Inadequate supply of essential amenities like clean water.
- An absence of industrial-scale waste management systems.
Businesses need a sizable income to build and maintain such infrastructures. A business loan can help mitigate the absence of necessary finance.
- Lack of funds to invest in marketing and distribution networks –
MSMEs should invest in marketing to increase their clientele. Also, they should build efficient distribution networks to supply their customers. Strengthening their financial infrastructure will help them invest in marketing and build better retailer networks.
There are multiple other ways to keep your business from sinking; however, you can try the suggestions mentioned above to overcome the challenges that most MSMEs in India face today.
