Micro, small and medium enterprises have a vital role in providing employment opportunities in India. The MSME sector also has a relatively lower capital cost compared to large industries. They also help in the development and industrialisation of rural areas. However, one major challenge that the sector faces at present is the non-availability of fast business loans and loans for UK companies..
Despite the difficulty of funding for business, MSMEs have been flourishing in recent years. The Indian economy is expected to become one of the leading economies in the world. Experts have estimated that the by 2025, the economy will hit the $5 trillion mark. And the backbone of the economy is the MSME sector.
Challenges that the MSME Sector Faces
MSME sector provides job opportunities, fosters innovation and entrepreneurship, and contributes to the GDP. The government in India has several initiatives for the benefit of sector. However, some start-ups still face problems with their capital finance. Most of them find it hard to find the right source of funding for business.
Aside from financial problems, MSMEs in India also suffer from sub-optimal scale of operations, inefficiencies in the supply chain, change in manufacturing strategies, uncertain market scenario, increase local and global competition, and technology obsolescence. MSMEs need to use innovative and flexible approaches in their daily operations in order to survive and be profitable.
Improving MSME Lending via FinTech Firms
As stated before, the MSME sector is having a hard time securing business loans from traditional financial institutions. It is difficult for banks to approve loan applications because most MSMEs have no infrastructure or collateral, don’t have experience, and bad financing record, just to name a few.
The good news is that MSMEs can approach FinTech firms for their funding needs. They offer customised loan solutions that will provide adequate funding for business.
How Loan Frame Can Help the MSME Sector
Loan Frame works by acting as a bridge between a MSME and various investors. Its goal is to solve the funding problem of small businesses and at the same time provide optimal operating costs for lenders. It is a win-win situation for all the parties involved.
The company’s approach to funding for business is oriented towards using the growing trend of supply chain optimisation in different industries. It is funded by top global venture capitalists, and its mission is to provide better experience compared to traditional capital finance methods. It streamlines the loan process reducing the number of documents required, submit and extract information online, and a single point of contact even when dealing with various investors at the same time.
The MSME sector in India continues to be the backbone of the country’s economy. But despite that, the sector continues to face difficulties in getting credit from traditional lenders. The good news is that new players such as Loan Frame are there to fill the gap and provide business loans to MSMEs that will allow them to grow.