Alternative Financing options for MSMEs in India


If you are an MSME in India, you might know how difficult to raise funds in the country. Though the lending industry and the Government are taking massive steps to bridge the financing gap for MSMEs in the nation, at the ground level entrepreneurs prolong to complain In reality, it’s miles being largely supposed that the SME finance gap in India is approximately around $650 billion and this difficulty isn’t forever going to determine anytime soon.

Nevertheless, as an SME entrepreneur, we additionally don’t have to tell you’re about the traditional financing option like working capital and line of credit.  But what while these options are exhausted and you want the budget to maintain the show-up and running? What if you don’t have any collateral in hand to elevate loans? You can’t close the shop and ask everybody to move home, right?

This is a whilst exchange, finance comes at your disposal.  Entrepreneur India offers three financing, which enables you to maintain constructing your agency without any financial hurdles.

Invoice Discounting

One of the key troubles faced with the aid of MSMEs is related to past due payments, particularly in case you are running with large groups. However, if the capital is stuck out of doors the machine and you have the legitimate invoice in the region – one could don’t forget discounting these bills.

Invoice discounting or factoring – is being a part of the commercial enterprise lending industry for quite some time now. However, with the introduction of GST, the system is more streamlined.

You can either discount your bill on Trade receivables discounting device (TReDS) platform which includes RXIL,TReDs or M1exchange, which acts a change and helps one improve from finances from economic establishments which includes banks. Or bargain the bill immediately through new-age SME lenders like Flexi loan, KredX or LivFin.

Merchant Cash Advance

While of a few factor-of-sales or PoS machines are bills facilitator, it’s miles surely a terrific manner to apprehend the economic fitness of your agency. Based on your PoS information, you could get admission to PoS finance or Merchant Cash Advance (MCA).

With MCA, the lender will trouble you a percent of strengthening based for your transaction recorded in the machine, in conjunction with a small price. To avail this, you need now not actually have a healthy credit score rating to boast of.

Again, MCA may be availed via almost each other new age SME finances along with Bajaj Finserv, TabCapital or Capital Float.

P2P Lenders

Peer-to-peer lending is a brand new age lending alternative. While this extra like a personal loan alternative as of now, P2P creditors are circuitously helping plenty of MSMEs

All you’ve were given to do that is – download a P2P lending app, check on yourself and installed your requirements. In a rely a while, the app will analyze your cellular data to recognize your creditworthiness and disburse the loan into your account.

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