A large number of small businesses start off as very small units, and remain that way for extended periods of time. However, with the right support, these businesses have the potential to multiply their growth and become established enterprises over time.
The problem arises when these businesses approach lenders seeking financing. Being largely risk averse, traditional lenders like banks look at two key factors when sanctioning a loan. The first of these is an established credit history. Unfortunately for MSME entrepreneurs, a vast majority of them are either new to credit or have a short track record that does not convince the lender of their creditworthiness.
The next factor that banks look at is whether the potential borrower can provide an asset as collateral against the loan. Here too, small business owners fall short, as many of them don’t have assets in their name which they can leverage to secure a business loan. This is where Kinara comes in, with specialized collateral-free business loans to help MSME entrepreneurs invest in the growth of their businesses.
Ashokkumar Prasad started his textile business, Ashok Textile, in 2003. His manufacturing unit, based in Pune, Maharashtra, was a small venture funded by his own savings. He started manufacturing materials and selling it as raw materials to clothing manufacturers. He ran the business for over a decade, and while his business was doing fairly well, his long-term goal was to expand the scope of his venture.
When Ashokkumar eventually decided that it was time to invest in the growth and diversification of the business, he realized that he did not have the funds out-of-pocket to undertake any major upgrades. He was able to keep his operations running at the current level, but he would fall short of funds if he was to direct any of his working capital into expanding the scope of his business.
This is a problem faced by thousands of small business entrepreneurs, who are able to pull together enough capital to start a business, but find themselves short of funds when it comes to expanding or diversifying it. When Ashokkumar found himself in this position, he started looking for financing options.
In 2016, Ashokkumar came to know about Kinara Capital's collateral-free loans. He realized that this is exactly what he needed and decided to apply for one to finance the diversification of his textile business. Soon after, he was able to secure a loan of Rs. 7.5 lakhs for his company.
He used the amount to start making his own clothing line and selling his products. This was a huge boost for his business, but Ashokkumar wanted more. He took another loan of Ra. 10 lakhs from Kinara, and this became a turning point for him, doubling his business volume.
The loans Ashokkumar received from Kinara helped him expand the scope of his business and improve his product output. It also significantly boosted his turnover, and allowed him to create more jobs, as the demand for his products grew. Being able to manufacture his own clothing line meant that he could sell more high-demand and high-value products, automatically improving the profile of his business.
He shares, "My turnover doubled from Rs. 3.5 lakhs to Rs. 7 lakhs! I was also able to grow my workforce from 2-3 employees to around 16 at present. This would never have been possible if Kinara didn't support me. I'm very happy with what my business has been able to achieve."
Ashokkumar is one of 45000+ MSME entrepreneurs in India who have benefited from Kinara Capital’s collateral-free MSME business loans. Kinara Capital, an RBI-registered, Systemically Important NBFC in India with an aim to empower the MSME sectors has disbursed 75000+ business loans worth INR 3500+ crores to date. With its branches across 3000+ pin codes, Kinara provides doorstep services in vernacular.
To get a business loan for your small business, check your loan eligibility in 1 minute in the myKinara App by downloading it from the Google Play Store, with 7 language options available, choose your preferred vernacular. You can now get a business loan by giving a missed call on 080-68264454 and go from decision to disbursement within 24 hours.