The MSME (Micro, Small and Medium Enterprises) sector plays a vital role in the Indian economy, contributing to employment generation, exports, and overall economic growth. However, one of the significant challenges faced by MSMEs in India is the lack of access to adequate credit. This is precipitated by several issues, including their lack of access to collateral to leverage against a loan, and the fact that most of them don’t have an established credit history.
The credit gap in the MSME sector in India refers to the difference between the demand for credit by MSMEs and the availability of credit from financial institutions. According to a report by the International Finance Corporation (IFC), the credit gap in the MSME sector in India is estimated to be around USD 380 billion, with around 75% of MSMEs having no access to formal credit. Traditional financial institutions like banks are highly risk averse, so MSME entrepreneurs are often met with nothing but disappointment when they approach banks for financing. They are asked for extensive documentation, and sometimes turned away even upon submitting the paperwork. For thousands of MSME entrepreneurs, finding out about Kinara’s collateral-free loans becomes the pivotal moment that helps them turn their businesses around.
Tanveer Samad Kazi started his automobile components manufacturing business called Perfect Industries in Kolhapur, Maharashtra. He started off with a capital investment of Rs. 2 lakhs, but soon found his business stagnating.
The automobile industry in India is a fast-growing one and one that offers plenty of growth opportunities for MSMEs. However, Tanveer didn’t have the funds to invest in improving his business in order to make the most of these opportunities. To bridge this gap, one of his friends suggested getting his documents in place and approaching a bank for a loan.
Tanveer approached a bank for a loan, but was promptly turned away and told to come back after he had filed his taxes for 2 years. He complied, but to his frustration, he was told to come back after he had filed his taxes the next year.
He did return with 3 years of documentation, but this time, the bank offered him a loan of just Rs. 1 lakh. Tanveer planned to buy expensive machinery that he needed for his business, and the amount wasn’t even close to enough. Like many MSME entrepreneurs, he found himself at an impasse, with no easy solution in sight.
Tanveer had all but made up his mind to close his business as he ran out of funds, when a friend of his, who was an existing Kinara customer, recommended approaching the company for a collateral-free loan. All it took was one call for a Kinara representative to visit his business and agree to provide him with the Rs. 10 lakh loan he needed. That became the first step in an incredible growth journey.
He shares, “I used the loan amount to add 3 more machines to the original unit, and expanded my workforce from 5 to 25. Then I was able to build 2 additional units with Kinara’s support, and I upped my workforce to 60. My sales are up from Rs. 4-5 lakhs before the loan to Rs. 15-20 lakhs at present. I was only able to get the financing I needed because of Kinara, and I’m extremely thankful to them. I hope they keep helping new businesses flourish as they did mine.”
Tanveer is one of 75000+ 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 100,000+ business loans worth INR 6500+ crores to date. With its branches across 4500+ 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. Also, we have a dedicated customer support team available between Monday – Friday (9.30 AM – 6.00 PM) at our toll free number 1800-103-2683 for any questions or assistance. This ensures that entrepreneurs can get the help they need throughout the loan process.
