Digitisation to Encourage Online Applications for MSME Loan

May 19, 2022

By Team Kinara

< 1 mins read

MSME Loan

Micro, small and medium-sized enterprises (MSMEs) are the backbone of the economy, accounting for around 60% of employment. They are fundamental to the day-to-day provision of goods and services around the world. Yet, many struggle to grow and expand their businesses across states and countries. Among the many challenges that MSMEs face, a lack of access to finance, including trade finance is frequently identified as a critical barrier to growth. The MSME financing gap is a reality that cannot be ignored and that should be tackled with determination to ensure that small players are given a chance to thrive.

Digitising MSMEs entails leveraging digital platforms to extend their marketing channels and applying digital innovations to better its management and service operations. Thus, changing business management towards more current approaches and earning a competitive advantage. MSMEs lack the breadth of expertise that investors do. This has an impact on both their capacity to discover potential financial sources and their level of comfort while pursuing novel financing strategies.

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Digitising MSMEs entails more than just selling things through technology. Aside from that, it enables MSMEs to manage their finances, plan their cash flows, and buy raw materials online. As a result, digitalisation is crucial to the overall MSME business process.

Advantages of Digitising MSMEs

Easier Loan Transactions

Customers' purchasing behaviours are changing as a result of online buying trends. They are now beginning to shift to digital commerce.

At Kinara Capital, the myKinara app offers fast and flexible collateral-free MSME financing within 24-hours. Working capital or asset purchase loans in the range of 1 lakh to 30 lakhs are available for the MSME industries in manufacturing, trading, or services sector.

Hike in Business Revenue

MSMEs that invested more than 30% of their budget in Internet technology increased revenue nine times faster than MSMEs that invested less than 10%. MSMEs can increase their revenue by 26% with the help of digitisation. In India, MSMEs that used e-commerce saw a 27 percent increase in revenue compared to their offline counterparts.

Increase Geographic Reach and Consumer Acquisition

MSMEs can expand their market and overcome the restrictions of physical location thanks to the rise of digital platforms, the prevalence of e-commerce, and the low barriers to entry. E-commerce has also enabled MSMEs to reach out to rural and remote customers, expanding their customer base.

Business Expansion

MSMEs that are grown locally typically have a limited marketing potential. Their customers are only those that reside close to their business set-ups. They are dependent on more traditional methods of product promotion, such as word-of-mouth marketing.

As a result, by digitising MSMEs, it is possible to increase the consumer network. Communities on various digital platforms will gradually learn about these MSMEs and their products, getting additional attention from a larger audience.

The main issue for MSME financing is risk assessment, specifically how to better analyse the risk potential of enterprises with short credit histories. Firms can approach this process from a different perspective thanks to technological tools and data-driven solutions. They enable the use of a larger pool of data to provide better visibility into the operations and creditworthiness of businesses. Instead of a backward-looking approach to risk assessment, data can now enable financiers to make risk assessments a real-time process.

Financial organisations can also leverage alternative data sets to construct more granular credit scoring and risk assessment models to better understand the risks associated with each type of transaction. Technology holds a lot of potential, and a lot of work has already been done. Despite this, the trade finance deficit has not been closed. It is obvious that technology alone is insufficient. To unlock the promise of digital technology and facilitate MSME finance, a multipronged approach is required.

Kinara's business loans, unlike other loans, require no collateral. Serving across 3000+ pincodes and 300+ sectors, the Kinara Capital online business loan application process is simple and quick, facilitated by the myKinara app. Download the myKinara app today and start your digital business loan application today!

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