How Are MSME Finance Companies Becoming the Backbone to Scaling Small and Micro Businesses?

May 23, 2024
Updated on

As an MSME business owner, navigating through the perils of securing credit and expanding businesses can be quite challenging, especially when access to formal credit can be difficult for this sector in India. However, over the last couple of years, MSME finance companies has made it easier to access collateral-free business loans for small business owners.  As per the  MSME annual report published on 15th Feb 2022, there were 633.88 lakh unregistered MSMEs that employ 11.10 crores people (as per National Sample Survey 73rd).  As per the figures of the Central statistics office, the contribution of MSMEs in terms of value-added accounts for 30% in 2019-2020. Owing to the factors listed here it will be apt to say that MSMEs are very vital for the country.


Let us look at some financing options.Being an MSME business owner is not simple. There are many obstacles to the smooth functioning of the MSME businesses. One of the major challenges an MSME business owner faces is cash flow shortage and access to credit. The pandemic increased the problems for these businesses with an increased credit cycle, with at least 15 lakh crore outstanding payments by buyers to MSMEs as per the global alliance of mass enterprises.

These challenges can be overcome through appropriate financing facilities for MSMEs. Undoubtedly the government of India is making substantial efforts to make easy finance available for MSMEs, and with “Atmanirbhar Bharat,”” the overall direction to the sector is given as well. Additionally, non-banking MSME financing companies also provide highly competitive financing options to businesses.

MSME Financing Traditional Banks Versus NBFC

MSMEs, in general, can have cash flow difficulties. But, on the other hand, obtaining loans through traditional banking channels is challenging. 

Overall, traditional bank-like financing is a bit difficult for MSMEs, due to:

  • Unavailability of a very clearly defined structure of the business,
  • Irregularity in their historical data about loans
  • Lack of proper registration processes and documents  

So, when obtaining loans becomes difficult, business owners need to look for other options. This is where NBFC finance companies come in, as they offer: 

How did the Pandemic Change the Scenario for MSMEs?

One of the things caused by the pandemic is a boost in the digital footprints of individuals and businesses.

Even MSMEs have enhanced their digital presence and have become skilled in using various digital platforms to satisfy dynamic requirements. 

Here are a few ways in which MSMEs have been affected by the pandemic: 

  1. These businesses have been able to build a formal system, payment history, and availability of lenders
  2. Lenders, like MSME finance companies, have welcomed the digital system, establishing several credit-granting models based on the borrower’s digital profile
  3. Several MSME financing companies now use the latest automated eligibility checking programs. This has allowed MSMEs to overcome several obstacles that existed in the prior system, such as time-consuming documentation and approval procedures.

The digital trend-driven lending is expected to reduce the credit gap in the MSME sector and can increase economic value by about USD 90-120 billion.

There are opportunities for the MSMEs to grow by leaps and bounds. With the right financing partner, these enterprises can do wonders. There are plenty of success stories in the country that can be seen. Let us have a look at how the financing companies are helping MSMEs.

Grow your MSME with collateral-free business loans

How are MSME Finance Companies Becoming the Backbone to Scaling Small and Micro Businesses?

One of the primary stumbling blocks for small businesses looking for an effective and straightforward financing alternative was a lack of proper records and paperwork.

Small business loans from MSME financing businesses enable small business owners to establish a payment history, which will make it easier for them to apply for traditional and larger loans in the future.

Thanks to the latest technologies, simple eligibility determination, and hassle-free documentation, access to these financing options have become relatively simple.

So, whether you need short-term working capital to match seasonal demandor a machinery purchase loan, MSME financing providers are ready to help.

NBFCs like Kinara Capital provide quick, 1-minute eligibility checks, making it simple and quick for small business owners to get a business loan without any collateral.

Small business entrepreneurs can use this to meet:

  • Working capital requirements,
  • purchase assets,
  • organize or strengthen their financial position,
  • expand their operations, etc.

The interest rate on an MSME loan varies depending on the loan’s purpose, the financing company’s policy, and the company’s credit score.

Another advantage of applying for business loans from MSME finance firms is the flexibility in terms of the loan period and their hassle-free and straightforward repayment rules.

The cherry on top of it all is that MSME financing organizations often do not require collateral for issuing these loans. There will be zero collateral, easy documentation, and a faster approval time (as low as 24 hours).

As a result, MSME financing firms enable small and microbusiness owners to expand and scale their operations, resulting in more job possibilities.

Having looked at all these factors, we can easily say that MSME financing companies are becoming the backbone of the business for scaling.


MSME finance companies are changing the traditional lending scenario in India. They are quickly bridging the gap for small and micro companies to access formal credit and get unsecured business loans. Thus, they enable small business owners to scale and access formal credit in a hassle-free and flexible manner that aligns with their business needs.

In this context, Kinara Capital is an NBFC that provides MSME business loans with the facility to check your eligibility in just one minute! Collateral-free business loans can now be disbursed within 24 hours with minimal documentation. Kinara Capital can thus be an excellent partner to grow your business, having disbursed over 5000 crore loans and covered 4500+ pin codes and 300+ sub-sectors. Grow your MSME with collateral-free business loans from Kinara Capital today.

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