Several product variants are offered by the financial institutions to suit the growing needs of the MSME sector including step up and step down EMI option, Overdraft facility and more.
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By Mehernosh TataIndian economy is likely to be a $5 trillion economy by 2025 and the MSME sector is expected to play an important role in this growth story. This sector has been the backbone of the economy, contributing immensely to the GDP and employment generation and with the emergence of ‘Make in India’ initiative, it is set to play an important role supporting the domestic companies and foreign multinationals setting a manufacturing hub in India.
Financial institutions including banks and NBFCs have also increased their focus on MSME credit, acknowledging their importance in the era of high economic growth. However, many times, entrepreneurs are not able to avail credit schemes on offer for the lack of awareness about such schemes or cost concerns.
Here are 5 key things you must know to avail cost efficient secured loans for your business, commonly referred to as collateralised credit:
What is collateralised credit?Collateralised credit refers to the loan schemes offered by the financial institutions with tangible security backing the business loan. Such loans tend to be the most cost-effective, as lenders can offer better interest rates given reduced credit risk and availability of collateral security in case of potential default. Small business owners can offer a variety of properties like residential, commercial, manufacturing units as collateral and avail business loans at better terms.