For MSMEs, Working Capital Loans Are The Road To Recovery

Benefits of Working Capital Loans for MSMEs
With the government recently announcing relief package in the form of automatic collateral free loans, MSMEs can apply for these loans to fulfil the need for immediate working capital. With no collaterals and gloomy sales forecasts, it would have been difficult to procure funds by most business owners. But with government-backed loans and EMI moratoriums, the firms can now breathe a sigh of relief and focus on restarting their stuttering operations.

Let us look at top benefits of working capital loans for MSME owners right now.  
 

1. Can easily help clear outstanding dues with suppliers for payment of raw material.


2. Retain employees by paying wages and ensure the continuity of the business.


3. Maintain control of the business without any hassles from creditors with collateral-free working capital loans of Rs 30-50 lakhs. In simple words, you remain the owner of the business as assets are protected even on loan defaults.


4. Flexible repayment facilities help repay loans on receiving payments. This translates to lower working capital loan EMIs.


5. High loan-to-value ratio on pledging assets. This means you get a higher quantum of loan on pledging business or other assets. Interest rates are lower than unsecured working capital loans.

As the economy restarts now, you may need to restructure operations to suit the new normal. For this, you may require additional cash to revamp your business operations. While accounting for irregular and uncertain cash flows, you need to start planning from a blank slate and use funds from the working capital loan wisely.
Additionally, in the short term, businesses will also need to invest in protective gears for workers in the factories and offices to make the workplace safer.
To control expenses and have adequate liquidity in hand, it may be wise to opt for the loan moratoriums and proportionately lower other expenses like utility payments, rentals, salaries, etc.

The Road Ahead
The MSME sector has been considered the backbone of the Indian economy. The importance of this sector can be seen from the extensive employment provided by this sector in both urban and rural areas.The road to recovery for the entire Indian economy depends on how well and early the MSMEs are able to get back on their feet. So it is time to get back your feet while injecting cash in your businesses with the Working Capital Loans, and help in stimulating the entire Indian economy on the growth path.