Ease of credit availability is the need of the hour for SMEs in India

COVID-19 continues to create roadblocks for global economies. With businesses being affected adversely, the demand for credit is bound to increase, particularly for the Small Medium Enterprises (SMEs) in India.

SMEs have been hit hard by the pandemic and it is important that they are provided with the required financial backup to support their employees and business functions. The Government has supported the SMEs and for their benefit, The Ministry of MSME recently launched 'Distressed Assets Funds-Subordinate Debt for MSMEs', a credit guarantee scheme for sub-ordinate debts, where the aim is to provide relief to about 2 lakh MSMEs.¹

According to the data shared by the Ministry of Finance, this scheme has seen over 1000% spike in disbursement to the COVID-hit SMEs. Reports reveal that SBI tops the list of lenders to SMEs with over INR 12,000 crore disbursed followed by Canara Bank with more than INR 3,400 crore, Bank of Baroda with INR 2,695 crore, Union Bank of India with INR 2,391 crore, and Punjab National Bank with INR 2,125 crore disbursed. According to the ministry, this will lend a helping hand to more than 30 lakh SMEs to resume their businesses post lockdown. ² Even Mastercard announced a commitment of INR 250 crores to help SMEs reboot their businesses amid the pandemic.³

Enabling growth by providing access to credit

With the pandemic disrupting economies, it is important for banks and NBFCs to play a larger role in making credit easily available to the SMEs. At Pine Labs, we are doing our bit to help our merchant partners avail collateral-free business loans to grow their business. Pine Labs' Capital offering allows merchants to avail quick business loan with minimum documentation.

Why SMEs need capital?

A simple answer to that is: To be financially viable and achieve business targets. Here's how additional Capital sourced through a business loan can benefit businesses:

• Drive short-term/ long-term needs

• Help plan better after unforeseen situations like COVID-19

• Empowers a merchant to add new store

• Meet bulk order requirements

• Attend to spike in orders such as festive season

Having the right amount of working capital enables businesses to cover their financial obligations and work out new strategies to boost their revenues. If you are looking for a capital solution for your business needs, reach out to us.

¹ Source: https://www.thestatesman.com/business/govt-launches-credit-guarantee-scheme-benefit-msmes-1502903313.html

² Source: https://www.financialexpress.com/industry/sme/msme-fin-govts-msme-credit-scheme-disburses-rs-45860-crore-to-1121493-msme-accounts/2009086/

² Source: https://economictimes.indiatimes.com/small-biz/sme-sector/mastercard-commits-rs-250-crores-to-support-small-businesses-in-india/articleshow/76873209.cms