One of the primary objectives for micro, small, and medium enterprises (MSMEs) is to secure a fast line of credit to expedite routine business decisions, with 55 percent of MSMEs expressing a strong need for this type of financial assistance, according to a sentiment survey by Fintech Soonicorn Kinara Capital.

Lack of easy access or non-availability of short-term credit is the biggest hindrance faced by MSMEs, with over 38 per cent of the firms attributing this as the main impediment to their growth, the report noted.

One out of two surveyed MSMEs wants an instant line of credit to accelerate everyday business decisions, as it can simplify routine business decisions such as purchasing raw materials to fulfill a sudden large order, hiring additional employees quickly for a seasonal product run, renovating business premises, or conducting unexpected machine repairs.

Furthermore, the need for a quick line of credit is strongest among manufacturing MSMEs, with over 60 per cent of them demanding this product.

Flexible repayment

In addition, 16 per cent of companies favoured flexible repayment products, which allow them the choice to make daily or weekly Loan payments or variable loan payments based on their business turnover for a select time period. Moreover, MSMEs from the trading sector particularly selected flexibility as their second most desired financial product attribute, ranking this requirement at 15 per cent, the report said. 

Other challenges faced by MSMEs include difficulty finding relevant buyers and sellers, especially since less than 5 per cent of the country’s supply chain is digitised, according to industry experts.

Micro-MSMEs particularly struggle with freight logistics and costs for local goods transport, and one-fourth of the companies say industry networking with their supply chain ecosystem is critical for their growth.

Similarly, MSMEs also struggle to keep up with quarterly GST and Income tax filings on time due to a lack of understanding of the requirements. According to the report, 30 per cent of surveyed companies asked for business accounting and GST Filing Support as their top non-financial service request.

“India’s small business entrepreneurs are now seeking more than access to formal credit and want tailored products and services aligned with their growth needs,” said Hardika Shah, Founder & CEO, Kinara Capital.

The survey was conducted with input from 2,600 formal MSMEs that are Udyam-registered and represent a range of businesses across Manufacturing, Trading, and Services sectors in Karnataka, Gujarat, Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu, and UT Puducherry.