I'm researching about MSMEs cuz I am thinking to apply in a msme lending company and this is a primary question which I've researched on:
Credit gap for Indian MSMEs is rs 30 lakh crores
So Why MSME don't have enough credit?
Large buyers often delay payments for goods and services.
Disruptions like heavy reliance on clients which no longer want to work, expensive/lack of raw material, demand shock, etc can make a business shut down
3. Lack of support from traditional banks:
Many banks don't provide financing to MSMEs because :
Many MSMEs especially Fmcg restaurants, bars, etc shut down in the first 5 years. Banks find it risky to trust businesses.
3.2. Processing fees and time
Processing a 20lakh MSME loan can be same as processing a 20cr corporate loan. This creates a high cost of small loans.
4. MSME cash flows are uneven:
4.1. Seasonal demand (Standard Fireworks generates 90% of income in Diwali season)
4.2. Delayed Payments is a huge factor hy customers/buyers
Tomorrow gotta write on payment networks