Home3 Ways NBFCs are Helping MSMEs Scale up their Businesses

3 Ways NBFCs are Helping MSMEs Scale up their Businesses

Ever since the pandemic struck India, the MSME lending market has changed dramatically. A market that was traditionally dominated by banking institutions, even up until five years ago, has now been transformed by NBFCs and other such players. Customers in India are allured towards NBFCs, owing to their innovative methods of funding, quick decision-making ability, timely disbursement of funds, and minimal documentation – thus allowing these institutions to cater to the financial needs of a vast segment of the Indian population.

NBFCs provide MSMEs with a reliable source of credit, often in an easy and uncomplicated manner. Unlike banking institutions, when you apply for an MSME loan with NBFCs, you do not have to adhere to stringent regulations and can avail of a quick loan without the need for extensive documentation. Additionally, when you apply for an MSME loan with NBFCs, the MSME loan eligibility criteria are minimal and straightforward, making it easier to obtain a loan.

Mentioned below are the ways in which NBFCs are helping MSMEs scale their business rapidly:

  • By Bridging the Financial Gap: When you apply for an MSME loan with NBFCs, the process is quick, easy, hassle-free, and flexible as well. When an MSME files an application for a loan with an NBFC, they can avail of collateral-free loans at flexible rates of interest, all with the benefit of a seamless KYC process and minimal documentation. Additionally, when you apply for a loan with NBFCs, they offer you the same at a lower rate of interest and flexible repayment tenures, ranging from 12 months to 5 years.
  • Help to Expand Business to New Areas and Markets: NBFCs play a crucial role in helping MSMEs expand their area of operation by offering collateral-free loans at lucrative deals. These loans help MSMEs in a wide range of expansion-related activities, including setting up new stores, expanding to new locations, securing raw materials needed for ramped-up production, and adding a more comprehensive range of products to their repository.
  • Acquisition of Assets to Improve Production Capacity: With the ever-evolving nature of technology, it is important for MSMEs to acquire the latest technology that exists in the market, to be able to stay afloat. With the help of loans from NBFCs, these small businesses can acquire the latest technology has to offer and can ramp up their production to remain competitive in the market.

Eligibility Criteria

The MSME loan eligibility criteria are as listed below:

  • You must have a credit score of 750 and above
  • In terms of your business’ turnover, it should be a minimum of Rs. 12 Lakhs
  • You must be able to showcase a reliable repayment history
  • You must not have defaulted on the repayment of any loan in the past

How to Apply for MSME Loan

Follow the steps mentioned below to apply for an MSME loan:

  • Step 1:  Start by choosing a lender by comparing the rates of interest offered, features, and eligibility criteria.
  • Step 2: Next, visit the official website of the NBFC you have selected, and once you create an account, log in using your user ID and password.
  • Step 3: Next, navigate to the MSME loan section, and proceed by filling out the application form.
  • Step 4: Once you have filled in the requisite details, submit the documents needed – KYC proof documents, proof of ownership of the business, Income Tax returns, bank details of your business, and profit and loss statements.
  • Step 5: Once you have submitted the form and uploaded the documents, your application will undergo a review.
  • Step 6: Once verified and approved, a loan officer will contact you and disburse the funds. 


With the steady improvement we have witnessed in NBFCs over the years, small businesses and start-ups no longer find it challenging to obtain business loans to further expand their market reach and diversify their products. When you apply for an MSME loan with NBFCs, you stand to benefit from their swift application process, convenience, and flexible loan conditions. Additionally, NBFCs hold certain goodwill in the market and are known for their reliability, hassle-free application process, and quick delivery of services.


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