Acquiring a business loan at the right time plays a vital role in the journey of a small enterprise. It empowers MSME owners to effectively manage their working capital and think about business expansion.
An unsecured MSME loan acts as the perfect support system for entrepreneurs in situations of financial distress. entrepreneur, with the right amount of financial assistance, small business owners can easily manage their day-to-day operations, invest in the right machinery, and execute business plans. While acquiring a business loan is important, its repayment is equally essential. In this article, we look at a few ways to help you effectively pay off your MSME loan.
The Importance of Responsible Repayment
Before we get into how you can pay off your MSME loan, let’s take a quick look at why it is important.
- Creditworthiness: A bounced or delayed EMI payment of your MSME loan can have a negative impact on your businesses’ credit bureau score, such as CIBIL, CRIF High Mark, Equifax, and Experian.
- New credit lines: On-time payments increase your chances of getting new credit lines. This enhances the chances of loan approval in the future.
- Lower rate of interest: Making the EMI payments of your MSME loan on time can help you get your loan application approved in the future. Moreover, it allows small business owners to get a loan at lower rates of interest.
Ways to Effectively Pay Off Your MSME Loan
- Borrow only what is required: One of the first things to ensure is to borrow an amount you will need. Therefore, assess your requirement and refrain from borrowing an amount that is more than what you require.
- Automatic debit: Automatic debit is a feature offered by most lenders. It automatically debits the EMI due at a date you agreed upon during the loan sanction. It is an effective way to allow you to pay your MSME loan on time and eliminates the need to track the due date each month manually.
- Reducing interest rate: Opting for a reducing rate of interest is another great way to pay off your MSME loan. While reducing interest rates are generally higher than their fixed counterpart, your interest reduces as you continue to clear your EMIs on time.
- Refinancing: While running a business, it is only natural to confront a seasonal disruption to cash flow or some other unplanned expense. In such situations, you can refinance your existing loan with a reputed NBFC for a better interest rate. This will eliminate the burden of repayment and ensure that you can easily meet all your routine business expenses.
Repayment: As Imperative as Acquirement
Therefore, an MSME loan is one of the most productive ways for small business owners to acquire the required capital to commence business operations or further growth plans.
Repayment of the acquired loan amount is something that holds equal importance for business owners. It enhances the organization’s creditworthiness and solidifies the businesses’ reputation in the financial landscape. A failure to repay the loan on time can hamper the enterprise’s ability to acquire a business loan in the future. While looking to apply for an MSME loan in India, make sure to choose a lender that offers you flexibility in terms of repayment and has business-friendly terms and conditions.
Acquiring an unsecured MSME loan from a reputed NBFC like Kinara Capital makes repayment a breeze. With Kinara Capital, you can choose from a plethora of digital payment and settlement systems such as the Airtel Payments Bank and digital wallets like Paytm, PhonePe, etc. As an RBI registered and tech-driven NBFC, Kinara Capital gives borrowers 400+ payment platforms to settle their loan accounts. This is especially beneficial for women entrepreneurs who can easily make repayments from within the comfort of their homes.
So, repay your MSME loan responsibly and maintain the healthy reputation of your enterprise!
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