Micro, Small, and Medium Enterprises (MSMEs) have been one of the primary catalysts for economic development in India over the past few years. With encouragement and support from key stakeholders, the MSME sector in India has grown by leaps and bounds. To further promote their growth, many financial institutions have specifically begun to offer tailor-made financial products for such businesses. One such offering is a Business Loan without collateral.
Nowadays, it’s simpler to avail of a Business Loan without collateral due to ease of access. Moreover, considering the importance of working capital, such loans ensure MSMEs have adequate working capital to meet their operational needs. Additionally, with availability of quick loan processing system, most of its aspects related to Business Loan are, as a result, being facilitated swiftly as well. From application to disbursal, the entire process is completed within a short period.
However, it is important to note that the time span may vary when it comes to credit dispensation to MSMEs. Let us first understand what credit dispensation is and its time span for MSMEs.
What is Credit Dispensation?
Credit dispensation is the process of releasing the loan/credit amount from a lender to a borrower or borrowing unit. The purpose could be either a fresh loan sanction, renewal of credit limit, or enhancing the working capital.If you want to know more information on this topic, stay with od ideas
The span of credit dispensation refers to the period between the loan application submitted by an MSME and the funds being disbursed. It could be dependent on various factors, which can include:
- Requirement – This could be specific to the business, and the requirement of funds at each stage of a project to accomplish goals.
- Sector/Industry – The second factor that affects the time span of credit dispensation is the MSME sector. The reason behind this is that the way a small business operates often differs within different industries.
- Project – Finally, the kind of project an MSME is working on also affects the period of credit dispensation. Since most disbursals are done in sections or parts, MSMEs receive the credit dispensation upon the completion of specific sections of a project.
All things considered, the credit dispensation period could range between 90-150 days, with an average disbursal time of 120 days.
Now, let’s check out the process for availing a business loan:
- Verification & Valuation – First, lenders need to verify the details of the borrowing unit, in this case, an MSME. They also need to conduct a valuation of assets just in case the borrower defaults.
- Credit Rating – Credit ratings determine your creditworthiness, which is calculated based on your debt repayment history, credit mix, etc.
- Proposal – A credit officer is responsible for drafting the proposal towards loan dispensation for further processing.
- Sanction – The proposal is further taken up by a sanctioning committee for authentication. There could be some back-and-forth involved during this stage as the proposal could require changes. Or the borrower may be required to resubmit certain documents.
- Resolution – The signing and passing of the resolution with the credit amount are conducted for final authentication.
- Concession – Finally, the credit is disbursed by a committee, provided there are no deviations from any specific card rate.
Credit Dispensation Done Right with a Business Loan without Collateral
When it comes to Business Loan without collateral you can rest assured that your credit dispensation period will match your needs. Here are some of the features and benefits you should know:
- No collateral involved – Business Loans are unsecured in nature. You do not have to put up any assets as security or collateral against the loan amount.
- Minimal documentation – You can apply for a Business Loan online by providing basic documents, with no extra paperwork involved in the process.
- Quick approval and disbursal – As an MSME business owner, you often need to improve business functions, and for that, require timely capital disbursement. With a Business Loan without collateral, you can fulfil all your targets on time without any hassle.
It can be said that the period of credit dispensation to MSMEs varies, according to the aforementioned factors. Nevertheless, a Business Loan without collateral is worth the wait as it can transform your business for the better.