Micro, small, and medium enterprises (MSMEs) are vital to the economic growth of a nation. However, accessing working capital through traditional channels such as banks and NBFCs can take time and effort. Instead, MSMEs can leverage their supply chain partners, such as JSW One, to explore off-balance sheet trade arrangements. These arrangements include unsecured lines of credit extended from the anchor's balance sheet, Letters of Credit (LC), and Bank Guarantee (BG) instruments. These options allow MSMEs to easily access growth capital, maintain healthy cash flows, and build strong supply trade relationships. Such trade arrangements are exclusively available to MSMEs as part of a supply chain, like those with an OEM or an e-commerce platform like ours.
Traditional credit options
- Bank loans: traditional bank loans are a primary source of credit for MSMEs. These can be short-term or long-term, depending on business needs. However, collateral requirements and lengthy approval processes often pose challenges.
- Overdraft facilities: banks offer overdraft facilities that allow MSMEs to withdraw more money than is available in their account up to a specific limit. This provides flexibility in managing day-to-day operations and cash flow fluctuations.
- Microfinance: microfinance institutions provide small loans to MSMEs that may not qualify for traditional bank loans. These institutions focus on offering credit to underserved and rural areas, supporting small business growth.
- Government schemes: various government schemes and initiatives are designed to support MSMEs. For example, the credit guarantee fund trust for micro and small enterprises (CGTMSE) provides collateral-free credit to MSMEs, reducing the risk for lenders.
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