MSMEs are breaking the traditional convention. Look who’s funding them

The way of doing business has certainly changed and the new-age entrepreneurs are breaking the status quo. The new bunch of inspired and passionate entrepreneurs belonging to an impatient digital world are rewriting rules.

However, their passion hits a roadblock when it comes to financing. The budding MSMEs, which have the potential to employ hundreds, suffer from lack of funds and burn out early.

This burn out trend is mostly seen in the e-commerce sector where sellers and retailers have had to shut shops due to funding. What’s missing? A tailor made scheme which could capitalise on booming Indian e-commerce market.

Here’s when you should give a serious thought to schemes by the State Bank of India (SBI). Their tailor-made schemes are giving wings to many dreams.

For those who want to ride on the e-commerce wave, SBI’s e-Smart scheme is surely a blessing.

“The world of SME financing is changing on account of emergence of new technologies and traditional methods of lending are also undergoing a change. Another major change which is happening in the SME financing is the e-commerce or aggregator model. So, if someone is a vendor on an e-commerce site, the vendor can get a loan within few minutes without doing much of the paperwork,” said Rajnish Kumar, Managing Director, SBI.

One of the beneficiaries of this scheme is Dipesh Satra, who went on to become one of the top consolidators for e-commerce platforms.

“My journey was fast, e-commerce boomed in India. I was devastated when I started but with good support and hard work, I managed. We want to grow this business and safeguard people who are working for us. We have to grow 10 times and I know SBI will back us. I have a vision to settle 100 families, develop more jobs and create employment. I have created 20 jobs in last two years,” said Satra who founded e-Biz Suppliers.

Under this scheme, sellers registered with any e-tailer for a minimum of six months are eligible. There’s no collateral security on loan of up to Rs 10 lakh and 25% collateral for loan amount of above Rs 25 lakh.

Another model of business which is attracting entrepreneurs’ interest is the franchise business. This is easy as you get an established name and fame and open franchisees. But what about the opening cost?

SBI took initiative to fund this breed of entrepreneurs as well.

“This is a new offering by SBI. Earlier, we were financing MSMEs through regular products. We found out that this segment was of niche customers, getting enrolled as franchises under some industry measures. They carry brand value, therefore, acceptability of their goods and services that they offer to the market is already there. We extend concessional interest rates, relax norms for franchisees. This also helps us in growing along with the value chain. We have tied up with some reputed brands to extend finance to their franchisees,” said Uma Shanmukhi, GM, SBI SME Department.

Pune-based Stylish Salon and Spa is a perfect example of this who took up franchisee of Hyderabad-based Studio 11.

Priya Tamhane, co-founder, Stylish Salon and Spa, said, “We started searching for franchises and found Studio 11. They have a tie-up with SBI, which was a boon for us. Studio 11 helped us with loan procedures. We got loan in no time. Loan is an important thing that will help you in future. Loan helps in taxes too.”

Under the Franchise Scheme, SBI helps in funding the project cost for setting up/renovation of franchisee stories. It offers low margin and less collateral at competitive interest rate.

The two schemes are a blessing to those who want to start their own business and have specific capital demands. Are you ready to fund your wings?