Major Challenges Faced by the MSME Sector
India’s economy benefits significantly from the informal sector.
There is no disputing that our country’s growth is heavily reliant on micro, small, and medium companies (MSME), which generate mass employment in every corner of the country and contribute significantly to the GDP. Given its significance, the government is anticipated to provide sufficient support to ensure that MSMEs’ growth is not hampered at any time, especially in the midst of a pandemic that has stopped the expansion of major world economies.
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1. Keeping Healthy Is Improved
There will be a start-up and initial problem in this regard. Even though India managed to make it to the World Bank’s Ease of Doing Business Index, the system has many loopholes that keep businesses on edge and make them vulnerable. In fact, once implemented 15 years (1,420 days) a new business has been recorded, which is 127. Change in Will is for change, Divine Property needs accommodation and Mumbai Expenditure is at the tax base level Change in the will at the tax base level.
2. Lack of financial expertise
Even though entrepreneurs keep on creating new strategies and plans to expand their existing business, there are still a large number of entrepreneurs who lack the financial knowledge to drive the business in the right direction. Entrepreneurs who do not have financial knowledge may not be in a position to take important business decisions related to MSME loans. In the absence of financial knowledge, you may make wrong decisions which can cost the business unless you take some outside advice. Also, knowledge about finance is important as you have to rely on MSME loans to tide over the crises that may be knocking on the door any time. Hence, it is important to understand everything related to MSME loans, find out about MSME loan interest rate and compare it in the market before taking a loan.
3. Lack of access to financial solutions
Most businesses face perennial problems of accessing finance or obtaining MSME loans, even as the government has implemented measures to ease credit for businesses to promote entrepreneurship. Most businesses face problems related to manufacturing, timely procurement of raw materials, or even acquiring new skills due to lack of access or funding to new technologies. Another major problem is the economic slowdown which has led to a liquidity crunch, but the government has given relief to MSMEs by asking banks not to declare any stressed loan accounts of MSMEs as NPA and refinance their loans till March 2020. Do it. On. work. Do it. was asked.
4. Technology Remains a Major Barrier
Most businesses fail to take advantage of the latest technological developments in their field due to a lack of expertise and awareness. Hence there is a need to make MSMEs aware of the technological developments which are important for the growth of their businesses. It is important for scientific research bodies to engage with local MSME clusters and address their technology-related problems and issues.
5. Labor Issues
Most of SMEs often face labor issues and especially in the new normal times, the ongoing migrant crisis has emerged as one of the toughest sectors for industries to operate in such times of pandemic. Apart from labor problems, businesses also need to emphasize on skill development, training, and ensuring market linkages to facilitate both urban and rural micro-entrepreneurs. The thrust on skill development can provide substantial and more benefits to the sector in times of crisis.
6. Lack of trust
It has been observed that banks refrain from lending to MSMEs as the amount remains small and at the same time, banks feel that MSMEs lack the required repayment capacity. In such a situation, they impose strict rules on these startups. Some businesses also fail to keep track of their credit rating which hampers the chances of getting a loan. Moreover, traditional lending options make it difficult for business owners to meet the strict eligibility criteria, apart from the lengthy process of MSME loan approval, further lowering their spirits.
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7. Lack of collateral in the loan
Some businesses may find it difficult to get MSME loans as a result of strict collateral protocols. Since small companies may not have assets to prove the criteria for availing loans, business owners can opt for unsecured business loans from lenders and can offer collateral or assets to get MSME loan approval. Huh. Can’t panic.