MSMEs Demand Instant Line Of Credit & Industry Networking As Topmost Priorities, Reveals Kinara Capital Survey

MSME Sentiment Survey Unveils MSMEs’ Top Priorities for Financial & Non-Financial Services across Sectors

• 55% MSMEs want Instant Line of Credit to Accelerate Everyday Business Decisions, as their topmost priority
• 16% of MSMEs favoured Flexible Repayment Product, based on business turnover
• 24% of respondents would like help with Industry Networking; many willing to pay for this support

Kinara Capital, a fintech driving vast financial inclusion of the MSME sector, recently conducted an MSME Sentiment Survey that has unveiled the top priorities of India’s small business entrepreneurs. As per the analysis, Instant Line of Credit is the topmost requirement of MSMEs in the financial services category, and Industry Networking tops the chart in the non-financial services category.

The MSME Sentiment Survey is a comprehensive analysis by Kinara Capital to understand the preferences and challenges of MSMEs. The survey was conducted with input from 2,600 formal MSMEs that are Udyam-registered, and represent a range of businesses across Manufacturing, Trading, and Services sectors in Karnataka, Gujarat, Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu and UT Puducherry.

Speaking about the findings, Hardika Shah, Founder & CEO, Kinara Capital, said, “There is a growing acknowledgement of the importance of MSMEs and unlocking this sector’s full potential will require a personalized approach. Our MSME Sentiment Survey gave MSMEs an opportunity to vocalize their challenges and needs. It is a sign that India’s small business entrepreneurs are now seeking much more than access to formal credit and want tailored products and services aligned with their growth needs.”

The MSME Sentiment Survey demonstrates that MSMEs are eager to scale their businesses and are looking for comprehensive and innovative services to fast-track their growth. There were 3 main findings from this survey on the themes of Instant Financing, Supply Chain, and Business Services.

1. INSTANT FINANCING: 1-out-of-2 surveyed MSMEs want Instant Line of Credit to Accelerate Everyday Business Decisions

• Challenge: Lack of easy access or non-availability of short-term credit are the biggest hindrances faced by MSMEs, with over 38% of the MSMEs attributing this as the main impediment to their growth.
• Solutions:

○        Over half (55%) of the surveyed MSMEs chose Instant Line of Credit as their top financial product choice for their businesses, with about 8% of MSMEs specifically asking for a Bill Discounting product.
Line of Credit can simplify routine business decisions for MSME owners that require quick action, such as purchasing raw materials to fulfill a sudden large order, hiring additional employees quickly for a seasonal product run, or renovating business premises, or conducting unexpected machine repairs. Signaling rising economic growth in India, the ask for Instant Line of Credit is strongest from Manufacturing MSMEs, with over 60% of them demanding this product.

○        In addition, 16% of MSMEs favoured Flexible Repayment Product that will give them the choice to make Daily/Weekly Loan Payments, or Variable Loan Payments, based on their business turnover for the select time period. MSMEs from the Trading sector particularly selected flexibility as their second most desired financial product attribute, ranking this requirement at 15%.

1. SUPPLY CHAIN LINKAGES: One-Fourth of MSMEs say Industry Networking with their Supply Chain Ecosystem is Critical for their Growth

• Challenge: MSMEs identified vulnerabilities with physical supply chain and difficulty finding relevant buyers and sellers, especially since less than 5% India’s supply chain is digitized according, to industry experts. Micro-MSMEs particularly struggle with freight logistics and costs for local goods transport.
• Solutions:

○        MSMEs are increasingly searching for comprehensive assistance to grow their business. Close to a quarter (24%) of the respondents would like help with Industry Networking, especially with their supply chain ecosystem to improve access to buyers and sellers and many indicated openness to pay for the service.

○        MSMEs cite lack of their own mode of transport as a critical supply chain challenge. Despite India’s growth, there is an acute shortage of truck and delivery drivers in the country. Of the surveyed respondents, 15% said they desired a dedicated 4-wheeler commercial vehicle for their business and 10% would like to own a 2-wheeler vehicle.
Service sector was the most vocal amongst all sectors, with over 20% citing commercial vehicle loan as the second most important priority to address the inability to supply finished products or raw materials on-time to customers, which can heavily impact their turnover.

1. BUSINESS SUPPORT SERVICES: Business Support emerged as a critical area where MSMEs seek expert guidance on Services such as Business Accounting, Tax Filings, GST Calculation & Filing Support.

• Challenge: MSMEs struggle to keep up with quarterly GST and Income tax filings on-time due to lack of understanding of the requirements.
• Solutions: MSMEs seek trustworthy professional guidance and tax filing support from accounting and tax experts.

○        30% of surveyed MSMEs asked for Business Accounting and GST Filing Support as their top Non-Financial Services request. Specifically, MSMEs listed Business Accounting Services and GST Tax Calculation and GST Filing Support with a share of 17% and 13%, respectively.

○        21% of MSMEs want to enhance their digital presence via Website Creation, Digital Platform Listings and Onboarding on Online Trading Platforms. About 15% of MSMEs selected Website Creation and Digital Platform Visibility as their top priority and 6% want support to be listed on MSME Trading portals such as TReDS and GeM. Above all, Services sector ranked Website Creation and Digital Platform Visibility at 27%, making it  their topmost Non-Financial Services requirement.

○        9% of MSMEs want Personal Finance Support, specifically seeking guidance with Insurance and Investments. This is indicative of many MSMEs reporting a 20% increase on average in their incremental income generation after being able to access formal credit to grow their business.