Yes, having a good credit score for MSMEs is always an added advantage in getting an MSME loan. MSME stands for Micro, Small and Medium Enterprises. An MSME loan is the funding offered by financial institutions to SMEs, MSMEs and Startup enterprises. These kinds of loans are mostly used by business owners and enterprises to suffice their working capital requirements, for business expansions, to enhance cash flow, purchasing equipment and machinery, etc. Many lenders also offer MSME loans without any security or collateral and at lower interest rates.
Credit scores play a crucial role in helping lenders decide whether to approve a business loan or not, as well as how much they should sanction. Having a better credit score helps MSMEs improve their chances of loan eligibility, while availing loans at reduced interest rates. By having good credit scores, MSMEs are better equipped to boost their loan-eligibility and poised to leverage business loan opportunities when they need it the most.
Here are some key criterias, MSMEs must always pay attention:
- Always pay lenders on time.
- Apply for credit carefully
- Check credit scores and Business Credit Reports regularly.
MSMEs can scale their access to credit to leverage their potentials. They should work hard towards boosting their business loan-eligibility and credit health with a high credit score which is a key factor in helping them get access to credit in the future.