70% of loan requests by MSMEs are to meet immediate financial needs: Paisabazaar
immediate financial needs. These range from working capital expenses, purchasing raw materials and consolidating debt.
Consumers suggested that they need working capital to cover salaries and rent, pay utility bills, vendors and suppliers, and to manage routine day-to-day operations. The report by Paisabazaar shows that less than 30% of businesses applied for loans on future growth initiatives like marketing, brand building, upgrading machinery, or acquiring additional office space for expansion.
The study revealed that nearly 45% of business loan applications were driven by the need for working capital expenses, highlighting the persistent liquidity challenges and short term cash flow gaps faced, especially by small businesses, in managing their day-to-day operations.
«Conversations with consumers suggested that their need for credit to meet cash gaps in working capital,» said Gaurav Aggarwal, Chief Business Officer, Unsecured Loans, Paisabazaar. «Another 24% business owners said they needed a loan just to purchase raw materials and maintain inventory levels. Most of these MSMEs operate in manufacturing, retail, or seasonal industries, revealing that uninterrupted supply was key for them to fulfill orders and meet customer demand. 2% of the self-employed applicants said they were seeking loans only to consolidate existing debts.»
Geographically, the demand for business loans was largely concentrated in top metro cities, with Delhi NCR and Mumbai leading the charts. Together, the top 7 metros—Delhi NCR, Mumbai,
