While the challenges may seem daunting, MSMEs can take proactive steps to overcome them and improve their chances of securing loans. Here are some strategies that Astravise uses to navigate the loan procurement maze,
1. Preparation and Documentation of Financial records
MSMEs need to maintain and organize their financial documentation properly. This includes financial statements, tax returns, and other relevant records. At Astravise, we work with our customers to ensure that they have these documents properly in place, as expected by lenders.
2. Arrive at the needs of the business
Before we even start exploring funding options, we closely work with various stakeholders at the customer end to clearly understand the needs of the business and convert them into numbers that lenders can objectively evaluate.
3. Identify short-term/long-term actions to build creditworthiness
To enhance their chance of getting the desired funding, MSMEs must take steps to build and improve their creditworthiness. We identify short-term long-term actions that must be taken to build creditworthiness. We work with the management to address the short-term fixes. Astravise team analyzed the past records in the case of a logistics client and determined that a traditional working capital limit can easily be justified with commercial banks and could execute the required process to complete the sanction in two weeks. This fund flow gave enough time for the client to work on a mezzanine debt option for which the terms were negotiated by Astravise with the lenders. Gradually, these actions will help create a positive credit history, making it easier to procure loans in the future.
4. Exploring Alternative Financing Options
We help research alternative financing options beyond traditional banks. This includes investigating government-backed loan programs, grants, venture capital funding, angel investors, peer-to-peer lending platforms, and crowdfunding. Each option has its eligibility criteria and requirements; we work with our customers to thoroughly assess and choose the most suitable option for their needs.
5. Focusing on Business Performance and Cash Flow Management
A strong focus on business performance and cash flow management is critical for MSMEs to improve their chances of procuring funds. By consistently monitoring financial metrics and ensuring efficient cash flow management, MSMEs can demonstrate their ability to meet loan repayment obligations and address lender concerns.
6. Building a Strong Business Plan
Having a well-crafted business plan is essential for companies seeking financing. A robust business plan includes detailed information about the company’s objectives, financial projections, market analysis, and growth strategies. Lenders review these plans to assess the viability and potential of the business. We work with customers to create a compelling business plan that establishes their vision, market potential, and ability to generate a return on investment.
7. Discuss with the lender the terms and document it
We help negotiate terms and conditions that benefit our customers. We also advise them on specific terms that need attention so that our customers get the desired outcome. We also help document the terms clearly and educate the customers on the implications. Astravise has helped its customers to renegotiate processing fees, the collaterals, and other covenants regarding periodic reporting.