Micro, small, medium and enterprises play a significant role in making jobs for the corporation, but they must try to opt for easy acquisition to finance when required. In our country, accounting for MSME is an important share of GDP contribution and employment. Banks face difficulty in the assessment of credit risk owing to the shortfall in the availability of repayment trends data, structured financial statements, historical cash flow statements, etc.
Supply Chain Finance is a loan where the sellers of MSME can obtain early payment opposed to the invoices of the extensive user.
For buyers: -
Buyers might be aimed at increasing their DPO (Days Increasing Outstanding). However, suppliers wish to get paid as soon as possible, therefore decreasing their DSO (Days Sales Outstanding). Because of the long credit period, the buyer can: -
For suppliers: -
Suppliers can also have the advantage of a conclusion of supply chain finance from the improvement of Day Sales Outstanding to acquire financing for a low cost.
MSME plays a crucial role in giving the growth and development of appearing economies like India. In India, more than 80% of MSME takes place over the range of bank credit and acquire funding from informal or private sources at an excessive cost.
There are various limits of challenges by banks from expanding funding to small businesses.
|Rate of email@example.com% onwards|
|Loan amount||Up to Rs. 2 Crores|
|Bank name||Interest rate||Processing fee|
|Axis Bank Ltd.||8.00%||1%|
|State Bank of India||7.80%||1%|
|ICICI Bank Ltd.||9.00%||1%|
|Bank of Baroda||9.00%||1%|
|SBI global factors limited||11.00%||1%|
|Tata Capital Financial Services Limited||12.00%||1%|
|Lending Kart Finance Limited||18.00%||1%|
Eligibility criteria for SCF depend on many factors such as business turnover, age of an individual, repayment history, creditworthiness, etc.
Earlier, Supply Chain Finance was insufficient for vast organizations due to huge board and running costs. But now with advanced technology SCF has been expanding as a cure for micro, small, medium, and enterprises and banks similar in taking down the cost process.
Therefore, knowing the facts of financeseva allows you to compare the best deals for Supply Chain Finance.
Also read: - What is MSME? Its Definition, Role and Importance