Innovative Funding Options – Update for MSME Businesses

Being an MSME Business Owner is as much about entrepreneurship as it is about adopting innovations in marketing, management, finance, human resources and operations among others. When it comes to finance, very often, MSME owners are faced with the question of raising cost effective funds from banks and financial institutions quite a few times by leveraging one’s real estate assets. Often there is a notion that financial products like Loan Against Property are expensive as compared to vanilla home loan products given the apparent 100-200 basis points difference in the published rates. However, due to reduction in both the rate and the difference in rates, as well as through innovative structuring, even LAP and Drop Line Over Draft products can become attractive avenues for raising medium to long-term funds for funding business operations. Following are three competitive LAP and DLOD products which are available presently (i.e. as of May 2017):

• A leading Indian Private Sector Bank offers LAP at 9% & DLOD at 9.5% with tenor of 10 to 15 years
• One of the top MNC Bank offers Priority Sector Lending LAP & DLOD both at 9%-9.25% with tenor of 10 to 15 years
• A well-established MNC Bank offers Priority Sector Lending LAP & DLOD at 8.95% both with tenor of 10 to 15 years

Hence if one thought was LAP is expensive, think again. There are now many such innovative options for structuring cost effective funds for MSME businesses. MyMoneyMantra has a strong track record in fulfilling such funding requirements for MSMEs.