MSME Banking
Cash Credit vs Overdraft: what is the difference for an MSME?
Cash credit and overdraft both revolve within a limit. How they differ in security, drawing power, purpose and monitoring, with a worked example.
· 3 min read
Educational hub
MSME Banking
How banks finance micro, small and medium enterprises, and how a lender reads your numbers. Each topic below links to a detailed explainer once it is published.
Core topics
- Cash Credit
- A running working capital limit secured by stock and receivables, with drawing power linked to what the business actually holds.
- Overdraft
- A limit on a current account, often secured by property or deposits, used for short-term liquidity.
- Working capital
- The money tied up between buying, producing, selling and collecting. Its cycle decides how much bank finance a business needs.
- Term loans
- Loans for long-life assets such as machinery, vehicles or buildings, repaid in instalments from future cash flows.
- CMA data
- The standard set of past, current and projected financial statements lenders use to assess and monitor credit.
- Credit assessment
- How a lender reads repayment capacity, leverage, conduct of accounts, collateral and the promoter's track record.
- DSCR
- Debt Service Coverage Ratio: whether the cash a business generates can comfortably pay its loan instalments and interest.
- Financial ratios
- Current ratio, TOL/TNW, interest coverage and others: the shorthand lenders use to compare businesses.
- Project finance
- Funding a new unit or expansion against a project report: cost of project, means of finance and projected viability.
Articles
MSME Banking
How to prepare a project report for a business loan
A practical structure for an MSME project report (DPR): the sections lenders expect, cost of project, means of finance and credible projections.
· 2 min read
MSME Banking
Promoter contribution in project finance: why lenders want your money in first
What promoter contribution (margin) is, why lenders require it, what counts towards it and how it shapes a project's cost and risk, for MSME owners planning a term loan.
· 3 min read
MSME Banking
Term loan vs working capital: matching the loan to the need
Term loans fund long-life assets; working capital funds the operating cycle. How to match the loan to the need, with examples.
· 2 min read
MSME Banking
Understanding DSCR: the ratio that decides whether a loan can be repaid
Debt Service Coverage Ratio explained for MSME owners: the formula, a worked example, what lenders read into it and how to improve it before applying for a term loan.
· 2 min read
MSME Banking
Understanding MSME working capital: the operating cycle in plain language
What working capital is, how the operating cycle decides how much money a business needs, and how banks assess working capital limits for MSMEs.
· 3 min read
MSME Banking
What is CMA data? The report your lender uses to read your business
CMA data is the standard set of past and projected financial statements lenders use to assess credit. What it contains and how to prepare it.
· 3 min read
MSME Banking
Why profitable businesses still get loan rejections
Profit on paper is not the same as repayment capacity. The common reasons a lender declines a profitable MSME, and what an owner can fix before applying.
· 2 min read