By Faiz Askari, Editor, SMEStreet
Really challenging to know that our entrepreneur community is getting ripped off by the shrinking margins for their business. On top of it, banks are providing them an opportunity which is not even approachable for them. Credit availability is there, but the cost of acquiring credit generally not in the reach of business profitability.
Harsh but true.
The new Mudra Bank Yojna is a welcome step but it has great relevance for tiny businesses of startups. There must be some credit facility on low interest rates which can help entrepreneurs to actually expand their respective businesses by diversifying in to new areas.
If the entrepreneur is working on a profit margin of 10% (hypothetical figure) why and how he /she can be able to justify the loan on 13 % interest rate.
However, the majority of businesses are working under 7% profit margins.
This is the major and perhaps the only roadblock for SMEs who are not growing the way they should grow.
Policymakers, leaders and bakers can solve this problem. Please do so in order to help industry and economy grow!