70 pc Of MSME Loan Applications Focused On Short-Term Needs: Paisabazaar Survey

New Delhi, Dec 6 (KNN) In a survey released on Thursday, loan and credit card marketplace Paisabazaar highlighted the pressing financial dynamics of micro, small, and medium enterprises (MSMEs) seeking credit on its platform. 

The analysis of business loan applications since January reveals a striking pattern of short-term financial needs overshadowing long-term growth strategies.

Approximately 70 percent of loan applications were primarily focused on addressing immediate operational requirements. 

A significant 45 percent of applications targeted working capital expenses, including salaries, rent, utility bills, and payments to vendors and suppliers. 

This trend underscores the ongoing liquidity challenges and cash flow constraints faced by MSMEs in managing day-to-day operations.

Raw material procurement and inventory maintenance constituted another 24 percent of loan applications, particularly among businesses in manufacturing, retail, and seasonal industries. 

These sectors emphasized the critical importance of maintaining uninterrupted supply chains to fulfil customer orders effectively. 

Additional loan purposes included marketing and advertising expenses (15 percent), machinery and equipment upgrades (9 percent), office expansion (3 percent), and loan refinancing (2 percent).

Geographically, the loan applications demonstrated a balanced distribution between metropolitan and non-metropolitan regions. 

The top seven metros—Delhi NCR, Mumbai, Hyderabad, Bengaluru, Kolkata, Chennai, and Pune—collectively accounted for 53 percent of applications, while the remaining 47 percent originated from non-metro areas. Notably, Jaipur and Surat emerged as significant contributors from outside the major urban centres.

The survey comes amid mixed financial performance for PB Fintech, Paisabazaar's parent company. 

The company reported a 44 percent year-on-year revenue increase to Rs 1,167 crore in the second quarter, transitioning from a loss to a net profit of Rs 51 crore. 

Conversely, Paisabazaar experienced an 8 percent revenue decline to Rs 143 crore, though loan disbursements remained stable at Rs 4,237 crore.

In a recent development, Paisabazaar disclosed receiving notices from the Income Tax Department. These notices, issued under Sections 24(2) of the Prohibition of Benami Property Transactions Act and 142(1) of the Income Tax Act, seek explanations regarding vendor payments and associated transaction details.

(KNN Bureau)