Synopsis: This blog tackles the common problem small business owners face with loan management. It gives simple, practical advice on managing loans, like budgeting for payments, consolidating debts, using EMI calculators, and getting expert help. Continue reading to gain a deeper understanding.


A report from The Indian Express showed that small businesses like Mohan’s are now owing ₹20,000 crore more in loans. This shows how outside problems can make it harder to handle loans. 

Mohan, a baker in Gwalior, India, is like many small business owners. He took several loans to grow his bakery, but soon found managing them all very difficult. His experience mirrors the struggles of many, as highlighted by a startling statistic from a 2022 survey: about 32% of small businesses find it hard to repay their debts.

It’s tough to manage repayments of multiple loans, but there’s no need to worry. We’re here to help with easy-to-follow tips and advice. With our help, you will learn how to manage your loans better, and this will help your business grow and do well. 

Tip 1: Prioritize Payments in Your Budget 

It’s crucial to put your loan payments at the top of your business budget. Why? Because even though the MSME delinquency rates were at a low 2.4% for 90-720 days past due in the latest SIDBI-TransUnion CIBIL report, missing payments can still have serious consequences. If you miss payments, you risk loan delinquency or default, damaging your credit and potentially leading to legal actions. 

Here’s a simple checklist to help you prioritize: 

  1. Know Your Due Dates: Mark the calendar for when loan payments are due. 
  1. Set Aside Loan Money: When planning your budget, first set aside the amount you need for loan payments. 
  1. Cut Unnecessary Costs: Look at where you can spend less, like skipping a new piece of equipment that’s not essential. 
  1. Plan for Surprises: Keep a little money aside for unexpected costs so you won’t miss a loan payment. 

Tip 2: Consider Business Debt Consolidation 

If you’re juggling multiple business loans, debt consolidation could be a smart move. It means replacing several loans with just one, potentially lowering your monthly payments and simplifying your finances. Especially for those with high-interest loans, consolidating into a single loan can lead to significant savings. 

Consolidating means taking out a new loan to pay off existing ones, streamlining your debts into one monthly payment. It often leads to a longer repayment period, a lower interest rate, or both. Before deciding to consolidate, ensure it actually benefits you in terms of interest rates and repayment terms. 

Here’s what you need to do: 

  1. Calculate your total debt. 
  1. Check your credit score, as it influences your loan options. 
  1. Explore different consolidation options, like bank loans, SBA loans by government, or Fintech loan lending companies for MSME . 
  1. Compare lenders carefully, looking at rates, fees, and terms. 
  1. Gather necessary documents like tax returns, financial statements, and a business plan. 
  1. Apply for the consolidation loan. 
  1. Close the deal, ensuring the new terms are more favorable than your current loans. 

However, it’s not a one-size-fits-all solution. Not all consolidations lead to lower interest rates or solve cash flow problems. Businesses with strong credit histories might find better options with traditional banks, while newer ones might prefer online lenders. 

Tip 3: Use an EMI Calculator for Smarter Loan Management 

When you take a loan, you pay it back in parts every month; that’s your EMI, or Equated Monthly Installment. An EMI includes both the money you borrowed and interest. Over time, you pay more towards the money borrowed and less in interest. 

Calculating EMIs can be tough with big loans and different interest rates. That’s why using an EMI calculator is smart. It saves you time, helps plan your budget, and you can see how changing the loan term or amount affects your payments. It’s a great tool to compare loans and choose the best one for your business, making your financial planning easier. 

Tip 4: Take Help from a Financial Experts 

Let’s go back to Mohan, our baker in Gwalior. His small business and many others are the heart of India’s economy, giving lots of jobs and helping our country grow. But running a business isn’t easy; there are big risks like changing prices and unpredictable sales. 

Here’s the thing: advisors can be lifesavers for small businesses. They help Mohan make smart choices with his money and show him how to stay strong against business risks. They guide him on where to invest extra money, plan his spending, and prepare for big changes in the market. 

Having an advisor means Mohan can keep making great bread while someone else looks after the money side of things. As the help from the government slows down and loans get expensive, an advisor is more important than ever. They’ll help Mohan understand tough stuff like inflation and loan costs, so his bakery can keep growing strong. 

Tip 5: Navigating MSME Loan Repayments 

The average loan for medium-sized businesses is about 9.74 million rupees, making it vital for them to manage these loans with care. They should consider setting up automatic payments for their loans, a prudent strategy to evade late fees and maintain a favourable credit score. In times of financial difficulty, it’s advisable for them to engage in open discussions with their banks. Such communication might lead to more flexible repayment options. Additionally, keeping a vigilant eye on their credit scores is crucial. A strong credit score is instrumental in securing more favourable interest rates in the future.  


Mohan’s story and the struggles of similar small businesses underline the importance of astute loan management. Key strategies include prioritizing loan repayments in budgets, considering debt consolidation for simplicity and potential savings, utilizing EMI calculators for informed decision-making, seeking advice from financial experts, and maintaining open communication with lenders. 

It’s all about taking those smart, practical steps towards managing your MSME loans effectively.