Private Finance for MSMEs: Tailored Funding for Needs Banks Struggle to Fit
Private finance for MSMEs, structured around your cash flow and your timeline. Clear terms and a dedicated relationship manager from first call to disbursal.
When a Standard Bank Product Does Not Fit
Some funding needs do not match a bank’s product list. The purpose may be unusual, the timeline may be tight, or the cash flow may not fit a fixed template.
Private finance for MSMEs fills that gap. It is business credit from a non-bank lender, designed around your requirement instead of a standard scheme. At Sharan, it means a conversation first and a structure second.
The need is real. India has 6.3 crore MSMEs (Ministry of MSME, 2023), and the IFC estimates their credit gap at over ₹30 lakh crore. Many creditworthy businesses simply do not fit the usual lending boxes.
What Is Private Finance?
Private finance is funding from a non-bank lender, structured outside conventional bank frameworks. The amount, tenure, repayment pattern and security are agreed for your specific need. Credit appraisal still applies, and approval is subject to eligibility.
Appraisal focuses on cash flow. We study your turnover, bank statements, receivable cycle and debt service coverage ratio (DSCR). Fixed-asset security is only one input, not the starting point.
Private finance here means a documented loan from a professional lender, with a written sanction letter and clear terms. It is not borrowing from an unregistered lender or an informal money market. It is also not private equity, where investors buy a share of your business.
A September 2025 Business Standard commentary describes non-bank private credit as a complement to banks and capital markets, not a replacement. It points to faster approvals and customised structures as the main reasons businesses turn to it.
Source: Business Standard, contributed commentary, 5 September 2025. Covers private credit broadly; no MSME-specific figures.
What Sharan’s Private Finance Covers
Each facility is built after we understand the requirement. The table shows the broad parameters we typically assess.
| Parameter | Details |
|---|---|
| Who can apply | Proprietorships, partnerships and private limited companies in manufacturing, trading and services. Udyam registration helps and is typically expected. |
| Typical purpose | Business needs that do not fit a standard loan: time-sensitive opportunities, non-standard capex, bridge funding, or combined working capital and growth needs. |
| Structure | Term loan, short-term facility, or a combination. Repayment can be EMI, step-up or bullet, matched to your cash flow. |
| Loan amount and tenure | Sized to your repayment capacity and subject to credit appraisal. |
| Security | Collateral-light options are available where the profile supports them. Some requests may need security, assessed case by case. |
| Decision basis | Cash flow, business vintage, banking behaviour and the strength of your use case. Not a fixed balance-sheet template. |
| Documentation | Clear checklist shared at the start. Complete documents help us move faster. |
All terms are indicative and subject to credit approval. Sharan does not publish fixed rates or timelines for this product.
Who Needs Private Finance? Four Common Situations
A Time-Sensitive Opportunity
A trader gets a bulk-purchase offer that closes in days. A standard sanction cycle may be too slow. A tailored short-term facility, sized to the expected sale proceeds, lets the business act while the offer is live.
A Non-Standard Business Purpose
A manufacturer needs funds for a purpose that does not sit neatly under machinery or working capital. We look at what the money will earn, not only what category it falls in, and shape the facility to match.
Irregular or Seasonal Cash Flow
A service firm is paid in large lumps every quarter. Monthly EMIs create stress between payments. We can align repayment with when cash actually arrives, subject to credit approval.
A Gap Between Two Larger Plans
A business is waiting for a bank sanction or a government subsidy release. Bridge funding covers the gap, with repayment planned from the expected inflow. The source and timing of that inflow are reviewed carefully.
The Sharan Edge: Tailored Structure, Transparent Terms
Private finance has a poor reputation when terms are unclear. Hidden charges and verbal promises hurt borrowers. Sharan’s approach is the opposite. We put the structure and the full cost of the facility in writing before you commit.
Behind this sits the Sharan group’s grassroots lending experience since 2018. Years of financing real cash flows in Madhya Pradesh taught us to read a business, not just a balance sheet.
Sharan Private Finance vs. a Traditional Bank
| Parameter | Sharan Private Finance | Traditional Bank |
|---|---|---|
| Structuring | ✓ Built around your requirement and cash flow | Fixed product and scheme templates |
| Assessment | ✓ Cash-flow and business-behaviour led | Often collateral and balance-sheet led |
| Collateral | ✓ Collateral-light options where the profile supports it | Typically security required for larger facilities |
| Turnaround | ✓ Streamlined documentation; timelines shared at each stage | Often longer, committee-driven cycles |
| Repayment | ✓ EMI, step-up or bullet matched to inflows | Mostly standard EMI schedules |
| Support | ✓ Dedicated relationship manager from enquiry onward | Varies by branch and product |
Comparison is general and for illustration. Terms at any lender depend on the borrower’s profile and the product chosen.
How to Choose a Private Lender Safely
Not every private lender works the same way. Use this checklist before you sign with anyone, including us.
- The lender’s regulatory status is stated clearly and can be verified on the RBI website
- You receive a written sanction letter with amount, tenure and repayment schedule
- All charges are disclosed up front, including processing and prepayment charges
- No one asks for an advance fee before sanction
- No one promises guaranteed approval or a fixed timeline over the phone
- You are given time to read the agreement before signing
- There is a named person and a grievance contact if something goes wrong
If a lender fails more than one check, pause and ask questions. A genuine lender welcomes them.
Private Finance Eligibility Checker
Tick what applies to your business
This self-check is indicative only. Final eligibility, terms and approval are subject to credit appraisal.
How to Avail Private Finance from Sharan
Initial Enquiry
Tell us about your business and the requirement. We listen first.
Document Submission
Share the checklist below so appraisal can begin without delay.
Credit Appraisal
We assess cash flow, DSCR, banking behaviour and your use case.
Structuring and Sanction Letter
A written letter with amount, tenure, repayment and all charges.
Disbursal and Onboarding
Funds are disbursed after signing. Your relationship manager stays in touch.
Documents Typically Required
| Document | Why We Ask |
|---|---|
| Udyam registration certificate | Confirms MSME status, where available |
| KYC of applicant, partners or directors | Identity and address verification |
| Business registration proof | Partnership deed or incorporation certificate |
| Last 12 months’ bank statements | Shows actual cash inflows and outflows |
| GST returns, where applicable | Verifies turnover |
| Financial statements or ITR, if available | Shows profitability |
| Short note on the purpose of funds and repayment source | Helps us structure the facility |
Final list depends on the facility and is confirmed at enquiry.
Private Finance for MSMEs: Frequently Asked Questions
What is private finance for a business?
Private finance is business credit from a non-bank lender, structured to your specific need. The amount, tenure and repayment are agreed for your case, not picked from a standard product list. A documented loan with a written sanction letter is the norm.
Is private finance the same as borrowing from a moneylender?
No. A professional private lender documents the loan, discloses charges in writing and issues a sanction letter. Informal moneylending often lacks this transparency. Always check a lender’s regulatory status and read the agreement before you sign.
Do I need collateral for private finance?
Not always. Collateral-light options may be available where your cash flow and banking record support them. Some requests, especially larger ones, may need security. We confirm the requirement during appraisal, subject to credit approval.
What interest rate will I pay?
Pricing depends on your business profile, the structure and the risk. We do not quote a single rate for all borrowers. You receive the rate and every charge in writing before you accept the sanction.
How quickly can I get funds?
Timelines vary with the complexity of the request and how fast complete documents arrive. Streamlined documentation helps. Your relationship manager shares expected timelines at each stage.
Can I take private finance alongside a bank loan?
Often, yes. Many businesses use a bank loan for standard needs and private finance for something the bank cannot fit. We review your existing obligations to ensure combined repayments remain comfortable.
What documents do I need?
Typically KYC, business registration proof, 12 months’ bank statements and GST returns where applicable. Udyam registration helps. We share the exact checklist after the first discussion.
Can I prepay a private finance loan?
Prepayment terms depend on the facility. Any prepayment charge will be stated in the sanction letter, so you know it before you sign. Ask your relationship manager about early closure during structuring.
Have a Need Banks Cannot Fit? Let’s Talk.
Speak with a Sharan specialist about your requirement. No obligation, no jargon.