By Sangeeta Sharma – Credit Advisor & Trainer | MSME Coach
When an MSME applies for a loan, most business owners focus only on the application form and the security offered. But here’s the truth from my 11+ years of MSME lending experience:
Banks don’t just fund businesses — they fund disciplined businesses.
The difference between getting a loan approved in 10 days versus getting stuck for 3 months often lies in your financial habits. These habits create a track record that silently speaks to the lender even before you open your mouth in the first meeting. Let’s break down 5 powerful habits that can turn your MSME into a “bankable” business.
1. Maintain Clean Bank Statements
Your bank statement is your financial mirror it reflects exactly how money flows in and out of your business. Bank always checks your past 6-12 months statement thoroughly.
What to avoid:
- Mixing personal expenses with your business transactions.
- Sudden large cash deposits that can’t be explained especially before applying for loan.
- Overdrawing your account repeatedly.
Best practices:
- Use a dedicated business account for all business inflows and outflows.
- Keep monthly cash deposits consistent with your declared sales.
- Always Maintain a steady average balance don’t let it drop to zero regularly.
Example: I once handled an MSME client who was profitable but had 15 cheque returns in 6 months. The loan application got delayed for weeks because the bank wanted a written explanation for every bounce. Had their account been cleaner, the loan could have been approved in one-third the time.
Why it matters: Lenders see clean statements as a sign of stability, professionalism, and transparency.
2. File GST & Taxes on Time
Banks love borrowers who respect compliance timelines. Late GST or tax filing sends a signal of financial stress or weak internal processes.
What to avoid:
- Filing GST returns months after the due date.
- Mismatches between GST filings and sales turnover in your financial statements.
Best practices:
- Mark tax deadlines on your business calendar and never miss them.
- Reconcile GST data with your books every month to avoid surprises.
- File nil returns even if there’s no turnover consistency counts.
Pro tip: Banks directly pull your GST data before sanction. If they see delayed filings, it reduces your eligibility for certain loan schemes like CGTMSE. So always ensure timely filing of GST returns and taxes.
3. Keep Properly Structured Financial Statements
A banker needs clarity not a bundle of papers with random numbers.
What to avoid:
- Submitting unaudited statements without explanations.
- Inflating numbers just for loan eligibility (it backfires during assessment).
Best practices:
- Get your Profit & Loss and Balance Sheet prepared by a qualified professional.
- Use CMA data format if you’re applying for working capital loans it’s the industry standard.
- Make sure your projections are realistic and backed by assumptions.
Example: One of my MSME clients submitted CMA data with projections that showed a 300% jump in sales in one year without any plan for expansion. The bank rejected it. Once we revised it with a realistic plan and supporting market data, the loan was sanctioned.
4. Avoid Frequent Cheque Returns
Frequent cheque returns (bounces) are a major red flag in MSME credit assessment. Why? Because they show either cash flow gaps or poor payment discipline.
What to avoid:
- Issuing post-dated cheques without ensuring funds.
- Relying on last-minute deposits to clear cheques.
Best practices:
- Maintain a buffer in your account before cheque clearance dates.
- Set up payment reminders and plan cash inflows accordingly.
- Monitor receivables closely late customer payments often trigger cheque bounces.
- Practice online payment rather than issuing cheques
Pro tip: Even if your financials are strong, multiple cheque returns in your CIBIL Commercial Report can instantly create a “risky borrower” impression.
5. Keep Your Credit Utilization Balanced
Your sanctioned limit is not a green light to max it out every month. High utilization ratios signal cash flow dependency on debt.
What to avoid:
- Using 95–100% of your limits every month.
- Depending on a single credit facility without diversification.
Best practices:
- Maintain 60–70% average utilization.
- Keep some emergency credit buffer for unexpected expenses.
- Explore multiple credit options (OD, CC, term loan) for different needs.
Example: I had a client who always used 100% of their OD limit. When they needed extra funds urgently, the bank declined because there was no room for enhancement without a fresh appraisal.
Discipline Builds Trust
When you walk into a bank, your documents tell a story and that story is shaped by your habits. By keeping your statements clean, filing taxes on time, preparing structured reports, avoiding cheque bounces, and managing credit wisely, you give bankers the confidence to fund your growth.
Remember: Paperwork can get you in the door discipline keeps you in the game.
If you’re serious about improving your MSME’s bankability, start with one habit today and build from there. In six months, your next loan application could sail through without a hitch.
Free Resource:
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