A large number of Micro, Small & Medium Enterprises (MSMEs) has approached banks for collateral-free loans to steer their businesses out of the crisis triggered by Covid-19 pandemic, PTI reports quoting a Care Ratings survey.

According to the Care Ratings survey, about 70% of the MSME respondents have approached banks for availing collateral-free and government-guaranteed loans. The survey also revealed that the majority of the businessmen intend to borrow less than Rs 1 crore. The survey also revealed that banks have so far given a nod to loans of around one-third of the applicants. It also informed that the cost of borrowings is 8 to 9% for most of the borrowers.

Care Ratings said that the survey was conducted for 2 weeks between June 23 and July 7, and witnessed the participation of 345 respondents from a cross-section of sectors. The size of the business of the respondents in terms of turnover ranged from less than Rs 25 crore to Rs 100 crore.

“The majority of respondents (over half) have availed moratorium from banks while fewer (27% of those it is applicable) have been able to do so from NBFCs,” the survey said, adding that the lockdown has severely affected a majority of the respondents, which is over 60%.

It also revealed that fall in demand, contraction in cash flows, shortage of finance and labour, constraints in logistics and increasing receivables are among the major challenges encountered by the segment owing to the lockdown.