Institutional finance to small industries

Small industries cannot rely on retained earnings alone: they need institutional finance — loans, refinancing, guarantees and equity support from banks and specialised institutions. Commercial banks lend working capital (cash credit, overdraft, bills) and term loans for machinery and premises; cooperative banks serve rural and semi-urban small units through local networks; microfinance institutions lend tiny amounts to micro-enterprises and self-help groups, often without traditional collateral. Worked example: a micro food-processing unit borrows working capital from a cooperative bank (local, knows the borrower), gets its machinery term loan refinanced through SIDBI's channels, and joins a credit guarantee scheme so the bank needs no property collateral — three institutions, three different needs, one financing plan.