Turnover is an important term in business. Business turnover is the total sales or revenue afforded by the MSME for a given time. It shows how much money a business has earned before deducting any expenses. Many business owners also think that profit is the most important factor, but turnover also plays a big role in measuring success and business growth.

High turnover refers to selling more products, services, etc. However, high turnover does not always mean high profit. This is because deduction of costs, e.g., the cost of renting a place, salary, and raw material costs, etc., is necessary. It is of great importance to determine the business continuity, not only for financial improvements, and for getting loans, but also, for business growth.

When a company wants to get a loan from a bank or a financial institution, the lender checks the amount of turnover of the company before proceeding with a loan. The turnover reveals how profitable the business looks. This gives the lender a view on whether the business has sufficient equity to be solvent and subsequently pay the loan obligation on time.

A high-turnover business has a greater likelihood of obtaining a loan. Banks think that if a business earns more, then it is stable financially and will be able to repay the loan. However, if a business has a low turnover, banks think that it is risky and reject the loan or might charge a higher business loan interest rate.

For instance, if a small factory firm seeks a loan of Rs. 10 lakh, the bank will verify the firm's yearly turnover. If the turnover is Rs. 50 lakh, it will sanction the loan. However, if the turnover is Rs. 10 lakh, the bank may hold back or request supporting documents.

Micro, Small, and Medium Enterprises (MSMEs) are very important for the Indian economy. These businesses create jobs and help in economic development. Turnover is key, for growth and survival, of Small and Medium Enterprises (SMEs).

  • Helps in Business Expansion

- A high turnover allows MSMEs to expand their operations. With more financial resources they can buy new equipment, employ more workers, and grow production. Consequently, it is followed by business expansion and, at last, capitalization with profits.

  • Attracts Investors and Partners

- Investors and business partners consider turnover before they invest. A business with good turnover numbers is attractive to investors since it indicates that it has the potential to generate profits.

  • Better Supplier Relationships

- Suppliers like to deal with companies that experience high turnover. If a company has a strong sales history, suppliers will grant more favorable credit terms. The company can then purchase raw materials on credit and settle later, enhancing cash flow.

Government Schemes and Benefits


- Many government schemes for micro and small enterprises, in particular, Mudra Loan and Credit Guarantee schemes, use turnover to evaluate the granting of financial assistance. MSMEs with a greater turnover rate have a greater chance of obtaining such benefits.

  • Managing Business Risks

- A company with a high turnover can handle financial risk more easily. If there are regular sales, the company is able to deal with expenses such as rent, wages, and taxes without a problem. Low turnover, however, can create financial problems and even business closure.

Turnover is one of the most important determinants of a firm's financial position. It is not merely sales; it affects business loans, investor trust, and long-term viability. For MSMEs, a healthy turnover can bring in new opportunities, improved supplier relations, and government favor. All businesses need to aim at raising their turnover by enhancing sales, cost management, and increasing customer relations. A company with a consistent turnover will always have a higher prospect of growth and financial security.

Additionally, NBFCs help in financing businesses, particularly MSMEs, with secured and unsecured business loans. NBFCs are different from conventional banks in that they offer flexible loan facilities with simpler approval procedures, and it is easier for small businesses to access funding. NBFCs assist businesses in enhancing turnover through their business loans, machinery loans, loans for raw material purchases, etc. With NBFCs, businesses can ensure consistent cash flow and continue to grow even during financial downturns.