Micro, Small, and Medium-Sized Businesses (MSMEs) are vital to economic growth, innovation, and job creation, but they frequently face obstacles in obtaining the capital they need to survive and thrive. A gap in the two groups’ comprehension of credit procedures is revealed by this study, which is based on direct data from 100 MSME borrowers and 100 bank employees in Kerala as well as secondary data from the RBI. The problem is not the availability of credit products, but rather the lack of financial literacy among MSME owners and the frequency of unfair credit evaluations, particularly in rural areas. The report highlights the necessity of improved state regulations, financial literacy initiatives, and the deployment of a Unified Lending Interface (ULI) to streamline lending to address these issues, guarantee quicker, easier access to credit, and foster sustainable growth.