What Are The Alternate Ways Of Funding SME?

SME financing in India has always been difficult in India. While large to enterprise level businesses have enough cash reserves to fund their working capital requirements, small medium businesses, almost always, are in a need of constant infusion of working capital. No one likes being caught in an unwanted cash crisis that might lead you to miss out on some potential profit opportunities. While most SMEs will relate to this scenario, you can keep such adverse situations away, if you plan well ahead.

The first step towards creating a good inflow of finances, is by knowing your business well. To know when will the next requirement of business funds arise, you must be on top of the following three:

Know your industry

Know the growth rate of your business

Know, where you are in the lifecycle of your business

The key sign of a healthy and profitable business is an efficient operating cycle that can be fully funded by, ready to use, working capital on hand. While a lot of options are available in the market these days, here are the top 5 non-banking ways of financing your business with short-term working capital.

1. Equity: Typically, most young businesses, heavily rely on equity funding to meet their short-term working capital needs. These funds might be injected from your own personal resources or from a family member, a friend or a third-party investor.
2. Trade creditors: Such financing can be accessed if you maintain good relationship with your creditors. If you have maintained a good repayment history, trade creditors are often willing to help with short-term loan for small businesses in India, against collateral or guarantee.
3. Factoring: A somewhat expensive type of business financing, that is often used by young small businesses. Factoring companies buy out your accounts receivable at a higher cost and handles the collection.
4. Line of credit: Easily available to small businesses that are more than 2-3 years old, a line of credit, enables you to access quick business funding to meet your short-term capital needs. A line of credit is given by banks, only if your business is well-funded by equity and you have some good collaterals to offer.
5. Unsecured Business Loans: If your business did not qualify for a line of credit from a bank, this is the best option for you. SME financing has become easily available from non-banking lenders also called NBFCs to meet your short term working capital needs. These loans are usually unsecured, meaning you do not have to give a collateral to receive the money, and come with a loan tenure of 1-5 years.

Off Lately, the Indian government has given a huge push to the digital transaction sector and rolled out many SME friendly policies and regulations. Today there are more than a dozen online lenders in the market that offer easy and quick access to loans for small businesses in India.

Now that you know, timely SME financing can be a game changer for your small business, you must plan your growth and cash requirements well.

SMEcorner is a company that offers SME financing for small businesses in India in as-fast-as 3 working days. All you need to do is fill in a quick online application, provide some banking and financial data (e-copy) and your working capital loan could be on its way.

Feel free to visit https://www.smecorner.com/ or call 9987535888 to learn how our working capital loan products can help your business growth.

SMEcorner is a digital lending platform, that helps SMEs in India meet their working capital needs with collateral-free business loans in just 72 hours.