Small and medium-sized businesses have increasingly begun to dot the country’s economic landscape. Not only have they provided numerous employment opportunities but they have also acted as a source of promoting financial inclusion.
However, most small businesses are still struggling with the problem of obtaining secure and reliable modes of finance. A lack of proper funding options has the ability to affect both, their operational efficiency and production capacity.
This is why it is extremely important for small businesses to be aware of the huge variety of financing alternatives which they can readily explore. Here is a list of a few diverse and sustainable funding options for business owners, that can instantly help them boost financial health.
Are You a Small Business Owner? Here Are a Few Ways to Get Funds!
Obtaining funding through invoice discounting is one of the best ways to eliminate your monetary problems. Under this method, instead of waiting for your invoices to be cleared by the clients, you simply sell them off at a discount to a third party which provides you with immediate cash. The sole concern of this intermediary is the creditworthiness of your client. The money thus procured can be used as an instrument of providing swift working capital solutions.
Also termed as direct lending, alternative lending is a way to acquire funds outside the traditional banking ecosystem. Unlike conventional lenders, the alternative lending platforms provide uninterrupted cash within a short period. The repayment tenure is generally stretched over 12-36 months and no restriction is imposed on how the money should be used. Most alternate lenders operate online and can easily work in accordance with your needs.
Micro-financing is one of the few funding options which can ensure that the coffers of small businesses remain financially sound. Registered under the Companies Act, 2013, micro-financing companies usually function as non-banking financial companies. They tend to provide instant loans at cheap interest rates. Contrary to their formal lending counterparts, they even cater to businesses with low credit rating. However, the number of funds disbursed are normally small.
Angel Investment & Venture Capital
Angel investment & venture capital are indeed one of the best funding options for business owners. Most of them prefer to provide funds during the early stage of a business. Typically, they furnish a lump sum amount whose value entirely depends upon the strength of the business’s idea. In return for their monetary assistance, they either seek partial equity ownership or an active management role.
Apart from the aforementioned, government-funded schemes can also provide excellent working capital solutions for most small businesses. These schemes are subsidised, risk-free, and safe.
Whether you finally decide to avail funding through invoice discounting or via micro-financing, you must make sure that your business does not get to bear any extra cost. For small businesses, the provision of adequate funds is not just a way to improve performance, but it is also a tool to boost financial health.
It is precisely for this reason that as a small business owner, you should examine every funding alternative and then select the one which meets your specific financial objectives in the best possible way.