The proliferation of the small and medium business in India and every other developing economy is evident and there are many factors that contribute to such a rapid rise. The benefits of such organizations are also immense and the governments have understood the importance of uplifting such businesses that can potentially add a lot of value to the GDP of the country and the purchasing power of the common people. These businesses also have the potential to exponentially increase employment and hence the empowerment of SMEs can be beneficial for society as a whole.
In order to ensure that small and medium businesses perform better, there are several policies that are developed by the government and the concerned authorities in the government. The prime focus is to strengthen the SME sector and remove any obstacle that acts as an impediment to the growth of this sector.
The biggest hurdle that is very common in the SME sector is financial constraints. Numerous problems can emanate from such financial setbacks. It becomes imperative to deal with the financial problems at first and hence, SME funding has managed to gain a lot of attention in recent time.
There are several ways in which you can fund your business and few such examples are as follows:
- Applying for a Bank Loan: This is perhaps the most common way of getting a business loan. It is also the most convenient way of being able to generate value for the organization. There are several types of loans that one can opt for. A few of the main categories are as follows:
- Secured Loans: These are also known as collateral loans. Such loans are granted in exchange to the tangible asset that is attached to the loan application which acts as a guarantee that the loan, as well as the interest applicable, will be paid by the borrower. Secured loans are business loans provided against an asset which is provided by the borrowing organization.
- Unsecured Loans: These are also known as collateral-free loans as such loans do not require any type of collateral to be attached to them. An unsecured business loan is mainly granted on the basis of the credibility of the borrower and the potential of the business to flourish. Unsecured business funding has gained great popularity because of its offerings to the borrowing company.
- Applying for the Line of Credit: The line of credit is somewhat similar to a loan where the only difference is that, the amount can be taken on the basis of requirement and the borrower is free to choose the ways or fragments in which the money is to be driven.
- Approaching friends, families or any known network of people: This is the easiest approach; however, this is an unstructured option and can impact your relationships.
- Crowdfunding: Recently this concept has also gained a lot of popularity and can be considered by the ones who are eligible.
- Getting an angel investment for your organization: Meeting the investors an explaining to them about your endeavor may be rewarding and the investor may decide to put in money in your start-up or SME business. However, a point to note is that investors will have a say in most important decisions of your business and hence, it’s up to you whether you wish to share the authority in return of the financial aid.
If you are an SME owner who is aiming to expand and grow the business, then opting for an SME loan would be a well-structured and a more logical decision. This day availing of a business loan in India is very easy as you don’t have to attach collateral or an asset as a guarantee against the loan amount. Most Fintech companies provide unsecured business loans to eligible SME owners. The eligibility criteria for an online business loan can be checked instantly on their website.