2 min read
25 May 2021

Small and medium enterprises (SMEs) are the economic wheels of a developing country like India. There are about 51 million such small businesses in India, contributing to one-third of the GDP.

These SMEs need access to creative sources of financing. They often do not have enough cash reserves to fund their business stipulations and manage working capital.

With a wide range of innovative options, alternative finance has been instrumental in the success of small businesses.

Business loans from NBFCs

Non-Banking Financial Corporations (NBFCs) provide affordable small businesses loans to SMEs with flexible payout options. Rigid lending norms followed by banks have caused NBFCs to step up and support these small enterprises.

A combination of automated technology and less paperwork means businesses can access working capital within 24 hours. This provides them with the necessary cash flow in crunch situations.

Some of the leading NBFCs offer a Flexi loan facility with their business loans, where you can withdraw funds from your limit when you need them.

Equity financing

Equity financing is a very useful fundraising method for new businesses and SMEs. Small businesses can raise capital by selling their shares in the form of common stock. These funds might come from personal resources or a third-party investor called an angel investor.

Trade creditors

Small businesses can ask their manufacturers and distributors for help with short-term business financing. You can convince them to defer your payment for inventory until the rolling target is achieved. When you repay their debt in time, you can negotiate for long-term funds and better payment terms to expand your business.

Crowdfunding

Peer-to-peer lending or crowdfunding is a popular creative method of acquiring funds for small businesses. Businesspersons reach out to thousands of investors through various online lending portals. Capital acquired through it can be debt, equity or reward-based.

There are many creative and conventional options for funding small businesses. You can secure funding with a robust business plan and persistence and keep your venture running.

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