As a business owner, you have multiple expenses and business finance can help you manage them with ease. It is a funding solution that can assist you in meeting a variety of needs, such as starting a new business, financing business operations to invest in new assets for your company, and increasing your cash flow.
Irrespective of whether you are a budding entrepreneur or a seasoned one, the availability of finance is extremely important for hassle-free business operation on a regular basis.
With the help of business finance, you can manage the following expenses with ease:• Purchase new land or invest in a new asset without difficulty
There are mainly two types of business finance that can help you get the required funds for your business expenses, namely:
Equity Finance: Under this type of finance, you can approach investors for funds in return for equity in your business. Typically, an investor provides your company with a large sum of money in exchange for a share in the business. Once the business starts making a profit, based on the number of shares the investor owns, he/she earns benefits.
Debt Finance: One of the most popular solutions, debt finance helps you avail of funds from leading lenders, which can be repaid at a predetermined rate of interest over a given period. You can easily qualify for an unsecured business loan from Bajaj Finserv and get a high-loan sanction of Rs.45 lakh at affordable rates of interest.
Financial Institutions: One of the best ways to meet your business expenses is to apply for a business loan. All you have to do is to meet the simple eligibility criteria and submit the required documents. If your business is 3 years old and you have a credit score of 750, you can apply for a business loan from Bajaj Finserv and get funds up to Rs.45 lakh to meet your business's big expenses.
Angel Investors and Venture Capitalists: Equity capital is another form of business financing. If you have a start-up or a new firm, you might not have enough business vintage to qualify for a loan. In this event, you can reach out to angel investors and venture capitalists for financial aid. Angel investors and venture capitalists invest in companies or start-ups in return for equity and profits.
Accounts Receivable or Invoice Financing: You may not be able to fund your business outlays like the purchase of raw materials or staff's salaries if your accounts receivables are unpaid. If this is the case, you can opt for invoice financing and use those unpaid invoices as collateral to get funds. Leading financial institutions offer invoice financing loan to help businesses solve the liquidity crunch.
Inventory Financing: Inventory financing is a secured loan where a company pledges its inventory as collateral. This credit option is more suitable for a small business that doesn’t have access to other financial solutions. You can use this loan to buy products that can be sold later, and these products can serve as collateral for the advance.
Business credit cards: Business credit card is one of the most convenient sources of business finance. It is the best suited for busy businesses that need urgent funds to carry out their daily operations-buying new stock or equipment. It is an unsecured credit facility, so you are not worried to lose any asset. However, if you opt for business credit card, you should be careful not to exceed your credit limit as it might affect your credit rating.
Business cash advances: It is a short-term source of business finance for businesses that take card payments. With business cash advances, you can get funds based on your card sales and in return, you need to pay an agreed percentage of your customer card takings. This means that you pay only when your customers pay you.
Crowdfunding: This financial solution is becoming a popular choice for new businesses or start-ups to get funds. If you have an exciting business idea that can transform into a success story, then crowdfunding can be an apt choice to get funds. All you must do is sign up with a crowdfunding website, share your project and promote it well to encourage donation. One of the biggest advantages of this financial solution is that you can get access to funds even if you have a low credit score. However, this form of business finance can help you only for a bigger project and not for the business’s everyday expenses.
Business finance refers to the external financial assistance a business may utilise to meet its monetary needs. The funds so availed can be used as capital investment to improve infrastructure, increase working capital, expand business operations, etc.
The funding needs of a business can be classified under the following categories –
Enterprises can raise business finance from various sources to fulfil their funding needs. They can include loans from financial institutions, invoice financing, raising capital by offering market shares, crowdfunding, peer-to-peer lending, etc.
Loans and advances from financial institutions are available against minimum eligibility, making them among the more popular sources of business finance.
Finance in business can be broadly categorised under two types –
- Debt finance
Better known as borrowed capital, debt finance is either a short term or a long term funding to be repaid along with interest to the lender.
- Equity finance
It is a financing option for businesses, raised in exchange of partial ownership of the business. Equity finance can either be capital introduced by the owner or by the investor/s. In case of the latter, the investors become shareholders of the company.
MSME stands for Micro, Small and Medium Enterprise. It was introduced by the Government of India in agreement with the Micro, Small and Medium Enterprises Development (MSMED) Act of 2006. As per this act, MSMEs are the enterprises involved in the production, processing or preservation of goods and commodities. Vital for economic growth, this sector contributes around one-third of the country’s GDP and generates employment for around 110 million of the population.
It also plays an important role in the socio-economic development of the country as many of these enterprises operate in rural India. According to the Government's annual report of 2018-2019, more than 6 lakh MSMEs operate in the country.
Initially, MSMEs were classified based on two factors - investment in plant/machinery and an annual turnover of the enterprises. However, the Ministry of Micro, Small and Medium Enterprises has recently revised the classification by combining these two factors into a single criterion.
The MUDRA loan is provided under the Pradhan Mantri MUDRA Yojana (PMMY) to non-farming and non-corporate micro and small enterprises. These enterprises can avail loans up to Rs.10 lakh under the MUDRA (Micro Units Development & Refinance Agency Ltd.) scheme.
We have discontinued this product (MUDRA Loan) at this time. Please reach out to us on +91-8698010101 to know more about the current financial services provided by us.
|Loan amount under Shishu||Up to Rs.50,000|
|Loan amount under Tarun||Rs.50,001 to Rs.500,000|
|Loan amount under Kishore||Rs.500,001 to Rs.10,00,000|
|Processing fees||0.5% for Tarun Loan, nil for others|
|Eligibility criteria||New and Existing Units|
|Repayment period||3-5 Years|
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