SME Finance Solutions

SME Finance Solutions

Small Medium Enterprises, aka SMEs, form the backbone of every growing economy. Not only do SMEs create innovative products and solutions for domestic and international markets, but they also generate vast employment opportunities for the populace.

However, unlike large conglomerates and MNCs, SMEs find it more difficult to find credible financing solutions and low-cost capital to grow their business. It is because they face higher operational risk, making their financing needs more specific. Thus, partnering with a specialized SME finance provider can do the trick.

So, what exactly should be the criteria for the selection of such a financing or banking partner?

Ideally, SME Finance solutions should support SMEs' ongoing operations and growth needs by offering financing at a reduced cost. In addition to that, the following points can help SMEs choose the best finance solution:

  • Timely Availability of Financing: Monthly operations, resource procurement, asset building, and business growth can often be time-sensitive. Therefore, a critical element of SME financing is its timeliness. Banking partners that can offer financing with minimal hassle and quick processing are best suited for SMEs. Furthermore, if these finance solutions can be availed on demand, with door-step assistance, it can save a lot of time that has to be invested in the sourcing of funds.
  • Personalized Structuring of Term Loans: Term loans can be flexible and structured in INR or foreign currency (FCY) based on export realizations. It is an essential requirement for SMEs and something that typical financing service providers do not generally offer. Thus, it can be a critical selection criterion while choosing SME finance solutions.
  • Loan Against Property: SMEs may at times have valuable assets but low liquidity. From time to time, they can benefit from taking loans against property to fund their growth. It's best to look for financing partners who can offer mortgages against residential, industrial, or commercial property with flexible overdraft and repayment options.
  • Loan Without Collateral: It's not always possible to arrange for collateral to get low-cost business loans. Financing partners who can offer unsecured, no-collateral loans to fund various business needs can be best suited for SME financing.
  • Working Capital Solutions: For SMEs, financing is not only needed for growth and expansion. It is required for effective management of working capital as well. Therefore, financing partners that can extend project finance, improve cash flow, and support purchasing power through readily available funding, are best suited for SMEs.

Financing for Export/Import: Pre-shipment and post-shipment financing is critical to the success of export/import-dependent SMEs. Financing providers who can facilitate this and the ready conversion from INR to FCY and vice versa can significantly support the SMEs in expanding their international trade.

Note: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of the right holder of the portal or its employees. The information contained in this article is sourced from empaneled external experts for the benefit of the readers and it does not constitute legal advice., its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

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