When talking about economic growth, there are two major levels to consider- the first one being the global economy and the other one being our native economy. IMF projected India’s growth rate to be around 7.8% for the current financial year and the corresponding figure for the global economy is projected to be at 3.8%. This explains the spurt of micro, small and medium enterprises (MSMEs) whose number for 2017 stands at 36.18 million and who are responsible for 8% of India’s GDP.
MSMEs are one of the most promising aspects that will help India scale up the ladder of growth and transform from a fast developing country to a developed one. Despite all this, these establishments face a fair share of issues, especially when it comes to their finances. These issues mostly pertain to the working capital and acquisition of credit or debt.
To overcome issues like these and more, MSMEs as well as SMEs (Small and Medium sized Enterprises) can avail any of the finance options mentioned below that can be of help to tide over financial issues:
Non-Collateralized Business Loans
These are debt instruments that can be availed without the involvement of any collateral asset from a bank or Non-Banking Financial Company. Their interest rates vary depending on the chosen lending institution, but in general, these instruments have easy to fulfill formalities when it comes to eligibility, paperwork and lending terms.
Several schemes have been introduced by the government to help upcoming businesses in the fulfillment of their financial needs. These include allocation of funds for lenders to grant SME loans to such businesses in addition to schemes like the Pradhan Mantri Mudra Yojana.
Angel Investors and Venture Capitalists
These are individual investors who invest in promising businesses in return of equity. The former tend to shy away from risk, while the latter generally invest in such businesses too, provided there is promise of high returns on investment. This category of investors and capitalists do not involve regular payments which can be of advantage for the business owners.
These are only a handful of choices among the feasible finance options available for new businesses.
In the reference given below, you can read more about the other options available:
SME Financing: A Variety of Options - Enlighten Your Finances
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.