Top Sources of Credit Loan for SMEs

If you think of any business, the first thing that comes into the mind is capital investment. Be it establishing small businesses or expanding the existing ones, we all look for easy credit loans.

Some even try to hit upon financial aid as a solution to overcome existing losses.  

It has been observed that there are different stages that define the credit requirement of any business. One must analyze the stage of their business – start-up, survival, growth or sustenance stage.

The main issue is the long and postponed payment cycle that results in an urgency to raise money from different sources for business survival.

Also Read: Lines of credit: online lenders vs. traditional banks

Credit Sources for SMEs 

There are private as well as government organizations that extend help to small and medium businesses. Their credit loan policies and terms state pre-specifies loan credit for a certain period of time. It is a big help for SMEs that struggle to meet their day-to-day expenses. 

Listed below are a few common sources that offer credit loans in no time with easy processes and minimal documentation:

Angel Investors As Credit Sources for SMEs

You can easily approach an angel investor who can finance your business in return of ownership equity or convertible debts. It is one of the most popular ways to raise money.

These investors analyze the potential in your business and calculate the profit that it can fetch in the future.  You must make sure the paperwork is solid and does not have any loopholes.

Also Read: Cash Crunch: 7 Tips To Avoid It

Bank Finances As Credit Sources for SMEs

Banks are the most famous source of credit loans for maximum businesses.  They provide a certain amount for a defined period of time against the security of any asset such as land, house or even jewelry these days.

It is just that getting a loan easily is a little complicated for the SMEs that do not have a good financial loan history. Therefore many SMEs deposit potentially long-term assets for short term credit loans.

Also Read:- Bank Loans In India – Eligibility, Purpose & Types

Self, Friends and Family As Credit Sources for SMEs

What if your business is not doing well and thus loans are also not easily accessible.

You will definitely turn to your own savings. In the worst case you will have to ask help from family and friends. You can think of it as a credit loan with zero interest rate. 

Also Read: Change The Way You Think Of Debt

Venture Capitalists As Credit Sources for SMEs

If you want high-risk but at the same time high return investment, go for it. It is basically a subsidiary of companies that hold significant cash for investment purposes.

To attract a venture capitalist to invest in your business, come up with a solid plan of action that promises higher returns. In most cases that is difficult.

So the SMEs end up selling their business to venture capitalists rather than getting credit loans.

Stock Exchange Listing As Credit Sources for SMEs

If you list down your SME into the stock market, it will be considered as a quoted company. This will bring finances in the form of company shares.

But the issue is that you must grow your business to a certain extent to get listed in the stock market. The majority of MSMEs don’t even consider it as an option. But you can if your business has potential.

Leasing As Credit Sources for SMEs

Ever thought of leasing your assets like cars and even houses? Yes, it’s one way to raise money legally. Go to a leasing company or individual and get the amount you want by leasing your assets. 

In a nutshell if we say there are many sources to meet credit for SMEs but in the era of 21st century apart from these ideas there are few more ways to established your business without taking stress to arrange finances. There are unsecured loans, collateral free loans and term loans which you can take from NBFCs.