SMEs and MSMEs have become one of the pillars of India’s economic growth story for the last few years. The fact that almost 95% of the total industrial units in India comprise SMEs establishes the integral necessity of this sector for the country’s finances.
Also, medium and small enterprises have been emerging across both the manufacturing and services niche, lending a balanced growth to the economy.
On a broader perspective, while the number of self-employed individuals is on the increase in India, they also need sufficient financing via a business or personal loan for self-employed to effectively run their business.
The financial market thus brings loans and advances to help meet funding requirements of new businesses.
- Total funding for start-ups in India grew by 108% from $2 billion in FY17-18 to $4.2 billion in FY18-19, as per a NASSCOM data.
- Corporate loan growth in India touched a 5-year high of 8.2% in 2019 as against a growth of less than 1% in the previous year.
On the flip side, although the availability of funds like a business or personal loan for self-employed is ample, new companies need to utilise them timely for growth and success.
How to understand the ideal time to avail financial assistance
Choosing an ideal time to avail external funding such as a personal loan for self-employed can prove to be crucial for a business’s success.
- Loans availed too early before they are required can unnecessarily increase the business’s existing liabilities, hurting its operational efficiency in the long run. Presence of unnecessary debt also negatively impacts a business’s forecasts regarding finance.
- A significant delay in availing funds can leave a business vulnerable to a financial crisis. Especially for new ventures, handling the situation can be overburdening for the management of business responsibilities while endangering business relationships.
New businesses and their need for timely financing
New businesses in India, especially in the MSME segment, are emerging fast.
- India is home to over 36 million MSMEs up until the end of 2019.
To keep their capacity utilisation to an optimum and achieve business growth, they must utilise available advances such as business loans in time.
Below mentioned are some of the instances where new businesses can require finance such as a personal loan for self-employed.
- An additional requirement of working capital
Additional working capital is a commonplace requirement for a new business, especially considering the continuous upgrades required by such setups to implement growth. Successful running of day-to-day operations is primarily affected by working capital availability.
Likewise, a business can fall short of cash for multiple reasons, which can ideally be fulfilled via short-term debt financing such as working capital loans.
- Equipment/inventory purchase
Maintaining a healthy inventory count helps optimally suffice for new and increased orders. It is especially true for trading businesses that have to maintain inventory daily or at least weekly. Replenishing stock with business finance can thus be an ideal option.
Plus, equipment purchase often involves substantial capital investment, which can be a financial challenge for new ventures.
- Other business needs
Other scenarios requiring business loan can include the need to hire skilled staff, to target emerging opportunities in the market, business expansions, and many more.
Availing debt finance can also prove crucial when a business plans to cut the cost of existing debt and refinance it with a new one attracting more affordable interest rates and charges.
The essential pointer to consider external financing as a suitable option thus integrally emerges from the fact that an existing business opportunity outweighs the debt obligation.
The financial market thus provides high-value funding as business loans or personal loans for self-employed that they can avail to meet these financing requirements in time.
Reputed NBFC Bajaj Finserv further makes financing convenient with features like the Flexi Loan facility that allows borrowers to make multiple withdrawals from a pre-sanctioned loan amount and pay interest only on the amount withdrawn.
As for availing funds at the right time, business loans not only keep a company financially healthy but also help them make the most of available opportunities. When availing a business loan, make sure to compare lenders to avail affordable funds with the best features and facilities.