Tired of the cash flow rollercoaster? Our guide to SME finance solutions explores powerful options beyond the bank to fuel your small business growth.
I’m betting that you know exactly how it feels to be a small business owner. It is 2 AM and you are staring at a glowing spreadsheet that looks like a heart rate monitor during a horror movie. It is full of feasts and famines. The life of a small business owner is a refined lesson in cash flow management and wild forecasting. But what if I told you that the world of SME finance solutions doesn’t have to feel like you are solving a Rubik’s cube in the dark? For a long time, founders believed the only route to funding was through those big, scary bank doors. Thankfully, that’s ancient history — and I, for one, am excited to share that. Today, a universe of more flexible, dynamic, and frankly more exciting SME finance solutions exists — all tailored to the agile hustle of businesses like yours.
The Money Maze: Why Traditional Funding Often Misses the Mark
Let’s be honest. Securing a small business loan from a traditional bank feels like trying to convince your father to give you the car keys when you’ve just turned fifteen. Getting an approval from the bank is a date you need the car keys for. You need to jump through a metric ton of hoops and gather documents. You need to pay them in full before you even consider their loan amount.
Banks love predictability. Sometimes the order of operations that they like to follow for a loan is akin to a long trip. They want to take their sweet time. Look at everything in the bank’s rulebook. Look at it soberly. And then give them a small amount of documents to consider. Let’s be honest, small and medium-sized businesses must inspect everything. In doing so, they can expand their logic to fit any scheme whatsoever. Once you do, turn the logic on and think. Eventually, you’ll realize that unmatched circulation is the real reason for acceptance. Otherwise, they’ll hand you the refusal — with full logic.
Beyond the Bank Vault: Your Toolkit of Modern SME Finance Solutions
Try to confuse the bank not as a kitchen knife. Vrrrm absolutely logic when you think of imposing the financial set. Of course, you can limit yourself — or you can choose to work on your business and continue expanding. In today’s fast-paced world, the modern SME mindset should take precedence. Moreover, everything you once lacked that could help you achieve financial success is now a boon. So, click on the buttons below and uncover the secrets — along with timeless insights.
Invoice Financing: How To Get Your Money Fast
You put in the effort and sent the invoice, now it’s a 30, 60 or 90 day wait for the payment. It’s a huge struggle for cash flow. Luckily, invoice financing comes to the rescue.
How it works: As a quick SME finance solution, you sell your invoice to a financing company and receive a large portion of the cash immediately. You unlock your payment now and don’t have to wait until the next quarter.
Best for: B2B transactions and any service provider that lends money to clients without interest benefit the most.
“MCA”: An Adrenaline Shot for the Business
MCA or Merchant Cash Advance is a futuristic loan for yourself. It is technically an advance that is based on your credit and debit card sales.
How it Works: A lender provides you with a lump sum payment (cash advance) and in exchange, you pay back a small, pre-agreed portion of your daily card transactions until the advance is cleared. During peak sales, the repayment is quicker, and when sales slow down, the payment reduces. This adaptive feature is the reason why it is a preferred option in SME finance.
Best For: Businesses like retail shops, restaurants, and e-commerce stores that process card transactions with a high sales volume need immediate cash with no collateral.
Asset Based Lending: Exploring Your Untapped Wealth
A significant amount of capital is often trapped with a business. Those the business owes, owes business collateral, old machinery, warehouse surplus, and unpaid invoices are all untapped collateral.
How it Works: This is a secured form of lending where you use your business assets to secure the funding. Firstly, due to the secured collateral, lenders are often much more willing to give a higher amount of capital than an unsecured loan would provide. Therefore, this becomes a stark and effective option when looking at SME finance solutions.
Best For: Corporations like manufacturing, wholesale, and distribution companies that possess considerable physical assets or an extensive sales ledger.
Crowdfunding: A New Approach
Everyone has an understanding of your vision, especially your most passionate customers. With crowdfunding, your supporters literally become your investors.
How crowdfunding works: A rewards-based or equity-based crowdfunding campaign may be started on Kickstarter or Seedrs, respectively. For funds contributed, users receive an early version of the product, some exclusive perks, or a small share of the company. With this, marketing and funding can be leveraged simultaneously.
Most effective: Campaigns of this nature work best with brand-new innovative products, creative projects, and well-established brands that have a powerful community and story to tell.
How to make your choice on the financial weapon
Every financial solution offers an untapped option waiting for you to unleash. The question is, how do I select the right one for me? Asking for the best option when there is a wide array of SME finance solutions is the same as asking for the best dish. The answer relies on your needs and the context.
Put these questions to yourself:
How soon do I need the funds? A resounding yes to this question turns the tables in favor of an MCA or invoice. For those in need of waiting, building a campaign, and marketing around it, opting for crowdfunding can work considerably well.
What are my strengths? When your customer base is growing rapidly, you can opt for crowdfund financing. For an overstocked warehouse, consider restructuring your debts through asset-based lending. And in cases where customers owe you money and have unpaid invoices, you can utilize invoice financing.
What are my weaknesses? Most of these SME finance solutions don’t require you to give away any shares of your company, and you maintain control. This is not true for equity crowdfunding, so ensure you are clear with what you are offering.
Final Thoughts
Businesses are realizing the immense opportunities that finance and capital provide and are exploring them by resourcing the right idea. Optimism and flexibility are the heart and soul of your business, and they should shape how you seek financing. Rather than viewing financing as a flat and scary obstacle to navigate, think of it as a myriad of multifunctional tools waiting for you to use when needed. The opportunities for financing your business are endless, so reach out and create that empire you have been longing for since your first sleepless night planning on a spreadsheet.
