What Are The Alternate Ways Of Funding SME?


Inability to find a sustainable funding source to keep one’s business growing has probably killed more dreams than anything else in the business world. While it is comparatively easy to find a business idea, it is highly difficult to look at the cash flow forecast and realize that all the money that you have might soon run out – completely.
There is a definite importance that SMEs hold in a nation’s economy. However, the traditional belief is that there are only banks available to help fund the SMEs. In fact, financing the amount of cash that you want is often difficult. This is evident from the fact that around 60 percent of the SMEs do not end up getting the amount of bank loans that they really want.

Funding Options For SMEs

Bank loans are not the only funding options for the SMEs and this is one of the most important things to know for people who operate small businesses. Since bank finance is increasingly becoming difficult to access, SMEs should take inspiration from business giants and large companies to find appropriate funding methods.


NeoGrowth Credit Pvt. Ltd. is one institution that provides working capital to SMEs without any hassles or long procedures. You can opt for NeoGrowth or from the multitude of funding options available for small firms and businesses. Some of the alternate ways of funding the SMEs are discussed below.


  • Angel investors: These are a group of individuals who are willing to provide funding in lieu of convertible debt or equity. Personal mentoring and one-on-one support are two of the biggest advantages associated with this form of funding. However, angel investors might not necessarily have deep pockets like any other funding source.
  • Cash advances: There are a number of finitech firms that provide a multiple of services and a quick access to cash. One such example is that of a Swedish finitech firm called iZettle. In addition to providing sales software, the firm quickly scrutinizes the sales history of the SMEs and based on the analysis, offer quick loans. In addition, finitech firms provide an option to pay back the amount in regular instalments based on the volume of future sales.
  • Crowdfunding: Crowdfunding has evolved to become one of the most popular alternate ways of funding the SMEs. It allows organizations and individuals to fund the SMEs in return of equity. Crowdfunding allows the SME to collect small sums of money from a huge number of people, rather than to get huge amount of money from a few people. It helps expose the business to a huge number of people and SMEs are able to raise large amounts of money in the shortest period of time.


Alternate External Financing Techniques

Apart from the solutions described above, there are additional external financing techniques that the SMEs should target for. Some of these techniques are:

  • Asset-based lending (ABL): This technique refers to any form of lending secured by an asset. Under ABL, four types of asset classes are secured – inventory, accounts receivable, inventory and real estate. The amount that the SME can borrow depends on the value of the selected assets, rather than the overall worth of the firm. The ease of selling the assets in case the SME is unable to pay the loan is also put into consideration.
  • Hybrid instruments: This financing option combines the features of debt and equity in a single vehicle. Some of the common examples of hybrid instruments include silent participation, convertible debt and warrants, subordinating debts and participating loans. In case of convertible debts and warrants, the investor has the power to convert debt into stock, thus reflecting an increase in the overall value of the company.
  • Alternative debt: In case of alternative debt, investors in the capital market fund the SME, rather than the banks. This is one of the major differences between alternative debt and traditional lending. Alternative debt includes direct tools such as corporate bonds and indirect tools such as covered bonds and securitized debts. Alternative debt is considered to be one of the “innovative” financing options for the SMEs and small-scale business owners.

Providing appropriate funding to small- and medium-sized enterprises are an important step toward a strong national economy. Since a majority of small business owners might believe that there are only a limited number of financing options available to them, it is important to remind them about a multitude of alternate financing options that they could apply for. Moreover, SMEs can choose from the available financing options that suit their requirements and needs in the best possible way.


NeoGrowth Credit Pvt Ltd can help you get business loans. For more information refer here : https://www.neogrowth.in/applyNow/

You can also download NeoGrowth-business-loans PDF file for your reference.

Post By NeoGrowth Credit – Business Loans specially created for Retailers & Online Sellers

For more Information – email us on digital@neogrowth.in

Or Give Missed Call @ 08080861166

Essential Business Tips to Secure Funding for Small Businesses


Starting a business is a very special experience for any entrepreneur. Exciting and challenging in equal measure, it provides you with invaluable lessons on life and people. The journey is enthralling to say the least and keeps you engaged every second. But the first challenge that you encounter on your way to becoming an entrepreneur comes in the form of funding.

Securing funding is a difficult task for any business. The market is afloat with startups and banks are quite strict about lending, given the recessionary after-effects that are still visible. So, how do you set up your dream?

 Ongoing funding needs for small businesses


First thing first, you should evaluate the funding needs for your business. It will help you create a strong business plan and you can pitch your idea to the investors very convincingly. Initially, funds are mainly needed to serve as paid up capital, authorized capital and to spend on registration and legal formalities. The ongoing funding needs mainly revolves around office space, equipment and hiring employees. When you get off the ground, you need more funds to expand your wings. Also, you require enough funding to meet contingencies and keep your business going during the tough times.

 Typical lending requirements


Small businesses are lucky to have multiple lending options in the form of banks, venture capital (VC) firms, angel investors, credit unions, companies specializing in lending to small businesses, crowd funding, sponsorship, grants and incubators. Your own savings and loans from friends or family can also provide you with the seed funding.

The former are business-oriented organizations and people and hence, they follow certain procedures. You would be required to complete legal formalities and comply with certain terms and conditions before getting the money. Some typical lending requirements are:

  • Good credit score and clean credit history – This is most important in case of banks as they give credit scores and credit history major importance while processing your application. Same applies for credit unions and lending companies. All of them want a guarantor and rigorously scan your credit history for defaults.
  • Collateral – Your property or security is also taken into account by banks, credit unions and lending firms. Since it is a strong indicator of your ability to repay the loan, these lenders evaluate it meticulously.
  • Detailed business plan – Important to all, business plan holds more significance for angel investors and VCs. They have a rigorous screening method and they study the details minutely. So, your business plan has the ability to make or break your chances of securing the funding.
  • Personal resume – Again, more significant for VCs, angel investors and sponsors than banks or credit unions, your resume helps create the right impression and win the trust of the lenders. It is a reflection of your business ability and managerial skills to run your enterprise successfully.

Tips for securing funding

No matter which lender you go to, you should be confident and mindful of certain things. The following tips are highly helpful in making a strong case for getting the funds.

  • Research all the funding options – With so many lending options out there, you have a vantage point. Now, you should aim at finding that lender who will give you the requisite funding at conditions, interest rates and restrictions that are favorable for you and your business. Also, you should look at the lender as a prospective guide who can help you in your journey.
  • Keep it lean in the beginning – Always keep a strict eye on your expenses at the start. Tread cautiously and always think in terms of return on investment while making any purchase. Don’t go overboard with spending on fancy office or extravagant business trips. Always try affordable and economic options.
  • Ask for the right amount of money – Both over capitalization and under capitalization are dangerous. So, evaluate what stage your business is at and how much does it need within the stipulated timeline to reach the goals. Be realistic and think long term before finalizing the figure. Lenders are wary of small investments as they offer less returns while big ones put you at risk.
  • Work on creating a great business plan – Your plan is the deciding factor while securing funding. So, incorporate exact figures, up-to-date research, realistic projections and engaging sales pitch in your plan. Present it confidently and communicate your vision with conviction.

@NeoGrowth Credit we provide no collateral, quick & simple documentation which is the easiest way for getting a business loan!

Post By NeoGrowth Credit – Business Loans specially created for Retailers & Online Sellers

For more Information – email us on digital@neogrowth.in

Or Give Missed Call @ 08080861166