The Significance of Steady Working Capital for MSMEs
A consistent flow of working capital is critical for any small business seeking long-term success and growth. Even if a company has significant assets and profitability, it may not be able to survive due to a lack of steady working capital.
So, what exactly is working capital?
Simply put, working capital is the difference between a company's current assets and its current liabilities. This metric is used to calculate how much cash is available at any given time after the business has met its financial obligations. Working capital is critical for small businesses to maintain stock levels, invest in marketing, develop new product lines, among many other things.
The money used to fund the day-to-day operations of a business, whether it is a wholesaler, distributor, retailer, or any MSME, is referred to as working capital. During a financial crunch, MSMEs can obtain working capital loans for a variety of reasons, such as when they require funds during periods of reduced business activity or when they want to expand a particular line of products or services.
To aid in the growth and expansion of MSMEs, the availability of financial support, particularly from NBFCs, assist MSMEs in resolving issues like delayed payments or fulfilling big orders.
Ways in Which a Working Capital Loan Can Help Your Small Business Grow
- Helps Fulfill Big Orders
Let's suppose your business gets a big order. To meet the requirements, you will need more raw materials and better equipment, and if there is a time constraint, you may need more workers/employees too. Now, if you do not have steady working capital, you may not be able to bear all this expense and end up losing the order. This is where a working capital loan plays an important role.
A working capital loan can help cover the expenses related to fulfilling big orders with quick disbursal, and avoid loss of revenue. Lenders like Kinara Capital provide MSMEs with quick working capital loans in as little time as 24 hours with an online loan application process.
- Paying Wages
As your small business grows, you will need to hire new employees. In addition to training new employees, it is necessary to continuously train the existing employees as well, so they stay up to date on the latest trends and methods of operation.
Working capital loans can be used to meet all of your company's needs. In times when you need to hire more employees but do not have enough financial backing, a working capital loan can come to your rescue. You can hire talented people to work for your business without burning a hole in your pocket.
- Renovating your Space
You can also avail of a working capital loan to renovate your workspace or shop. It helps establish a good reputation among your current customers, as well as attract new ones, and keeps your business competitive.
Make the Best Use of a Working Capital Loan
Most businesses experience a period when they receive a large number of orders and service requests. To meet the rising customer demand, you must expand your operations. You can easily achieve your goal at this time by utilizing a working capital loan. Working capital loans can be used to expand an office or factory, open at a new location, or add support infrastructure, among other things. However, you must make sure that you choose a reputable and flexible lender.
NBFCs like Kinara Capital offer collateral-free working capital loans with a tenure ranging from 12 to 60 months. Moreover, with their fully digital application process, you can get your loan approved and disbursed in as soon as 24 hours. You just need to fill a 1-minute eligibility check, and if you qualify, you can take the online application forward or have a loan officer contact you for further assistance.
So, do not hold back your growth and avail of flexible working capital loans to unleash the real potential of your business!