Business entities are considered small and medium-sized enterprises because they have limited resources. While the definition of SMEs may refer to the number of employees of the business entity, it also reflects the financial capacity of these businesses. Undoubtedly, the limited resources of SMEs, such as small starting capital, is one of the hindering factors for growth.
One of the most viable solutions to this problem that an SME can take is to apply for a loan from a bank and other lending institutions. The additional capital can then be used to purchase more commodities, hire more employees, and expand its office space. Loans, like asset finance loans kenya, are utilized by SMEs to acquire additional equipment to be used in the production of products or to make its services more efficient.
There are many kinds of loans, and one of the following types may be the best option that your business can apply for so you can have the additional capital.
This loan option can be the best way to have the needed capital when your business has been awarded a contract for particular jobs or commodities by virtue of local purchase order or LPO and local supply order or LSO. For your SME to take such a profitable opportunity, you must be ready with the required cash to be able to accept the contract. In this case, an LPO financing loan from a lending institution that acts on loans quickly may be the wisest thing to do.
When your operations are being affected by your unpaid credits to some suppliers of your commodities and services, you can get to a lending institution and apply for invoice discounting. The lending institution will pay your unpaid invoices so you can get back to your normal operations again. This can be the best option for retail stores and others that sell commodities and services.
When you are engaged with the buy and sell of imported products, and you ran out of cash to pay some charges and taxes at the port, then an import financing loan can save you from the inconvenience. A bank will lend you money on time, so you will not be burdened with additional charges.
If you are a small-time contractor and you need some money for your bid bond, you can apply for a bid bond loan so you will be able to raise the required amount. For a small business, winning in a construction bidding contract is an opportunity for income, so you should opt for a bid bond loan than let this profitable chance pass you by.
Although secured loans can be used to finance various needs like hospitalization, education, and other purposes, you also utilize this type of loan to increase your capital. This type of loan can even be more helpful when you need more funds because it can allow more loanable amount because it requires collateral.