How Can a Business Handle an Urgent Need of Cash Flow
If you’re a business owner, then you’re likely to know just how important cash is for your day to day operations. Without adequate cash flow, your business processes are likely to grind to a halt. This is precisely why it is important for business owners such as yourselves to set up avenues to handle urgent cash flow needs beforehand. That said, how do you go about doing that? Are there any ways in which you can handle all your cash flow needs? Why yes there are. Here’s a quick look at a few ways.
1. MSME Loans
An MSME loan is one of the most popular ways in which you can satisfy the urgent cash flow needs of your business. Over the years, business loan interest rates have fallen quite considerably, making them an attractive proposition for business owners such as yourselves. That’s not all. Availing an MSME loan is now easier than ever too and can be done online within just a few minutes using service providers like Finserv MARKETS.
2. Bank Overdraft Facility
Alternatively, if you hold a bank account for your business, you could also approach your banking institution and avail an overdraft facility to meet your cash flow needs. The overdraft facility allows you to withdraw more cash than what you already have in your bank account.
In return for this service, the bank charges a fee on the amount that you’ve overdrawn from your business bank account. Although this method is much easier than availing an MSME loan, the interest rates and fees charged by banks for providing you with an overdraft facility can at times be much higher than that of business loan interest rates.
3. Credit Cards
You could also use your business credit card to meet any urgent cash flow needs that your business may have. However, as with the bank overdraft facility, you should always exercise caution while using credit cards to bridge the gap in your business cash flow. This is simply because of the fact that the interest rates and other fees charged on credit cards tend to be far higher than that of an MSME loan. In fact, the interest rates on credit cards can go up to over 50% per annum.
4. Invoice Financing
Many banks and financial institutions offer something known as invoice financing to help businesses meet their cash flow needs. With invoice financing, you basically borrow money from a financial institution against unpaid invoices that you’ve raised for your customers. You can generally avail up to 70 to 85% of the total unpaid invoice value as a loan.
And when your customers finally make payment against the invoices, the financial institution where you availed this facility from, takes back the borrowed funds along with a certain service fee and interest. However, there’s a slight drawback to this method. If your customers fail to make payments on time, the financial institution may cut off access to further cash flows, leaving your business stranded.
As you can see, availing of an MSME loan appears to be the most hassle-free option available to businesses. Not only is the business loan interest rate quite low when compared to the other options in this list, it is also easy to obtain.
If you need more information on MSME loans, make sure to visit Finserv MARKETS. It is a one-stop solution for all your loan needs. That’s not all. At Finserv MARKETS, you can check your eligibility, calculate your EMI, and apply for an MSME loan, all in one place.