A small business is a company that has very few employees and is in the hands of an individual or a small group of people. This makes the management of employees an easy task compared to large corporations. Also, the profits generated by the company in the course of the single financial year are distributed among the owners of the business in accordance with the agreement or investments they had made before they started the business.
Challenges before small businesses
Small businesses are new to the field and thus are trying to find foot in the market. Small businesses, in particular, are quite vulnerable compared to large businesses. Small businesses have to pay to their employees, pay their rents, pay the owners of the company for their services and also interest on their investments. The cash reserves after all these expenses that remain with the company is very low. The large businesses on the other hand have large cash holdings with them. The value of the assets that are with them are also very large compared to a small business. Thus, if there is any fluctuation in the business cycle, large corporations can easily sink into their cash reserves and pull out of the situation. Small businesses since are already short on liquidity can have very tough times during a decline in economic activity. Small businesses can take especially designed capital loan known as working capital loan for small business,which can help them to navigate through the present financial crisis. It can help them to stabilise their business and take on the challenge with new zeal and energy.
No need to release equity
For any business owner, his or her equity in the company is precious. Nobody wants to lose equity of his or her company. With working capital loan for small business, one does not need to lose equity of their business. Howsoever, great the needs of the business may be, never get short of financial liquidity. The business owner(s) will always remain in control of the company always.
No need for any collateral
It is a common practice in the banking system that to secure a business loan, one needs to put some assets as collateral. But small businesses do not have assets that are equivalent to their financial requirements. When such situations arise, the small businesses fail to secure loans from the banks. But now there are many financial institutions that are present in the world which are giving loans in the form of working capital loan for small business. And to avail these loans, businesses also do not require to put their assets as collaterals to these financial institutions. This is a win-win situation for the companies as well as for the financial institution. Companies are able to get required liquidity without any risk and financial institution is able to advance loans to the needy companies earning interest on these loans, leading growth of the economy.