Funding: Why SMEs Need It

There are many reasons why SMEs seek funding, some more common than others. At some point in every business’s lifecycle, funding will be required for various reasons and can be used in a multitude of ways. Here’s what you need to know about why your SME needs funding.

Funding Start-up Costs
SMEs that are already operational often struggle to secure traditional bank loans, making it even harder for businesses that are just starting out. This is unfortunate, as many significant costs for new businesses arise before they even open their doors. This includes not just rental, but also inventory, equipment, and advertising. As any business owner knows, unexpected costs are always lurking. Startups often need more money than they anticipate, exacerbating their challenges.

Funding Expansion
Most small business owners aim to grow quickly in the first few years after starting to reach their desired size. This growth typically requires additional funds. Even the most successful startups rarely save enough cash to cover a new location. Funding can be used to increase sales, add products or services, move into a new building, hire more staff, or expand internationally. Strategically funding your growth can help you seize new opportunities and fulfill your business aspirations. While many loans have fixed monthly payments that can aid in financial planning, fluctuating revenue streams can make these repayments difficult during certain periods. A Merchant Cash Advance can be a better option in this scenario, as repayments align with turnover—meaning you pay more during stronger months and less during leaner ones.

Working Capital
Working capital refers to the cash a business has on hand to pay its short-term debts and cover day-to-day expenses. Sometimes, accessing this cash can be challenging, and that's where a working capital loan can be beneficial. A working capital loan can help you keep track of your finances, provide the funds needed for growth, and enable you to seize immediate opportunities and make necessary changes.

Funding Allows Investment
Having access to funding allows you to decide where to invest in your business. The best use of funding is to support growth-enhancing projects that build your business from the inside out, rather than merely filling gaps. For instance, funding can be used to upgrade your technology, making your systems faster and more reliable for your team’s daily operations. Innovative technology is just one of the many ways you can use funding to strengthen your business.

The Bottom Line
Funding should not only be viewed as a last resort; it can also be a strategic tool to maintain healthy cash flow and create opportunities for investment in growth. As a small business owner, it’s crucial to have the right channels and relationships in place to make securing funding simple and efficient when opportunities arise. Contact Merchant Capital today to fund your business within the next 48 hours.