SMEs sector in India has about 95% of industrial units in the country and it contributes about 40% to manufacturing and 45% to exports. The most common challenges SMEs face in our country are Limited Working Capital and Low production capacity. According to the surveys almost 90% of Micro and small units India generate financial support from friends, relatives and private money lenders. Due to these two factors there will be decrease in growth rate.
Working Capital is used as an index to measure the health of a company. The higher the capital, the stronger is the enterprise.
What is Working Capital?
It is the difference between the total number of assets (T.A) and the total number of liabilities (T.L) in a company.
Working Capital= TA-TL
In general this amount is used for executing day-to-day operations in a business.
1. A manufacturer probably uses the funds to manufacture more products.
2. A HR may use the capital for recruiting more employees.
Uses of Working Capital
• Equipment and inventory purchases.
• Hiring and training employees and taking care of salary payments.
• Unexpected expenses.
However a well-managed business always secures a good capital, whereas the poor financial management leads to low working capital which results in the issues like
The SMEs use money from the creditors to execute business operations .Due to the lack of sufficient income to maintain expenditure, the companies face bankruptcy.
2) Lack Of Investment
In general people invest in companies that have good turnover and have a high capital. Negative working capital indicates the weak financial management of the company. As a result, Investors are less likely to consider such companies.
3) Less Growth
The working capital indirectly influences the growth of the business. The negative sign in the capital decreases the investments which in turn effects the growth of the company.
As the negative working capital makes it difficult to meet the advance or normal payments, it increases the cost of inventory there by having a substantial financial loss.
Access Working Capital Finance with Intec Capital Limited
The financial provider in India started with an aim “To be most preferred financial provider for every Indian entrepreneur” and the main mission is “To provide simple and fast asset solutions for machines and equipment to small and medium entrepreneurs”.
Intec has two Business verticals
1. Emerging Entrepreneur group which specifically focuses on small and first generation entrepreneurs with a loan ranging from Rs.5 lakh- Rs 50 lakhs.
2. Strategic Business group focuses on medium and large scale SMEs with loan more than Rs.50 lakhs.
The following individuals and business entities can apply for loans
• Self-Employed Professionals
• Proprietorship Firms
• Partnership Firms
• Private and Public Limited Companies
Financial Solutions Offered
The managers identify your unique business requirements and thereby offer you term loan product that suits your needs exactly. Within 72 hrs the loan will be approved.
The finance will be provided after thorough inspection of your documents and a personal discussion. If you meet required standards then you will be eligible. The loan starts from INR 5 lakhs. The tenure for the loans is up to 60 months.
Usage based payment facility:
This is very useful for startups with low working capital. As the name indicates payment is made based on the usage i.e. biweekly, quarterly or half yearly (6 months).
Buyers credit facilitation:
SMEs have to take credit from overseas banks to pay for their imports. These banks usually lend money against some guarantee issued by the SMEs. At Intec, the business is supported by providing import financing options on the capital goods in foreign currency or in Indian Rupees.
The identification of required machines or equipment will be done by our dedicated managers. Then we give required products for lease. The lending rates will be industry-specific and competitive.
Hence the companies with low working capital need a financial supporter like this to increase their growth rate. Furthermore opening gates for new Business era in India.