Is it possible to get financing for SMEs without getting into debt?

Financing for SMEs is one of the essential elements so that businesses can grow and last over time, however, they must carefully review their options and possibilities, understanding the operation of each alternative, in order to choose the appropriate one. avoiding potential problems in the future.

Since these types of companies are so important for the country, generating more than 70% of employment and contributing around half of the GDP, private financing for SMEs offers a wide range of modalities so that they do not run out of resources or have to grow at a slow pace, but not all are convenient, especially if the cash flow is not as strong or if the venture is very young, among other factors.

Common financing for SMEs

Sometimes the financing options for companies can represent more than a solution, an obstacle, especially if it is about traditional alternatives that can take a long time and require a large amount of documentation and procedures.

Bank credit

Bank loans are, in addition to taking time to resolve and with a high average approval time, very expensive, with interest rates that can even exceed 25%.

Credit cards

In this case, although they have shorter resolution periods and a higher approval rate, the interest to pay reaches a high rate and the Total Annual Cost (CAT) can exceed 50%, something that can seriously affect in case of Not paid on the established dates.

Factoring

Faced with these two options, factoring can be a good option, since it consists of the sale of invoices receivable, however, if the entity that must pay any of these invoices does not do so, the client (the financed company) is the one who must take charge of that debt, thus losing more money than obtained.

Any of these three common private financing options for SMEs that were reviewed are sources of potential debt for companies, which can delay their growth or leave them permanently out of operation, depending on the conditions of the ventures, but fortunately, there is an option that avoids borrowing, the MCA.

The Merchant Cash Advance Solution

The MCA is a type of financing that is friendly to SMEs, even if they are very young companies and do not yet have a credit history, since it not only requests affordable requirements, among which are a minimum of 6 months of operation making sales through credit or debit cards, have a Point of Sale Terminal (TPV) provider and be legally constituted before the SAT, but, due to its operation, technically avoids borrowers’ indebtedness.

Said operation consists of a cash advance, hence its name: “Merchant Cash Advance”, which is covered with a percentage of future sales achieved by the company that received the financing, and which requires an accessible fee, which is paid in advance, avoiding possible adverse situations.

When settled with a percentage of the sales achieved, the payment of this financing is flexible and represents profits for the companies at the same time that they are paid, since completing sales represents a win-win for borrower and lender. That is, a simple and debt-free financing process.

Pymes Capital and MCA

If you have a business and want to make it grow without the risk of debt, the Merchant Cash Advance is one of the alternatives that you should not overlook, since the payment will not be burdensome for you or take the financial state of your company out of balance.

In addition, the resolution periods are very fast, so that the needs of your organization are attended to as soon as possible.

Do not think about it too much, you can request your financing online, just go to the Pymes Capital site and fill out the application form.