Financing for SMEs can be found in various forms, according to their characteristics. Choosing variables such as the term of a loan can be a key factor in being able to achieve the objectives of a business, without falling into possible difficulties.
Banxico’s figures show that, by 2021, the total balance of the business loan portfolio reached 2,292 billion pesos. In such a relevant financial product, on which the development of hundreds of companies in Mexico depends, knowing in depth the different terms that exist and what their advantages are can be essential for a business to find the right financing.
Short and long-term financing: know the alternatives
From the different term possibilities that exist, various types of credits with different advantages derive, which are worth considering to find out which is ideal for your business.
Short term financing
It is a product designed to obtain capital immediately, which is commonly used to solve situations that have to do with income.
The payment of a credit of this type is established in a period of maximum one year.
What types are there?
- Factoring: in this, invoices or collection rights are transferred, in exchange for obtaining immediate capital.
- Inventory: Applies when company assets are left as collateral for payment of a debt.
- Promissory Note: This is a document where a payment agreement between the lender and the borrower is established.
- Confirmed payment: confirming consists of delegating the administration of payment to suppliers, to a financial institution. This financing for SMEs is the inverse of factoring.
- Line of credit: the traditional financing of the bank, where an amount is lent to be paid with interest.
The requirements and application in these types are simpler. In addition, there is not always a need for a guarantee and they are quickly accessible..
Long term financing
This is used for large projects planned for the future, such as investments or expansions, and its payment is planned for more than one year.
To access such a loan, an excellent credit history is required and that the projects are good.
What types are there?
- Bonds: promissory notes issued by a company to receive funds from the financial market.
- Shares: capital or equity participation of shareholders in an organization.
- Leasing: a contract for the rental of goods that a company can use during a certain time.
- Mortgage: is the transfer of ownership of a property, conditional on the payment of a debt.
Long-term financing has benefits such as serving for projects that require many resources. It also offers the possibility of modification and renegotiation over time, which makes it adaptable to needs. It also helps improve credit history a lot.
The MCA, with the best of short and long-term financing
If what you are looking for is an option that brings together the best of each plan, the MCA or cash advance, offered by Pymes Capital, can be a great option.
This type of financing is easily accessible for SMEs since it provides capital to a business and it must be paid based on a percentage of its sales, plus an agreed fee. This means that the term and quotas adapt to the rhythm of sales and do not hinder the development of the business.
Visit Pymes Capital and learn more about the MCA. Obtain, through a completely online application, the financing that your business needs