Monthly Archive: February 2019

How to Use a Loan to Expand an SME

Many small and medium-sized businesses reach a point where their business becomes stable and really works. That’s why some entrepreneurs take the decision to expand their business to cover a larger number of customers and really grow. But the best way to take advantage of a business credit to expand an SME is by creating a strategic plan that allows you to fully visualize what you must do to achieve your goal.

This will make your project very well guided and raise the chances of it being a success. It will also help you to realize the expansion on a large scale and under an adequate standard of quality that your clients will notice.

Below we will tell you specifically in what you can use it and what you should include in your plan so that when you start the search for financing, it will be easier for you to choose the one that suits your company and what you want to do in it.

How can you use business credit to expand an SME?

How can you use business credit to expand an SME?

Open a new store

Opening a new store and equipping it properly is the most common way in which SMEs begin by expanding their business idea. If you want to start like this, you can use your loan to open a store in the place where you have already found a new market that also likes your products or services. This will not only help your presence but also help your brand to be reinforced and become known by more people.

Distribute to a larger territory

Maybe the idea of ‚Äč‚Äčexpansion depending on your business and industry is to make your products or services reach even more people. That is why you can also use your business credit for the necessary thing that will make you reach the farthest corner of the country and also grow at an exponential level. Here your strategy and the use of financing should focus on the distribution and logistics model you need.

Hire more employees

Another situation in which you may find yourself may be that your business is working and growing at a good pace, but that you need a little more help. Here you can increase the liquidity of your business with the help of the loan, using it to pay for human capital expenses and for your financial health to remain stable.

Create new products

Another way in which we can talk about expansion is innovation or creation of new products and services. Being the vanguard and always offering the most appropriate for your customers, will make your business continue to survive but at the same time grow. Equally here you need an adequate amount of capital to be able to do this project, because the idea that arises from your creativity has to become real and materialize it.

Promote your business

A form not so visualized by the owners of small and medium-sized companies as an expansion strategy is promotion. Since it is thought that it is totally a marketing issue, even if it is, the result is fully reflected in the expansion. Well, when you invest in advertising or campaigns, the knowledge of your company reaches more people, generating a higher return on the expense you could make.

Strategic plan to take advantage of business credit

Strategic plan to take advantage of business credit

To begin to put together the plan that will make you take advantage of the business credit to expand a SME correctly, you should keep in mind that it is also necessary to include the specific management or use that you will give to the credit, in order to continue having a good liquidity and financial health in your SME.

Strategies for expansion

Goal and objectives

Setting goals and objectives may sound like something very unnecessary since you have in mind why you are doing all your project. But we want to tell you that by writing them you will notice many details that you had not contemplated before. As the estimated time you have to finish it, for whom you are directing the strategy and for what purpose. But above all they serve to keep you motivated until you fulfill it.

Budget

It is extremely necessary that you establish a budget in which you include each of the things you need to acquire in order to expand your business. For example, if you open a store, write down how much the monthly rent costs, the permits you must process, the interior design, etc. Do not forget the least bit since having the correct number will allow you to evaluate which institution can offer you what you need.

Strategies for credit management

Use according to the budget

We know that sometimes certain unforeseen situations arise that deviate a bit from what you had already established from the beginning. But it is important that you maintain the use of credit only for what you requested. That is, use the exact amount for each thing you had planned, because only then you will see that the credit will really have a good performance.

Payment plan

Many entrepreneurs have the correct solvency to handle credit payments without problems, but forget the payment date, which little by little generates interest arrears. Or in the same way, they do not prevent payment control both for normal business expenses and for credit, forgetting to allocate the fixed amount to liquidate the financing on time. That is why by including the plan in which you always have in mind your date and amount to pay will help you have a greater benefit.

Now that you know how to take advantage of a business credit to expand an SME and how to use it, you can continue to request one. We recommend that apart from the amount they can offer, compare interests, deadlines and the time it takes to grant it.

SME Financing Sources Which One to Choose?

When a small or medium business needs a boost to be able to continue growing and achieve the projects that arise, it is good to know the SME financing sources that exist. But above all know which one to choose, because not all projects are of the same level or large scale. That is, there are projects that are very easy to capitalize and carry out.

That is why here we will tell you what are the types of financing in Mexico and how to choose the loan according to what you want to do.

Fund and savings of family and friends

Fund and savings of family and friends

This type of financing is the one that you can have more at hand and immediately, but the disadvantages are greater. Well, when you have to ask for money from people close to you and who initially trust in the use you will give them, there may come a time when the loan conditions change from one day to the next. That is, it is very common that they want to see more benefits than just having helped you carry out a project for your business.

Crowdfunding

Crowdfunding

Crowdfunding is a newer type of loan for certain very specific projects. Well, you need to register on a platform, present your project and wait for investors to contribute a certain amount. In return you would be paying their contribution monthly. In the end the liquidation process is the same as a traditional credit.

Risk capital

Risk capital

This could be an option that not many SME owners wish to use. Well, you receive a quantity in exchange for certain shares of your company, since the investors expect from your business that this money will actually double or triple favoring you loved parts. But do not be scared, the pressure is not so much, an advantage is that in addition to the capital, they offer a support to guide your project towards a correct planning and execution.

Government financing

Government financing

The government is interested in growing the economy in the country, therefore it has opened the doors for entrepreneurs to have access to SME financing. In the same way in this type of loans you must present your idea and based on that you will receive the support.

Traditional banking

Traditional banking

This is a type of credit that works in a traditional way, but has emerged thanks to the growth of SMEs. You must carry and physically request the entire process to obtain it. But here the disadvantage is that banks give preference to projects of more consolidated companies, that is, to large businesses and give an important weight to your credit history.

Fintech

Fintech

The Fintech are companies that use technology to improve the processes of requesting and granting SME financing. Many focus on facilitating access to credit for entrepreneurs and owners of small and medium enterprises, so they can boost their business. The advantage goes even beyond the ease of response, since the requirements they request are minimal. You can feel safe because although everything is through the internet, these institutions are regulated by both the Condusef and the National Banking Securities Commission and can also make offers as large as traditional banking.

But which one should you choose?

But which one should you choose?

Project size

The first point to determine which one to choose is the size of the project you want to make. That is, there are projects that need a smaller amount than others. For example, through crowdfunding and the different platforms that operate in Mexico under this scheme, you can get up to 25,000 pesos. While with an SME financing from a Fintech you can get up to 3 million, that’s why you should choose the one that can offer you what you really need.

Granting time

You may really need the money in the shortest possible time to continue production in your labors or cover a business offer with a new client. The best thing, in this case, is to approach the source that gives you an immediate answer about the credit. The Fintech have the facility to answer immediately, the traditional banking in a few months as well as a government loan. And with a crowdfounding or the help of people close to you could take even more.

Terms of the offer

As you can tell, these types of financing are distinguished mainly from where the money is obtained, so the conditions of the offer vary. You must choose the one that suits you and above all suits your business. For example, your business may be profitable but your way of managing it could stall it, so it is feasible that you request a venture capital in which business advice is included and is an extra backup. But if on the contrary you want to remain the owner of your business, any of the other types work. You should only compare the amount offered, the terms and interest.

Now that you know more about SME financing, you can make the decision that will make your business grow and improve. Discover in 10 minutes how much you can get from one of the best Fintech in Mexico and meet your goals.