Why should small businesses like you choose debt financing?

Debt financing refers to borrowing money from lenders to meet your financing requirements and run business operations smoothly without losing control or ownership of the same. Running your business with other people’s money can give a boost to your operations while also costing you less, given that you assess your options and needs well and accordingly make a choice amongst the different options available.

Learning about debt financing choices crafted for unique needs of small businesses

Loans for businesses to grow- Term Loans
A lot of people use business loans to pay for their goals to grow. You can get the money you need for a business loan whether you want to open a new site, hire more staff, or buy new technology.
Credit lines help you manage your cash flow
A line of credit helps businesses better handle their cash flow. You can get money from it to pay for short-term costs, and you can pay it back when your cash flow gets better. It works just like a credit card for your business.
Fasten the payment process with invoice discounting / receivable financing
In case your business has a long repayment cycle or it faces trouble getting paid on time by customers, invoice financing can help you reduce this cash flow variability by letting you borrow against your outstanding bills and run the business smoothly.
Equipment financing
Your business can get the machinery or technology it needs by financing and using the equipment itself as security. This can be very important for companies that want to improve their processes without having to pay a lot of money up front.

How to Get Financing for Debt

Figure out what you need.
Understand your options well and find out what your company needs the money for: growth, new tools, or keeping track of its cash flow. This will help you pick the right kind of loan with the cheapest alternative available in the market.
Get your papers ready
Get together the papers you need, like tax returns, collateral papers, business plans, and financial accounts. Having the right paperwork improves the chances of getting a loan.
Pick the Right Lender
Look into different lenders, their terms and conditions, and the specific instruments they offer, and pick the one that best meets the needs of your business. Look for NBFCs that help small businesses get loans, like Red Fort Capital.
The process of applying
Send in your application along with the necessary paperwork. You will need to be able to explain how you will use the money and pay back the loan.

Advantages of Debt Financing for Small Businesses

Control
Debt financing, as opposed to equity financing, lets you keep full ownership of your business. This means investors won’t be able to get in the way of how you wish to operate your business. Retaining ownership especially in the growth stage of a business can prove to be a highly consequential decision impacting the business operations and returns in the longer term.
Tax deductions for business:
Most of the time, you can deduct the interest you pay on loans from your taxable income. This can lower your taxable income and lower your total tax liability. Hence, debt is generally a cheaper source of finance than equity.
More structured & planned business expansion:
Businesses can better plan their finances with fixed repayment schedules that help them keep track of their cash flow and meet their commitments.
Advantage of leverage:
If the returns on high-return projects are higher than the cost of the debt, borrowing money to spend in them can help your business make more money.

Red Fort Capital is here to help you grow.

Red Fort Capital helps small businesses in India get the money they need in a number of ways: With products like Invoice Financing, Term Loans, last mile financing, equipment financing and working capital financing, Redfort acts as a one stop solution for all financing needs of your business with quick and hassle free loan disbursement.

Conclusion

Getting money through debt can help a business grow and stay stable. Small businesses can use debt to reach their goals without giving up ownership as long as they know their choices and pick the right type of financing. With NBFCs like Red Fort Capital, it’s never been easier to get the money you need.

FAQs

What does debt funding mean?

A business can get money by borrowing it and paying it back with interest over time. This is called debt financing.

What is invoice finance, and how does it work?

With invoice financing, businesses can borrow money against their unpaid bills, which gives them instant cash flow.

What are the pros of using debt borrowing to keep ownership?

You can keep full control of your business even if you take out debt financing because it doesn't lower your stock stake.

Can I subtract the interest I pay on my loans from my taxes?

Yes, you can often deduct the interest you pay on loans from your taxes, which can lower your total tax bill.

Apply Now for Business Loan in India

Submit Your Application in Minutes

About Red Fort Capital

Red Fort Capital is dedicated to empowering Indian MSMEs (Micro, Small, and Medium Enterprises) on their path to business growth through customized business loans. We understand that securing a business loan in India can pose significant challenges, particularly when factors like a less-than-ideal credit score, a relatively short business history, unclear financial records, or variable cash flow come into play.
As a respected Non-Banking Financial Company (NBFC), we take pride in offering a diverse range of secured business loans, spanning from 1 to 10 Crores. What sets us apart is our remarkable ability to disburse funds fast, in just 7 days. Our financial solutions are meticulously designed to cater to a spectrum of needs, including working capital requirements, equipment and machinery purchases, invoice/bill discounting, and last-mile financing, among others.