DURBAN - Small to medium sized enterprises (SMEs) can leverage working capital loans to capitalise on time-sensitive business opportunities.
Provided they can access the debt needed and afford the repayments, debt is usually a better financing option than diluting company ownership. Loan facilities can help manage seasonal fluctuations and bridge gaps in cash flow, whereas equity financing can aid in long-term growth and development.
Equity financing, raising capital by selling company shares to investors, is most appropriate for high-risk high-growth technology and innovation start-ups, where the right investors can provide the company with industry experience, wisdom and business connections.
"Additional investors and shareholders also introduce other complexities in running a business," said Daniel Goldberg, co-founder of Bridgement, a Fintech company offering invoice financing and revolving credit facilities to small businesses.
Well-managed debt is well suited to short-term cash concerns and demands. Goldberg said, "Working capital is a daily necessity for SMEs, they require a regular amount of cash to make routine payments, cover unexpected costs, and purchase basic materials used in the production of goods".