Debt financing, that is, borrowing money from the credit market, comprising of lenders such as a bank, NBFCs, or even the government, can be a cost-effective and reliable funding option for many companies. This can be obtained directly from the financial institution or from a credit marketplace like Yubi Credit Market.
This helps to explain why debt is proving to be a popular financing option for many Indian enterprises, with debt markets contributing Rs 6.92 lakh crore to the Rs 11 lakh crore that companies raised by mid-December of 2022.
That said, the debt raising process can be fairly complex. To reduce complexity, borrowing firms must consider some key factors during preparation and planning.
5 Things to Keep in Mind When Raising Debt
Clarity on funding purpose
Before starting the process, borrowers must be very clear on their financing requirements, goals, and timeframes. Early clarity on these aspects can help them to negotiate the best financing terms and debt structure with prospective lenders, understand the likely impact of debt on shareholders, and raise the required funds in a timely manner.
Once a business has determined its purpose and the debt route it wants to take, enterprise credit marketplaces such as the one built by Yubi, can assist it in gaining access to a variety of debt products ranging from short-term financing to long-term business loans to working capital loans – all on one platform. A multi-product platform enables businesses to select the debt route that best meets their credit and business goals.
Accessibility to lenders
Credit penetration is poor in India’s business sector for many reasons:
- Many business borrowers, especially MSMEs in semi-urban and rural areas, are unable to connect with lenders such as large banks through existing channels.
- Borrowers are often limited in their access to lenders by their current networks as well as geographical boundaries, making it difficult to connect with new lenders and build partnerships.
- Cumbersome borrowing processes, confusing documentation, and long disbursal timelines discourage many borrowers from approaching traditional lenders.
The good news is that prospective borrowers can overcome these challenges with Yubi Credit Market. The digital enterprise credit marketplace connects business borrowers with 750+ lenders across India, facilitating seamless, timely, hassle-free flow of credit for all kinds of borrowers.
Types of debt options available
Borrowers must be aware of the numerous loan alternatives available to them, as well as how they differ in terms of interest rates, payback schedules, documentation, and collateral requirements. A lack of awareness can cause not just delays in the debt-raising process, but also the risk of acquiring and securing an unsuitable debt structure.
A digital platform like Yubi Credit Market helps to create this awareness. It provides 10+ debt options in a simple, centralised place so borrowers can easily access what they need and avail the best possible deals.
While business borrowers recognise the need to borrow money, they lack the guidance of financial specialists who can advise them on the best debt solutions for their company and link them to a network of lenders.
A platform like Yubi Credit Market has the added benefit of having a SPOC, who is a skilled debt specialist, to understand the business’ condition and recommend solutions that best meet the borrowers’ demands.
An advantage of debt financing over equity financing is that the borrower can retain ownership of their business. That said, this benefit can be insignificant if the interest rate is too high. Borrowers must research the factors affect the interest rate of a business loan and compare interest rates when raising debt.
With Yubi Credit Market, borrowers can easily compare interest rates to find the lender and debt product that works best for them. On this marketplace, they also get a single point of contact so there’s no need to negotiate separately with multiple lenders. Instead, business owners can focus on what matters most – growing the business.
Yubi Credit Market: The One-Stop Debt Solution for Growing Indian Businesses
Digitisation and centralisation can help overcome the challenges in debt-raising, simplify the process, and enable borrowers to access the debt they need on their own terms.
Yubi Credit Market is India’s largest enterprise credit marketplace and the world’s first online debt marketplace. Here’s how your business can benefit from India’s largest credit marketplace:
- Access 750+ lenders and the multiple branches of the top 50 lenders across India to get the best deal for your business.
- Swift loan disbursal mechanism with the fastest turnaround time in the industry
- Save time on paperwork, documentation, and multiple rounds through seamless digital onboarding.
- A single relationship manager for multiple banks and every deal ensures that you don’t have to deal with spam calls or multiple bank representatives.
- Full transparency so you can track your deal status in real-time and get updates on-the-go
Click here to know how Yubi Credit Market can help you meet all your capital requirements with ease.