Raising Funds

The institutional Debt Financing to MSMEs in India that is overseen by the Reserve Bank of India includes Public Sector Banks, Private Sector Banks, Small Finance Banks, Foreign Banks, Co-operative Banks, and Regional Rural Banks.

Working Capital, Term Loans, Equipment financing, LAP, LC / Bill Discounting, ECB, Structured & Stressed assets funding, are some of the products under this category.

However, there are many limitations of Institutional Debt Financing which MSMEs are facing today. They may fall in any of the below-mentioned categories when they approach the Institutional lenders:

• Termed them as high-risk borrowers
•  Lack of timely credit for non-compliance
•  Information asymmetry
•  Issue of Collateral
•  Ratings issues
•  Procedural delays
•  Vulnerable to market fluctuations

While raising funds, here comes the role of Alternative Sources of Debt financing where our team at Kennis, plays a dominant role viz:

1. NBFC’s & Fintech – which are platforms for financing customers with a focus on Structured Finance, Asset-based Finance, Buyout financing, LAP, LAS, Receivables Discounting, Supply chain financing, Cluster financing, and small loans.
2. CGTMSE: This is a department set up jointly by the Ministry of MSME and SIDBI to provide access to finance for un-served / under-served borrower segments, making the availability of financial assistance from lenders to first-generation entrepreneurs and underprivileged section of society who lack collateral security and/or third-party guarantee for supporting their ventures up to INR 2 crores

Kennis has great knowledge in all Debt financing products and depending upon the requirements and its internal study, the team will come out with the right approach and solution to meet its clients’ objectives.

Commonly known as an IPO, Initial Public Offering enables a Company to raise money from stock. Public under regulated environment and the shares of the company can be traded on stock exchange.

The equity path of raising funds also includes Angel investors that are individuals or groups of investors with a significant amount of assets. They usually invest in startups and have strict rules about the businesses they invest in. A huge number of angel investors choose early-stage companies for investing in and provide operational and technical knowledge to the companies they invest in.

The next type of raising funds under equity fundraising is Mezzanine Financing. It’s a type of financing that combines both debt and equity. In mezzanine financing, the lender provides a loan. If the company is profitable, the borrower repays the loan under pre-negotiated terms. However, if the business takes a downturn and is unable to repay the loan, the lender steps in and converts the loan into equity.

Venture Capital is another way of raising funds under equity fundraising wherein the Venture Capital firms offer funding for startups in exchange for ownership stake in the company.

For SMEs & MSMEs, Private equity funds are pools of capital to be invested in companies that represent an opportunity for a high rate of return. They come with a fixed investment horizon, typically ranging from four to seven years, at which point the PE firm hopes to profitably exit the investment.

Our team at Kennis will be able to provide guidance to all the deserving Startups, SMEs & MSME in terms of raising equity finance. Come to us with your vision, come with your business plan, come with your funding requirements……we will assess internally and guide you through this journey from ‘Conception to Completion.