Spend money to make money. Often it is seen that business ventures fail to sustain after launch. This mostly happens due to flaws in strategies and a lack of proper planning. Therefore, making the right decisions about what business priorities and investments should be, is extremely crucial for a business owner. Chalking out a proper plan helps in the best usage of working capital to expand the bottom line. It also helps in dealing with efficiency in every area of your business that includes various functions like advertising, marketing, staffing, product development, and building customer loyalty.
There are several instances where it has been observed that entrepreneurs waste the initial capital also known as seed funding by diverting the money into some other business functions. The chief cause of a business to flounder is attributed to mainly improper investment strategies and lack of far-sightedness. Oftentimes, a merger or an acquisition is necessary to boost the financial health of a company but attaining funds for that purpose is tedious and obviously, better-managed companies win the gamble. Promoters of such well-managed organizations have access to a funding facility called Promoter Funding for the purpose of business growth, take-over, and acquisition.
Funds in the form of secured loan provided to promoters by banks and other non-banking financial companies ( NBFCs) is termed as Promoters Funding. The funds raised through promoters funding can be used for meeting several needs such as acquisitions, takeovers, and expansion of business. Such funding requires collateral security, which can be from the existing company or shares of the companies you own.
Promoters grow their business or increase their stake in the company with the help of promoter funding. It also helps in the conversion of outstanding securities into equity shares. Many a time promoter funding fulfills the working capital requirement of a promoter. It has been observed that with public sector banks going slow on lending, debt-linked mutual funds have come as an alternative for promoters to borrow money. Several mutual fund schemes like dynamic bond funds often help in financing promoters against collateral.
Financial institutions which are engaged in promoter funding offers fund to promoters of companies against their shareholding. This facility enables a promoter to increase the shareholding or utilize the funds in the expansion and diversification of the business.
Apart from getting investors for the company, promoters play a significant role in ensuring that the company is well funded. For any organization, getting funds from the market during a financial crisis is a big challenge because investors refuse to pump in money in underperforming companies. This provides a big opportunity for promoters for increasing their holdings in that company.
The loans availed through Promoter Funding can be used to increase the stock holding in the existing company. It offers multi-dimensional benefits such as:
Several financial institutions are operating in Gurgaon which offer tailor-made financing solutions. Resurgent India Ltd. is one such institution, an investment bank, and a brand that helps its clients raise debts and customized financing solutions as well as promoter funding. Our market experts can effectively help in raising the required funds required for your acquisition and business expansion needs.