According to Inc42's data, the value of debt investments in the first half of 2024 reached $576 Mn, more than double the amount raised in 2023
The central government announced a slew of measures in Budget 2024 to boost credit availability for micro, small and medium enterprises (MSME)
Besides banks and non-banking finance companies, there are venture debt funds, a new class of debt funding.
Navigating different avenues to raise capital has always been daunting for businesses, particularly for startups and small and medium enterprises (SME) with limited expertise in banking and finance. Today, many of them are exploring debt funding as raising equity gets harder. It is the right time as the lending environment gets increasingly favourable to startups and SMEs. But for that, companies need to improve their internal processes and boost their risk profiles.
A stable interest rate regime is expected to boost debt financing. Economists are forecasting the current high-interest rate cycle to end soon. Major economies, including India, have witnessed high interest rates over the past few years. However, with inflation cooling off, central banks have taken a more dovish stance towards borrowing. As interest rates plateau, debt financing becomes an attractive proposition for companies.