Question

Discuss the best funding options for Small and Medium Business Enterprises (SMEs) in Saudi Arabia to keep cost of capital optimum ?

it is a  discussion i need the answer for the blog .

Answer 1

The cost of capital optimization means to maintain such a proportion of debt and equity so the wealth maximization will become more for such an organization. at the optimum level, the market price per share increases whereas the cost of capital will be minimal. when considered as a whole in the present world the amount of contribution that is being done by the small and medium scale industries is creating a larger impact on the entire value of the business in the industry level as a whole and are only getting recognized to a greater extent because of the amount of contribution they are making to the world economy.

The best funding options for small and medium business enterprises in Saudi Arabia are :

1. Maintaining the amount of the equal proportion of debt and equity.
2. Trying to maximize the earnings per share while keeping the cost of financings low.
3. To be pretty flexible to raise funds easily from any sources such as banks, friends, etc.
4. The risk of insolvency has to be maintained by keeping the debt funds low and within the borrowing limits.
5. Taking advantage of SME loan programs available in Saudi Arabia.
6. In case the same is based on agricultural products or other fungible then taking finances on the basis of Bay al-Salam.
7. Availing funds from the commercial banks in Saudi Arabia like Al Bilad Bank, Al-Rajhi Bank, Alinma Bank, Arab National Bank etc.
8. And the main program called Monshaat whose main aim is to develop, support and to nurture the businesses which are registered in the SMEs by providing an enormous amount of help in every way possible may it be financial, innovative etc.

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