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How Small Businesses Use Loan Against Mutual Funds for Working Capital
Small enterprises employ LAMF to fund short-term working-capital needs, benefiting from lower interest, faster access and retention of invested portfolios.
Small and medium enterprises are increasingly utilising Loan Against Mutual Funds (LAMF) facilities to fund working-capital requirements. By pledging mutual-fund units, businesses gain access to revolving credit at lower interest rates than unsecured loans. This arrangement enables entrepreneurs to maintain investment continuity while financing inventory, payroll, or vendor obligations.
Financial institutions periodically reassess pledged fund values to manage exposure. The adoption of digital lien systems has accelerated processing, helping businesses manage liquidity gaps efficiently while reducing dependence on high-cost credit lines.