Do you have a brilliant business idea, and want to see it become a reality? or do you run a small business and are looking to scale up? Starting a business, whether a small or large enterprise, necessitates a capital investment. Funding provides a solid foundation for your business and allows it to expand and grow. Finding funding for a new business can be a difficult and time-consuming task. To answer the question of how to get funding for startups, we’ve compiled a list of key financing techniques that will assist you in obtaining funding.
Top Methods to Get Funds for Your Startups or Business
1. Finance Your-self
Self-financing or personal investment is the most common method of financing used by new businesses. Even if you opt for startup business loans or ask a venture capitalist or government entity for funding for your startup, they will still ask you how much capital you intend to invest in it. For first-time entrepreneurs, investing your own money is the best option. You can easily opt for business loans in the later stages of your business, and lenders will have no reason to deny it because they will consider the stability of your business as a low-risk factor for them.
2. Onboard Angel Investors
Angel investors are individuals with excess funds who are interested in investing in new start-ups in India and around the world. The risk involved in these investments by Angel investors is higher than the risk involved in startup business loans offered by financial institutions, because Angel investors intend to invest for higher profits. Hyderabad Angels is one of the most well-known angel investors in India. Startup owners can approach these investors directly for funding assistance.
3. Apply for crowdfunding
Crowdfunding is a method of raising funds from numerous investors through social networking sites and web-based platforms. The funds thus raised are primarily used for business purposes. Crowdfunding web portals raise funds for a variety of other purposes such as social causes, charities, disaster relief, and so on. This concept or idea aids in the fundraising of start-ups or first-time entrepreneurs looking to scale their businesses, as well as the promotion of social and cultural causes. A few popular crowdfunding platforms in India include Kickstarter, Ketto, Wishberry, and others.
4. start-up business loan by Indian government
The Indian government, in order to support startups and advance the potent startup ecosystem of India has launched a number of loan schemes aimed at assisting start-up enterprises, SMEs, and MSMEs, as well as promoting rural India’s socioeconomic growth, women entrepreneurs, educated youth, individuals from the SC/ST category, Small Scale Industries (SSIs), villages, people living in rural and urban areas, and so on. Indian government schemes such as – Make in India, MUDRA loan scheme, Start-up India, Stand-up India, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Atal Innovation Mission, and other loan schemes are start-up business loans by Indian government intended to assist start-up enterprises.
5. Peer-to-peer lending approach
A form of startup business loans is peer-to-peer lending in which no intermediaries are involved.h Lenders lend money to borrowers as an investment, and borrowers receive funds to invest in their Start-up. Here, the lender stands to benefit from the high rates of interest applicable to the borrower. These rates tend to be higher than those that the banks, MFIs and NBFCS offer. The RBI regulates peer-to-peer lending institutions for the benefit of both lenders and borrowers. Peer-to-peer lending is a type of loan for start-up businesses, but it is an investment for lenders.
6. NBFC and MFIs small business loans
Without a financial history or credit score, new lenders can find it difficult to obtain loans from private or public sector banks. Non-banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs), offer small loans for your startups without the hassle of financial history or credit score screening. Interest rates offered by NBFCS and MFIs are higher than those offered by PSU banks or start-up business loans by Indian government.
Every startup/business is unique and has a unique set of requirements. It is important for entrepreneurs to know the direction in which they want their companies to head in, the stage of investment and the capital required. The answer to how to get funding for startup lies in the above-mentioned ways. Choose the best and most feasible way to fund your startup and watch your business ideas come to life.