Tips To Get Funds for Your Business
When it comes to securing funding for any business, there are several avenues that entrepreneurs can consider. The type and scale of the business usually influences funding requirements along with your own business objectives. Here are some of the funding options that you can consider for your business-
- Small Business Loans– You can always apply for a Small Business Financing in order to get funding for your business. You should check the small business loan eligibility criteria carefully before applying. Compare small business loan interest rates from multiple lenders before coming to a decision. These business loans are usually collateral-free and are given to businesses that have a stipulated age and turnover among other factors.
- Crowdfunding- Several crowdfunding websites have carved a niche in India and are fast becoming preferred funding channels for startups. Entrepreneurs offer descriptions of their companies, future goals, plans and expected profits. They can raise funding from multiple people on these websites by way of donations/shares. Crowd funding helps in creating more awareness about your business. Some of the well-known sites here include Ketto, Wishberry, Indiegogo and Catapooolt.
- Bootstrapping- Bootstrapping is basically funding the business personally. Entrepreneurs may invest from their own income/savings and can raise funding from family members and friends. There are lesser regulations, formalities and costs involved in this process. This should ideally be the first source of funding for businesses.
- Angel Investments- Angel Investors are people who have surplus funds and are interested to pump the same into upcoming businesses. They also work through several networks in order to finalize the best proposals from entrepreneurs. Some of the world’s biggest companies like Alibaba, Google and Yahoo have been funded by angel investors who usually take a chunk of equity.
- Venture Capital- Professionally managed venture capital funds usually invest in businesses and seek exits in cases of acquisitions or IPOs. They usually take equity and offer mentorship and guidance. This helps businesses who are already generating ample revenues and wish to achieve the next level of growth. However, venture capital funds have shorter time frames for recovering investments.
- Incubators & Startup Accelerators- There are several startup accelerator and incubator programmes available in India which can help raise funding for businesses. Incubators nurture businesses while accelerators help in expansion. These involve programmes with fixed time periods and networking and mentorship opportunities are readily available.
- Government Schemes- The Indian Government has already launched its startup fund of Rs.10,000 crore and there are schemes like the Bank of Ideas and Innovations programme available for entrepreneurs. There is the Pradhan Mantri Micro Units Development and Refinance Agency or MUDRA which has a sum of Rs.20,000 crore allocated for offering benefits to a whopping 10 lakh SMEs in the country. Once the business plan is submitted and approved, loans are sanctioned with a MUDRA card which can be used for buying raw materials and meeting other expenditures. This functions in the manner of a credit card. There are Tarun, Shishu and Kishor schemes available. Several states have their own programmes like the Maharashtra Centre for Entrepreneurship Development, Kerala State Self Entrepreneur Development Mission and the Rajasthan Startup Fest among others. There are business loans offered particularly for MSMEs by SIDBI (Small Industries Development Bank of India).