Do you have a constructive business idea that can bring a change? Want to start a new business but don’t know where to get proper funding to accomplish your dream? It goes without saying that you need a startup capital to get a head start for your business, whether it’s a kind of startup, SME, or a large-scale business.
Startup Funding helps you to grow and expand and gives a strong base to start a business. It is sometimes not so easy to get a startup loan for your business. We have listed some of the best funding sources to make things easier for you –
1. Self-Financing
Personal investment or self-financing can be the best way to start your business. You can arrange funds from an investor, government body, or take a loan. But you will still need to answer a question. How much are you going to invest?
It is always best to invest your personal savings if it is your first time. Later on, you can apply for startup business loans easily and the lender won’t be able to deny your application. They will already know that investing in your business is not much risky as it is stable.
2. Crowdfunding
In this concept, you can gather funds from several investors through online platforms and social media sites for different purposes. There are online portals for crowdfunding where one can raise funds for different purposes like charities, social causes, disaster management, business ideas, etc.
Budding entrepreneurs and startups can raise funds with this concept. Some of the top crowd-funding platforms in India are FuelADream, Catapooolt, Ketto, Kickstarter, Indiegogo, Fundable, Wishberry, and Milaap.
3. Angel Investor
Anyone with enough money can be an Angel Investor and invest in new businesses and startups in India and across the world. As compared to loans provided by financial organizations, the risk involved is higher because those investors expect higher returns. Some of the well-known Angel investors in India are Indian Angel Network, Mumbai Angels, and Hyderabad Angels. You can directly contact such investors.
4. Bank Loans
Start-up investors first approach the banks for a start-up business loan. It is considered to be the most convenient and trusted source to raise funds. Banks also provide loans for startup business in the form of working capital loans and term loans. Almost every private and public sector bank does that. However, there is a change in the loan amount, interest rate, and repayment term in every bank.
5. Government Schemes
The government has launched a lot of schemes for small business loans startups to benefit SMEs, MSMEs, and startups, and for the socio-economic development of women entrepreneurs, rural India, educated youth, small-scale industries (SSIs), people from SC/ST class, and people in urban and rural areas. The Government of India has introduced schemes like Start-up India, Pradhan Mantri Mudra Yojana (PMMY) to provide MUDRA Loan scheme, Atal Innovation Mission, and others.
6. NBFCs and MFIs
If it’s your first time that you are lending and you don’t have any credit score or financial record, you might not be able to seek loans from banks. This way, you can contact Micro Finance Institutions or MFIs and Non-Banking Finance Companies or NBFCs who provide MSME loans for startups. You can get a loan as per your needs without any financial record or credit score. However, the interest rates are usually on a higher side as compared to banks.
7. Peer-to-Peer Lending
It is another great source for borrowing money where there is no role of any mediator. Borrowers get money from lenders to invest their money in their business. However, the rate of interest is higher than that of MFIs, NBFCs, and banks, as lenders get a part of earning from borrowers. The RBI regulates the peer-to-peer lenders to protect the interest of both borrowers and lenders. It is a kind of loan for a startup and an investment for a lender.
8. Business Cards
With the growing trend of startups over the years, there has been a great demand for credit cards for businesses. If you need only a small amount of money to start your business up, you can apply for business credit cards and repay the amount on a timely basis to improve your credit score and avoid penalties and extra interest rates.
The Takeaway
So this is it for this guide about the most common startup funding sources. We hope one of the above techniques might be helpful to seek funding for your business. We wish you good luck to start your own business with the best funding source.
If you want to avoid the tiring and time-consuming paperwork and get an instant loan for your MSME, Marg Fintech has come as an easy and modern solution. By partnering with Indifi, Marg ERP provides financing for your operational expenses, business growth, and consistency. It is the best online platform for lending finances to help small and medium businesses and fulfill their financial needs for business growth.
They provide funds for the stock, raw materials, and buying inventory to boost your cash flow. If you have an incredible business or marketing idea, or you want to add a modern technology to your operations, they can help you to improve profits and expand your business.
