Starting a business? You have a great idea, you have the will and you know you will. Ever thought of the capital or funding required fulfilling your dream? Launching any business requires capital investment, whether the start-up is any type of MSME or large enterprise. Funding makes your business initiatives with a strong base and helps to expand and grow further. Finding funds for a start-up business can be sometimes challenging and tiresome task. However, to make it simple for you, we have compiled a few important funding ideas or suggestions that shall help you in availing credit facilities from leading financial institutions. Top 8 Business Ideas to Fund your Startup
1. Self-Finance your Start-up Business: Self-financing or personal investment is the best way of financing used by several business start-ups. Even when you take a loan or ask a venture capitalist or government entity to provide funding for your start-up, they still have this question; how much capital you shall be investing in your start-up? Investing your own savings is the best option for first-time entrepreneurs. In the later stages of business, you can easily opt for business loans and lenders shall not have a reason to deny it, as they will consider the stability of business, as it will be low-risk factor for them.
2. Apply for Business Loan from Private/Public Sector Bank:Banks are considered to be the first priority for start-up enterprises, as they find it a more reliable and convenient way of getting money. Banks provide funding to start-up enterprises in two forms named term loan and working capital loan. Almost every public and private sector bank of India offers business loans for start-ups. However, the interest rate, loan amount, and repayment tenure offered shall vary from bank to bank.
3. Avail Small Business Loans from NBFCs or MFIs: If you are new to lending and do not have a financial history or maintain any credit score, then it shall become difficult to get loans from private or public sector banks. Check your credit score and further contact Non-banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs) to avail Startup Loan. The interest rates offered by NBFCS and MFIs are comparatively higher, as compared to PSU banks.
4. Consider Government Loan Schemes for Funding:The Government of India has launched various loan schemes that aim to benefit Start-up enterprises, SMEs, MSMEs, as well as promote the socio-economic growth of rural India, women entrepreneurs, educated youth, individuals from SC/ST category, Small Scale Industries (SSIs), villages, people living in rural and urban areas, etc. Loan schemes initiated by the Government of India to help Start-up enterprises include the MUDRA loan scheme under Pradhan Mantri Mudra Yojana (PMMY), Start-up India, PSB Loans in 59 minutes, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Stand-up India, Atal Innovation Mission, Make in India, Trade-related Entrepreneurship Assistance and Development (TREAD), etc.
5. Checkout the Latest Business Credit Cards:Credit cards for business purposes have taken a rise since the emergence of start-up enterprises in recent years. If your start-up does not require large amounts of money at the initial stages of business, then you can use credit cards for transactions and timely repaying the amount to avoid debt or extra interest rates charged in form of penalties.
6. Arrange funds from Online Crowdfunding portals :Crowdfunding is a concept of collecting funds from multiple investors via social networking sites and web-based platforms for majorly business purposes. Online Crowdfunding web portals raise funds for various other purposes like social causes, charities, ideas, disaster relief, events, etc. This concept or idea helps in raising funds for start-ups or first-time business owners and also promotes social and cultural causes. India’s leading Crowdfunding platforms include Kickstarter, Ketto, Catapooolt, FuelADream, Fundable, Indiegogo, Milaap, Wishberry, etc.
7. Peer-to-Peer Lending :Peer-to-peer lending is a type of money borrowing where no intermediaries are involved in the whole process. Lenders lend money to borrowers as their investment and borrowers get money at their disposal to invest in their Start-up. In this process, lenders can earn from borrowers, as the interest rate offered is higher, as compared to banks, NBFCS and MFIs. Peer-to-peer lending institutions are regulated by RBI for the betterment of both lenders and borrowers. For start-up enterprises, peer-to-peer lending is a type of loan, whereas for the lender it becomes an investment.