Running a successful business requires not just hard work and determination. There are other factors that are essential to fuel business activities. Business capital is one such important factor, which helps operate and expand a business.
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Let’s discuss the top 10 ways to finance your business and meet capital requirements:
1. Consider Seed Funding: Seed funding as the name suggests, are funds availed by start-ups and budding entrepreneurs in the initial stages of their business. Seed funding is a form of securities offering in which an investor provides funds to a start-up company in exchange for equity stake. Availing seed funding is not too difficult. You must have a profitable business model to avail seed funding.
See Also: Types Of Business Loans
2. Get a Bank Loan: A bank loan is the most convenient way of availing funds to meet working capital needs or to fund business expansion. Business loans are offered by banks, NBFCs and other financial institutions. For example, the various business loans offered by SBI are secured and unsecured business loans, e-dealer and e-vendor finance schemes, fleet finance, open term loans, SME eBiz loans, PM Mudra Yojana, Stand-Up India Scheme and small business loans. The quantum of loan and the rate of interest vary across products.
3. Use a Credit Card: You can use your credit card for small cash requirements. Availing funds using a credit card can be done in two ways: Using the credit utilization ratio or availing credit card loans. However, credit cards generally charge high interest. Using credit card can mean higher interest payments, if you do pay back the outstanding amounts in time. However, if you are able to manage your debt efficiently, then this trick can help you in the event of an occasional cash crunch.
4. Seek Venture Capital Funding: Venture capital firms or VCs are responsible for offering risk capital to promising business ventures, in return for a percentage of ownership in the business. Venture capital funding helps in accelerated business growth, by developing the product through acquiring innovative products and technology. It also helps to establish business connections and allows better networking of companies.
See Also: How To Get A Business Loan From A Bank?
5. Try Crowdfunding: Crowdfunding is a type of business investment, where a group of investors invest surplus capital into business ventures that need regular money supply. The process involves pooling funds from investors through websites, specially dedicated to crowdfunding. This is a low-cost and effective way of raising business funds.
6. Business Incubators: This facility can be availed mainly by start-ups and small businesses at the budding stage. Business incubators assist these businesses by providing professional services and encourage businesses grow and develop by helping them understand business trends. The business incubators collaborate with the start-ups and provide services like mentoring, management services, seed funding, training and office spaces to help start-ups grow and thrive.
7. Attract an Angel Investor: Angel investment refers to a process of business funding during the nascent stages. Angel investors are a group of people who are willing to understand your business perspectives and long term business plans. These investors are willing to provide initial business funding when they see a promising business venture.
8. Secure Government Grants: The Indian government has introduced various schemes that help small businesses and start-ups secure business funding. Schemes like Startup India and Stand-Up India, aim to encourage youth and woman entrepreneurs start their own businesses. These schemes offer easy access to business loans and encourage sustainable growth.
See Also: Business Loans For Women
9. Raise Money from Your Family and Friends: Business funds can also be availed from friends and family. However, you must be very responsible when you turn friends and relatives into creditors. You can pool money from these people by explaining the business and by emphasizing how and when you intend to repay them. If you do not have a secure plan, then you might end up messing personal relationships.
10. Get an SME Loan: There are various micro-financing units, which provide easy business loans, with or without collateral. However, these institutions grant loans at higher interest rates. These loans are ideal for people with low credit rating, who are not able to secure bank loans. These loans are also very popular in semi-urban areas to fund working capital requirements.
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