Funding is one of the primary requirements for starting a business. Before initiating the Business, it’s vital to ensure that you have sufficient and smooth cash flow. An uninterrupted cash flow means you can stay worry-free about funding and focus on your core businesses.
Out of all the businesses failing, almost 90% fails due to lack of proper funding. So, to help you out with your funding issues, I will be discussing various sources that you can utilize for funding.
Let’s check them out one by one.
Options to raise fund for your Business
One of the easiest ways to raise fund for your Business is bootstrapping. The term “Bootstrapping” might feel heavy, but it merely means utilizing the fund that you already have in the form of savings or borrowing money from family, friends and relative.
This method is a simple and inexpensive yet effective method for raising fund for your Business. The process is the best option if you are starting a new business with lesser investments. There is minimal to zero documentation and other formalities.
2. Government Packages
There are multiple Government schemes designed to help businesses start and run Business efficiently. Under these schemes, funding is available at minimal interest rates. The government also offers a subsidy on these interest rates, making them one of the most sought after funding options.
But, to avail these subsidies, you will have to satisfy specific criteria. You can apply for these schemes direct, but we would recommend getting in touch with financing expert who can help you avail these loans easily
3. Loans from NBFCs or Microfinance
Availing loans from NBFCs is relatively easy. You won’t have to submit multiple documentation for loans from these firms. If you do not qualify for the loans from Banks, and your credit rating is not right, then loans from these institutions are the best option.
The limitation with these options is that you will have to pay a very high rate of interest, and the fund amount that you will receive will be limited.
4. Bank loans
This is the most popular form of funding option that is preferred by business owners. Banks offer two types of loans for Businesses.
Funding: These loans can be availed for a more extended period. To avail this loan, you will have to submit all the necessary documentation of your Business.
Working Capital: These loans are offered to keep the operations running for the business cycle.
5. Funding from Angel Investors
As the name suggests, these investors act as an angel for promising start-ups that have an excellent potential for growth in future. These investors invest their surplus money in such firms in the hope of earning profits when the firms grow. These investors also offer support to help businesses succeed.
This is a relatively new concept in India but is quite popular in western countries. As the name suggests, here fund is gathered from the crowd for businesses that are gaining popularity amongst the general public.
Business owners make detailed information about such companies public. This information includes business goals, future planning and other details. Anyone interested in Business can invest in it directly.
The mode of investment can be in the form of investments, pre-booking, and pre-orders. This mode helps you generate funding and also gives much-needed publicity amongst people.
7. Investment from Venture Capitalists
This option is viable for small businesses that have started generating and are proliferating. Venture Capitalists are expert in managing funds and grooming businesses for future growth. They invest in small companies with high potential.
Along with providing funds, they also offer mentoring and guidance to companies so that they can grow exponentially in the market.
Running a business needs continued funding. Without regular cash flow, a company might run into problems. So it’s better to arrange it from multiple sources.
Applying for funding needs a lot of documentation and other legal formalities that can consume your crucial time. So we would recommend taking assistance from financial experts.
WE at Probal consulting have experience of 10 plus years in helping businesses to avail funding. So if you are looking for assistance in this matter, feel free to reach us!
Probal Consulting Group is a leading Taxation, Accounting and Compliance firm that helps individuals, MSMEs and other businesses manage their accounting, taxation regulatory compliance affordably.