Monday, August 2, 2021

5 Funding Options to Enhance Your Business or Start-up

India’s start-up industry has evolved drastically over the years, becoming one of the key contributors to the country’s economic growth. However, lack of resources remains a major concern for young entrepreneurs who are struggling to implement their business ideas. 

Even though multiple credit facilities are available now for small business owners where they can obtain funds in exchange for their company’s equity, they also come with additional liabilities. To protect a business from this unnecessary burden, entrepreneurs have realised that a business loan is an ideal option to raise their start-up funding. However, there are some alternatives they should check out before making a choice. 

Top funding options to support a business venture 

The financial requirements depend on the type and nature of a business, and borrowers must pick a funding option keeping that in mind. While some of the sources offer a small amount, you can find several start-up business loans that offer a large sum to support your monetary needs. Here is a list of funding options you might find beneficial:

  • Opt for angel investment

Individuals with a keen interest in investing in budding start-ups are known as angel investors. They generally look for a clearly thought-out business plan so that they can earn dividends out of your business’s success. Even though angel investment involves sharing a specific percentage of equity, you get some compelling benefits like contacts to potential customers and strategic partners, credibility, etc., in return. 

You also get insights into the marketplace and strategies of your competitors along with guidance, which helps a lot, especially when you are starting out. 

  • Consider bootstrapping your start-up

Bootstrapping or self-funding might seem difficult to deal with initially, but it helps start-up owners get an idea of the basic expenses involved in running a business. This way, you get to understand which aspects require special attention and cut costs accordingly without affecting your business’s growth. 

It is expected that small business owners will struggle to keep up with monthly liabilities until the business starts gaining some traction. Even though obtaining a sizeable amount is easier through external sources in the form of business loans, borrowers often struggle to pay the hefty EMIs. On the other hand, self-funding gives you the freedom to invest in what is truly required, and you get to stay away from these liabilities. 

  • Choose to crowdfund

This particular funding option has gained immense popularity over the years. Crowdfunding refers to the practice of gathering funds through multiple financiers where they offer a specific amount after assessing your business idea. All you need to do is find popular crowdfunding websites, set up campaigns, describe your business goals, your company profile, etc. 

With the help of this popular alternative for startup business loans, entrepreneurs get to realise that their business ideas are getting appreciated and helping them raise funding. 

  • Get in touch with venture capitalists 

If you are looking for a sizeable fund along with an introduction to skilled employees, customers, and strategic assistance, this particular funding option would be suitable for you. Venture capitalists generally invest in start-ups that have already gained some traction and have high growth potential. 

Since this is one of the effective ways to boost a slow-moving business, certain aspects are taken into consideration by VCs before offering funds. For instance, the stage of your company, which sector your business belongs to, the location, etc., play vital roles here. You also need to have a strong team that will be open to inputs and new ideas from venture capitalists. 

  • Small business loans

You can easily find trusted lending institutions offering high-value loans to help budding entrepreneurs with financial assistance. However, it is advisable to opt for small business loans since they come with flexible EMIs. Plus, with an overdraft loan facility, you can withdraw any amount you need and repay at zero prepayment charges whenever your business has enough cash flow.

These days top NBFCs are also coming up with attractive start-up business loan options to maximise the benefits if you meet the basic eligibility criteria. These collateral-free loans do not require the backing of any security deposit or your assets, and you get affordable interest rates to conveniently manage your EMIs. 

Financial institutions like Bajaj Finserv also provide pre-approved offers on these business loans, personal loans, etc., to make financing a lot more hassle-free. You can easily check your pre-approved offer by submitting details like name and contact number and get yourself a decent deal. 

Note that financiers set certain parameters that entrepreneurs need to meet to opt for business loans, like a good credit score, presentations to covey your business plan, etc. According to a report collected from a recent study, 90% of Indian start-ups collapse within the first 5 years of their inauguration. While lack of skilled labour force, advanced equipment were some reasons behind this, 65% of the respondents felt that insufficient funding is the biggest hindrance here. 

With the availability of so many funding options, your start-up business is bound to grow at a steady pace. 

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