8 Funding Options To Raise Startup Capital For Your Business
How do you start a business? You have a great idea and the will to make it a reality. Have you ever thought about the capital or funding needed to realize your dreams? Capital investment is required to launch any business, regardless of whether it’s a small or large MSME. Funding helps you to grow your business and gives you a solid foundation. It can sometimes be difficult and tiring to find for funding your startup business. We have put together a list of important financing methods that will help you find finance.
1. Self-Financing your Start-up
Many business start-ups use self-financing and personal investment as their preferred method of financing. You can ask for funding from a government agency or venture capitalist, but they will still want to know how much capital you are planning on investing in your startup. First-time entrepreneurs should consider investing their own savings. You can apply for business loans in the later stages of your business. Lenders will not hesitate to approve it as they consider stability and low-risk factors for the business.
2. How to Become an Angel Investor
Angel investors are individuals who have excess cash and are interested in investing in start-ups across India as well as around the world. Angel investors take on more risk than loans from financial institutions because they plan to invest to make higher profits. The most popular Indian Angel investors are the Mumbai Angels, Indian Angel Network, and Hyderabad Angels. These investors can be reached directly by start-up owners for assistance with funding.
Also read: 7 Tax Saving Ideas for Small Business Owners
3. Crowdfunding Support
Crowdfunding allows investors to pool their funds via social media sites and other web-based platforms. This is used primarily for business purposes. Crowdfunding portals online raise funds for many other purposes, such as charity, events, disaster relief, and social causes. This idea or concept helps to raise funds for start-ups and first-time entrepreneurs. It also promotes social or cultural causes. India’s most popular Crowdfunding platforms are Ketto and Catapooolt as well FuelADream and Fundable.
4. Raise Funds By Winning Contests
The number of contests has greatly increased the chances and opportunities for fundraising. It encourages entrepreneurs to start their own businesses. You will need to either create a product or a business plan in order to participate in such competitions.
These competitions can help you get media coverage. ProfitBooks was fortunate to be regional finalists in Microsoft BizSparks 2013 and to have won the Hot100 Startup award in 2014.
To be successful in these contests, you need to make sure your project stands out. Your idea can be presented in person or through a business plan. Your proposal should be complete enough to convince others that it is worthwhile.
5. Bank loans
Start-ups consider banks to be their first priority because they feel it is a more reliable way to get money. The two types of funding banks offer to start-ups are term loans and working capital loans. Nearly every Indian bank, both public and private, offers start-up loans. Banks may vary in terms of interest rates, loan amounts, and repayment terms.
6. MFIs and NBFCs offer Small Business Loans
It will be difficult to obtain loans from public or private sector banks if you are new to the lending industry and don’t have a credit history. Contacting Non-banking Financial Companies and Micro Finance Institutions will allow you to get loans for your Startup based on your needs without having to have a credit score. MFIs and NBFCS offer interest rates that are significantly higher than those offered by PSU banks.
7. Business Credit Cards
Since the rise of start-ups in recent years, credit cards for businesses have seen a significant increase. You can use credit cards to make transactions, repay the amount on time and avoid any extra interest rates or penalties if your business does not require large sums of money in the beginning stages.
Also read: 10 Ideas To Help Reduce Small Business Costs
8. Peer-to-Peer Lending
Peer-to-peer lending is a form of money borrowing in which no intermediaries are involved. Lenders lend money as an investment to borrowers, and borrowers receive money to invest in their Startup. Lenders can make more from borrowers in this way since the interest rate offered by MFIs, NBFCS, banks, and banks are higher.RBI regulates peer-to-peer lending institutions for the benefit of both lenders as well as borrowers. Peer-to-peer lending can be used to finance start-ups, but it is an investment for lenders.
These are the most popular financial methods for funding your Startup business. Among all the methods, at least one will be most helpful in funding your start-up business. Start preparing for all the necessary bootstrapping steps and launch your business while selecting the best options.