Many entrepreneurs looking to start a business may be perplexed on the best source of funding to seek. With myriad funding sources available, all money may seem like good money, but it isn’t. Evaluating a few of these sources will help you choose a convenient way to proceed. Here are five common funding sources with a concise explanation of each, to aid you in opting for a feasible source to get your business started.
Your savings and resources can prove to be a prime and instant source of funding your new business. Although you may find it a little risky when the venture does not flourish as expected, it is an easy source of funding that makes you feel in control of things. There are several self-financing options to raise money for your new business – tapping into your personal savings, selling off personal assets like stocks, bonds, real estate, ancestral property, judicious utilisation of credit cards, availing mortgage loan against property like Bajaj Finserv Mortgage loan, and personal bank loan such as Bajaj Finserv Personal loan on Finserv MARKETS.
2. Family and Friends
If you can’t tap into your savings, or if you lack a good credit history that can convince any financial institution to lend you money, your next best idea to raise money for your new business would be to fall back on your near and dear ones. Family and friends would be supportive of your business vision and it would be easier to convince them than some unknown lending authorities. Family and friends are less likely to see your credit history or demand any high-interest rates while you repay the money in instalments – in case of family, there may be no interest rates at all.
3. Small Business Loans
Infusing your own savings and resources into your new business may not suffice at times. If you need to borrow money to set up your new business, you can also apply for a business loan offered by various financial lending institutions. Business loans such as Bajaj Finserv business loan from Finserv MARKETS, not only offer a higher loan amount but also exclusive benefits like ‘principal holiday’, unlimited withdrawals and flexible part payments that can let you concentrate on your business.
4. Crowdfunding and Government schemes
Crowdfunding is the latest method of raising money for new businesses through online platforms. In India, it is still in the nascent stages having a market size of 50 million USD, i.e., a miniscule fraction of 34.4 billion USD capital (2015 estimate) generated by the global crowdfunding industry. Since 2010, there has been a proliferation of online crowdfunding sites like Milaap, Ketto, Wishberry, etc.in India, and the past year alone has witnessed 12, 000 successful campaigns.
These platforms use latest technologies like artificial intelligence (AI) and block chain to target a large number of potential donors and help people raise money for their business. The choices are manifold, if your business is in the early stages, else it is a time-consuming process. You can raise the money and return the money in kind.
Also, depending on your financial requirements and social category, you can also avail any of the government schemes sponsored by both state and central governments, like MUDRA, Start-up India, Stand-up India, and MSME scheme to fund your business.
5. Business Incubators
If you have a good idea for a business, but need a lot of help, in terms of both money as well as guidance in getting it up and running, a business incubator could be the way to go – if you can get your business into one. A business incubator is an organization dedicated to providing services and support to fledgling companies.
Business incubators are run by venture capital firms, government agencies, and universities with the goal of nurturing new business through their earliest stages by providing marketing, networking, infrastructure, and financing assistance. Several reputed incubators in India, like Techno Hub, T-Hub, are operated and backed by its various state governments.
Funding is the fuel on which a business runs. A business can take different avenues to attain funding, and more than one of the above options can be used. It is important to note that the chosen funding will depend on the business’ desire to be in debt, how solvent the business owners are at the time the business is founded and the amount of money a business will need to launch and maintain itself through a variety of events. Last but not the least, small businesses are best suited for job creation to tap into India’s demographic dividend. Thus, shoring of small businesses encases not only requires scaling up of capital investment but also human and physical infrastructure.
Tapping into your personal savings, selling off personal assets like stocks, bonds, real estate, ancestral property, judicious utilization of credit cards, availing equitable mortgage loan against property like Bajaj Finserv Mortgage loan, and personal bank loan such as Bajaj Finserv Personal loan on Finserv MARKETS.
Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!