New Businesses cannot thrive due to the challenging process of securing finance. On the other hand, many business owners commit the mistake of focusing their efforts on a limited number of funding choices when there are many more readily available.
A recent poll found that about 94 % of new businesses fail within the first year. Lack of money is one of the most common factors. Money is the lifeblood of any business. The use of money as a fuel is necessary for the protracted and laborious journey from an idea to a company that generates profits. Because of this, company owners frequently ask themselves, “How can I fund my startup?” during every step of their operations.
8 Different Ways to Raise Startup Capital
1. Angel Investor
Individuals with surplus cash are known to be Angel investors and these individuals are interested in investing in new start-ups in India, as well as worldwide. The risk involved in these investments by Angel investors is more, as compared to loans offered by financial institutions, as Angel investors plan to invest for higher returns to profit. India’s popular Angel investors include Mumbai Angels, Indian Angel Network, and Hyderabad Angels. Start-up owners can directly get in touch with these investors for funding support.
2. Peer-to-Peer Lending
Peer-to-peer lending is a sort of money lending in which there are no middlemen engaged in the transaction. Lenders give money to borrowers as an investment, while borrowers get funds to invest in their new business. Lenders can profit from borrowers in this process because the interest rate offered is higher than that of banks, NBFCS, and MFIs. The RBI regulates peer-to-peer lending institutions for the benefit of both lenders and borrowers. Peer-to-peer lending is a sort of financing for start-up businesses, but it is an investment for lenders.
3. Apply for Loans under Government Schemes
The Indian government has launched a number of loan schemes aimed at assisting start-up businesses, SMEs, and MSMEs, as well as promoting rural India’s socioeconomic growth, women entrepreneurs, educated youth, individuals from the SC/ST category, Small Scale Industries (SSIs), villages, and people living in rural and urban areas. The MUDRA loan scheme under the Pradhan Mantri Mudra Yojana (PMMY), Start-up India, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Stand-up India, Atal Innovation Mission, Make in India, Trade-related Entrepreneurship Assistance and Development (TREAD), and other loan schemes launched by the Indian government to assist start-up businesses include the MUDRA loan scheme under the Pradhan Mantri Mudra Yojana (PMMY), Stand-up India.
4. Equipment Finance
Equipment is critical to a company’s success and growth; a lack of it might make it difficult for a new company to compete. Using a lease or loan to borrow or acquire assets, whether it’s a restaurant appliance or a transportation vehicle, is what equipment finance is all about.
It’s a great way for companies to stretch the expense of an asset over time. It’s also great for high-tech firms whose equipment quickly becomes outdated. It’s not financially practical to continually selling old equipment and buying new ones in this situation, thus equipment financing is a reasonable choice.
5. Borrow money from both Private and Public Banks
For start-up businesses, banks are the first port of call since they find them to be a more trustworthy and easy source of funds. Term loans and working capital loans are two types of loans that banks offer to start-up businesses. Almost every Indian bank, both public and private, provides start-up financing. Interest rates, loan amounts, and payback terms vary per bank.
6. Crowdfunding
Crowdfunding is a concept of collecting funds from multiple investors via social networking sites and web-based platforms for majorly business purposes. Online Crowdfunding web portals raise funds for various other purposes like social causes, charities, ideas, disaster relief, events, etc. This concept or idea helps in raising funds for start-ups or first-time business owners and also promotes social and cultural causes.
7. Take advantage of Business Credit Cards
Since the growth of start-up businesses in recent years, the use of credit cards for commercial reasons has increased. If your business does not require huge sums of money in the early stages, you may utilise credit cards for transactions and clear the balance on time to prevent debt or additional interest rates paid in the form of penalties.
8. Bootstrapping
Finally, if you have the financial means, you may always fund your company concept yourself. This is the most frequent approach for people to obtain capital for their business, and it shows investors how serious you are about your project. It also indicates your willingness to take chances because everything is on the line.
If you can put your money and assets into your firm, you may gain a lot of advantages. You can keep control of your company and won’t have to hand it up at the premium phases, which isn’t achievable with other funding sources like venture capitalists and angel investors.
Where to get Startup Capital Loan?
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