How to get finance for your business
Entrepreneurship is a dream for many professionals. You would want to be the master of your time and business. To get started, you need three things: a great idea, a competent leader and capital. You need the right type of funding. If you are an entrepreneur, you need to ensure sufficient funds, to keep the business wheel oiled.
Where can one get funding for business?
There are many avenues one can turn to, for business funding. In this article, we cover some of the best routes:
Bootstrapping your business
Bootstrapping or self-financing is often the first method of funding a business. If you have enough savings from a previously successful business, from savings or even a family inheritance, then it can keep you going.
If your business generates regular income, but it needs money for working capital, then you can always turn to a bank for funds. There are a variety of Business Loans to choose from – Term Loans, Collateral-free Loans, small Business Loans and Working Capital Loans are just some of them.
Angel investors are individuals with large amounts of money to invest in different ventures, hoping to make a profit out of them. You could approach an Angel Investor to invest in your business, if you can convince them about receiving high returns.
Much like Angel Investors, Venture Capitalists are a group of wealthy individuals looking to invest in a business. Usually, they ask for an equity stake in the company, in return for providing you with funds. Both Angel Investors and Venture Capitalists will look for a share of your future profit.
Governments usually do not directly lend. But they do support Loan Guarantee Schemes for startups, micro, small and medium enterprises, women-run businesses and a host of other ventures. Some of the schemes to consider in India are the MUDRA Loan Scheme, Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Make in India, production-linked incentives or Production-Linked Incentive (PLI) Schemes. Your bank would help you take advantage of them.
Some great ideas can be funded by your peers and other individuals who believe that a business will make a difference. Often, companies that can make a social impact can get crowdfunded. You could consider raising funds on crowdfunding platforms or social media websites.
Making the choice
Deciding which route to take for funding is more often an outcome of chance, rather than choice. It can be rather tricky to get an Angel Investor to invest in your business, unless you have good connections or a solid value proposition. Crowdfunding can also be a challenging route, unless you are a social enterprise.
A Business Loan is an easy source of funding. You can enhance your ability to borrow, by bringing in an asset like property or gold. If you want the best bank loans for your business, choose from ICICI Bank’s different Business Loan offerings.
Terms and conditions apply.