How Small Businesses can use funding options for raising capital?

Start-ups and small businesses have become extremely popular nowadays. There are a lot of individual who dream of their own start-ups. However, arranging finances can sometimes pose a roadblock to their dreams. At times the interest rate of business loan is so high that it becomes a potential hurdle to business owners.

There are several options for raising capital these days that are designed keeping the fast-growing start-up culture in mind. 

10 funding options for raising capital

Below are several tactics to easily arrange funds for your business.

  • Crowdfunding

Crowdfunding, in recent times, has gained a lot of popularity due to its easy process. All you need to do is list details about your business on social media platforms. People who find the idea convincing and profitable can invest in your business.

  • Accelerator funding

There are several accelerator programs in various cities in India. These programs fund small businesses and start-ups. These programs assist businesses in taking a giant leap to gather funds to meet their urgent business requirements.

  • Bootstrapping

Bootstrapping refers to self-financing a business. You can use your previous savings as an investment in your business. This is easier as you do not have to pay interest or seek loans. However, at times this investment may not be enough. 

  • Angel investing

A few investors, known as angel investors, are enthusiastic about investing in small-scale businesses. However, you need to carefully pitch your business ideas. This would convince them they could earn a substantial profit from this investment

  • Bank loans

Several banks offer business loans. But the eligibility criteria for these loans are often stringent. Thus, there are chances that your loan application might get rejected. To avoid this, you must thoroughly review the eligibility criteria before initiating the process.

  • Business loans from NBFCs

Several NBFCs offer sumptuous business loans. The best part is that you can avail of collateral free business loans with several other advantages such as instant processing and flexible repayment options. 

  • Invoice loans

There are times when you can avail a loan against an invoice payable. This is best suitable for situations when your client cannot pay you soon after the delivery. They might request additional time to complete the payment, which you will have to comply with. However, you need funds for your business as well. At that time, you can easily reach out to specific lenders for an invoice loan.

  • Government schemes

There are several government schemes to fund small-scale businesses. You can navigate to the relevant government websites and check your eligibility. If you find your business eligible for such grants, you can easily apply for them to increase your funding.

  • Venture capital

Venture Capitals are firms that finance businesses at their nascent stage to help it exgrowpand. But in turn, you will have to provide them with a substantial share of the profits you incur. At times, you might have to add them as partners in your business to convince them to invest.

  • Raising money from contests

These are several business contests where people get to pitch their business ideas. If your idea is convincing enough, there are high chances you will get substantial funding for your business. But the real challenge is that many business people compete for this opportunity. Hence, your idea must be unique enough to stand out.

You can easily compare loan amounts and interest rate offered by various lenders on online marketplaces. This can help you to choose an appropraiate financial institute as per your need.

There are a few easy options to avail yourself to expand your business. However, if you are thinking of considering a business loan, compare interest rate of business loan before proceeding.

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