Finance is the key to the success and sustenance of small businesses in India. Usually, banks tend to be the first and most preferred funding source when we plan to raise funds for capital. But they are not only the choice as a financial solution. There we can find many methods to raise funds smartly.
Different methods to raise finance for Small businesses in India:
Crowdfunding is a popular method among other funding options in competitive business space. With the ease of accessibility, crowdfunding is advantageous, particularly for start-ups. It literally means obtaining individuals for getting money and some of the business ideas by putting out there on a crowdfunding platform. Of course, business ideas should have potential and investors will look for ROI before they commit to businesses to invest. Even this is the fair and new age method for those who know to play properly. Due to that, they can get good business support and ideas.
Most of the entrepreneurs are familiar with angel investors. We can define this type of funding method as – these are the individuals with major initiative and interest to invest in the development of businesses. These angel investors keep an eye on the activities of the enterprises which work best and will invest in those businesses which convene their profitable criteria. Usually, they participate in the networks to search through proposals and business plans to ultimately decide which they are going to support. For more businesses, it’s a big deal to get a nod of proficient angel investors. And also those investors tend to hold a keen interest in the business and assist to improve the revenue generations by providing business-related suggestions.
Small businesses can find many independent lending institutions that can help raise finance for startups in India. The need to secure a loan can be comprehensive for small businesses most of the banks. These lending institutions are willing to take risks to provide loans to small businesses. However, it looks at the solid profitability criteria of those enterprises. This is an effectual source as there are high chances that the loan facilities will arise through. These institutions survive to provide to the unique and smaller entrepreneurs who have trouble getting their plans to traditional sources. While they don’t proceed with as great a repute as banks, the monetary aid granted by them is excellent for most small businesses.
Financing from a venture capitalist is like gaining a diamond in a coal mine. It’s tough to arrive by, but scores especially big circumstances for a business owner. Most VCs favor supporting enduring small businesses as engaged to startups. If they find proof of potential and scalability, they come on board not only with money but with expertise, mentorship, and guidance. They lead to a visit with the business till it’s either received by someone or until it runs public. The only pleasant downsides are that they exert control and there is a lot of responsibility towards the VCs.
While often searched by startups, bootstrapping can be an efficient way of obtaining finance for smaller current businesses as well. A small business needs capital when needing to scale up or grow. It can also be for the procurement of equipment, logistics or payroll management. Bootstrapping requires either spending one’s own funds into the business or arranging some money from friends and family at low-interest prices. It’s important to note that this process works if the loan requirement is not too big. As the famous proverb goes, one shouldn’t retain all their seeds in one box.